Retailers race to get ready ahead of rebate checks

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The tax rebates that began showing up in bank accounts via direct deposit this week originally weren't expected until the end of the week, leaving some retailers scrambling to make sure the economic stimulus handouts end up in their cash registers."We were a little surprised by this," admitted Sears Holding Corp. spokeswoman Kirsten Whipple.It will be next week before the Illinois retailer gets the signs it has ordered to publicize an offer of a 10 percent bonus for customers who use tax rebate checks to buy gift cards. Those checks, which are scheduled to start going out next week, were expected to be mailed starting May 16.Sears has adapted. It sped up production on the special gift cards being used in the promotion; those should start arriving in stores next week. And, even if check-bearing consumers arrive before the special gift cards come in, alternatives will be ready for use.A retail consulting group estimated as much as $42 billion of the $105.7 billion tax rebate total will be spent at retail stores between May and December. The rest will be split between paying debt, savings and charities, according to a February survey.The stimulus package was approved earlier this year when federal officials became concerned by the slowdown in the nation's economy. The Internal Revenue Service had to cope with the annual tax filings first but has now begun issuing rebate payments of up to $600 ($1,200 for married couples) plus $300 for children under 17. The order in which payments will be made can be found at the agency's Web site, www.irs.gov.Spending on things such as groceries, televisions and vacations should send sales in the second quarter up 3.5 percent as a result of the rebates, compared with the 2 percent figure that would have been expected without them, said TNS Retail Forward, of Columbus, Ohio."Retailers and suppliers should maximize their efforts to benefit from the tax rebates because growth prospects otherwise look bleak through the end of the year," said Frank Badillo, senior economist at the consulting firm.Much of the economy is driven by consumer spending, so filtering money through the retail industry is one of the government's priorities even if it doesn't sound like something the family financial planner might support. Still, merchants are trying to be tactful as they work to get a piece of the action.Pittsburgh shop owner Christine Berardi began thinking about whether she should do anything when the media reported that the government was ahead of schedule. She probably will skip any "rebate" promotions for her Hip'tique women's clothing store. Instead, she might send out a tongue-in-cheek e-mail message, something like: "If you're trying to justify one more summer dress ... "Those merchants doing rebate-related promotions are trying to make consumers feel they are stretching their windfalls further. Both grocery chain Kroger and grocery distributor SuperValu are offering an extra $30 per $300 gift card bought with economic stimulus checks.Starting in May, Home Depot will send direct mail advertising, air radio spots and launch a Web promotion encouraging consumers to use their rebates to invest in environmentally friendly home products. "This effort is to turn a short-term stimulus into a long-term investment really by saving consumers money over time," said spokeswoman Jen King.Sears is still working out details of its program, which offers a 10 percent bonus to shoppers at Sears, Kmart and Lands' End stores.As it stands, the offer is only open to customers who bring in paper checks. They need to use the entire amount toward gift cards because the retailer doesn't want to deal with lots of consumers asking for big chunks of change. "We won't be able to handle the cash requests," said Whipple.Those who use direct deposit can't participate -- yet. "We haven't been able to come up with a good solution but we're working on it," she said.Whether or not customers respond to any of the retailers' lures remains to be seen. As Whipple said, "We won't really know until people bring in their checks."E-mail Teresa F. Lindeman at tlindeman(at)post-gazette.com(Distributed by Scripps Howard News Service, www.scrippsnews.com.)