Home Depot, Sony Lust After Your Tax Rebates

Marketers Campaign for Their Share as $106 Billion Wings Its Way to Public

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YORK, Pa. (AdAge.com) -- That hand in your pocket belongs to your local retailer, trying to grab your economic-stimulus payment before you even get it.

Although rebates won't be mailed until May, that hasn't stopped eager marketers such as Sony and Home Depot from luring the 130 million consumers expecting checks to fork some of it over -- presuming they haven't already. The National Retail Federation estimates that Americans will lay out more than $42 billion of the $106 billion slated to be sent.
U.S. Rep. Brian Baird (D-Wash.)
U.S. Rep. Brian Baird (D-Wash.) Credit: Roger L Wollenberg

"It may actually become competitive to get a message across around the time the checks arrive. That's why some progressive brands are already talking about it. Because, as we know, consumers are already spending the money," said Marshal Cohen, analyst with NPD Group.

Sony is packaging promotions for consumers' regular tax refunds together with the rebate-check promotions, betting that indeed, people are spending both checks before they arrive. Sony Electronics' first tied-to-taxes promotion plays on numbers, advising consumers to "Turn your 1040 into a Sony 1080p" referring to discounts on some of its high-definition Bravia TVs. Print, radio and digital ads, along with a sweepstakes to win cash, are included in the effort, which also includes co-marketing with TurboTax.com and some retail partners.

Check to Mother Nature
Home Depot is going so far as to hit on two hot buttons -- green marketing and the tax rebate -- by encouraging customers to spend their share on environmentally friendly products. "We think it is a great way to turn a short-term stimulus into a long-term investment by reducing consumers' energy costs," a Home Depot spokeswoman wrote in an e-mail.

To that end, it's partnered with U.S. Rep. Brian Baird (D-Wash.) to promote House Resolution 987, a bill that encourages people to spend their rebates on energy-efficient products and services and also prompts retailers to offer promotions to spur them to do that.

But the early promoters aren't alone in trying to convince Americans the checks are burning a hole in their patriotic pockets.

The National Retail Federation, which lobbied for the economic-stimulus package, expects a flurry of marketing closer to the May check-release date. "When the majority of checks come, we're sure to see many retailers jump on the bandwagon," an NRF spokeswoman said. "Retailers recognize that many consumers don't want to splurge when they get these checks, but for those that do, retailers are sure to be ready to help them get the best bang for their buck."

Ready to cash
During the 2001 rebate spree, retailers including Wal-Mart and Costco helpfully cashed rebate checks at their stores for free. Many also offered special hours with deep discounts, weekly sales and online specials tied to the check release, she said.

This time around, Wal-Mart hasn't yet developed a plan. It responded to a request, saying: "Our focus remains doing our part by to provide savings on the items they need every day. While many [consumers] say they plan to pay down debt with their checks, we know a portion may go to everyday spending needs or special wants. Right now, we're listening to what customers tell us about their plans later this spring, so that our prices will help make their dollars go even further."

The question is: Will consumers balk at these bald-faced plays for those checks?

A variety of researchers have polled consumers about how they'll spend their rebates, and while the majority say they'll pay down debt or save it, somewhere between 20% and 40% say they plan to spend at least some of the money. That tracks with history -- after the economic stimulus rebate checks of 2001, one-third of the money was spent in the first three months after the checks arrived and two-thirds was spent in the first six months, according to the Congressional Budget Office.

The right tone
Still, even with many willing -- or tempted -- to spend, marketers walk a fine line between being too aggressive and overbearing ("Spend your check here and now!") and not competitive enough (saying nothing while the competition offers deals and bargains tied to rebate checks).

Mr. Cohen said he expects retailers to try many different tactics. Retailers may suggest that consumers do indeed pay down debt and save, but also treat themselves a little. Some will also likely offer an extra incentive for shopping at only their stores, such as giving away merchandise for spending their entire $600 rebate there. And still others will "play the patriotic card," piggybacking on the government's mantra to spend for the good of the economy.

And while heavy-handed marketing tactics may irritate consumers and create a backlash against a brand, sitting on the sidelines probably isn't an option. "This is one of those once-in-a-decade things. If marketers miss this, they may have a relatively cold summer," said Rob Enderle, principal at the Enderle Group.
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