Stores await consumers' tax rebates

Retailers encourage shopping sprees

Sony wants to turn your tax rebate into a high-definition television. Home Depot has other plans for your check from Uncle Sam: help the Earth by spending it on energy-efficient appliances. And Sears is offering a gift card to customers for the amount of their rebate checks, plus a 10 percent bonus.

Merchants struggling with the slowdown in spending are stepping up promotions to court consumers who are expecting a cash infusion from federal rebate checks. Retailers are already planning major sales and big advertising campaigns in the fierce fight for dollars - even though the government won't start mailing out the checks until May. For merchants worried about a bleak year, this is like Christmas in spring.

Store owners have good reason to expect a shopping spree. People plan to spend 40.6 percent, or about $42.9 billion, of the $105.7 billion the government is distributing in tax rebates, according to a survey conducted in February by the National Retail Federation, a Washington, D.C., trade group. Consumers, besieged by soaring cost of gas and groceries and declining home values, plan to use about $30 billion to pay down debt and about $20 billion to put in savings, the survey found.

The tax rebate, part of a federal effort to boost the economy, will put $600 in the pocket of most individual filers, $1,200 for couples who file jointly, and an extra $300 per child for families. Only the wealthiest taxpayers will be excluded. The rebates are separate from tax refunds, which many filers have already received.

Retailers also hope the timing of the rebates, which will coincide with the summer selling session, will jump-start the economy, said Jon B. Hurst, president of the Retailers Association of Massachusetts. The beginning of any season is important because that's when the majority of consumers shop and when the margins are best for retailers because merchandise is not marked down, Hurst said.

"There is a lot of hope that the rebates, as well as the usual refunds, will spark increased consumer spending," Hurst said. "With two-thirds of the economy being represented by the consumer, and with confidence at low levels locally and nationally, this stimulus will be a shot in the arm for the industry."

Toni Williams, 47, of Mission Hill, has debated whether to use her expected $600 rebate for a vacation, a replacement washer and dryer, or a computer upgrade. For now, she's settled on a new laptop.

"I have an ancient desktop computer (circa 2000) and am looking forward to purchasing a laptop with my rebate and additional funds which I have saved," Williams said. "I wish I could take a nice vacation to visit friends in the southern part of the country instead, but the airline industry's tardiness and dysfunction leave me wary."

Home Depot, meanwhile, is hoping to tap into the green frenzy to fuel consumer spending. For Earth Day next week, the company, which has suffered from the weak housing market, will launch an advertising blitz to encourage consumers to spend their rebate on environmentally friendly products. The Atlanta-based chain plans a direct mail campaign, radio spots, and website promotions around the tax rebate and ecofriendly items, such as compact light bulbs and 10 percent off a $1,000 Bahama Blue LG washer.

"The effort will help turn a short-term stimulus into a long-term investment by saving consumers money over time through reduced electric bills and energy costs," said Home Depot spokeswoman Jen King.

On Sunday, Staples will debut on its website the "Staples Economic Stimulus Center" to provide tips for small-business customers to find savings. Through June, the Framingham office supply retailer will offer weekly promotions, no interest and no payments for six months on any purchase of $499 and up (excluding computers), $50 off a $500 purchase (excluding computers), and a sweepstakes for chances to win office supply products.

Sony got a head start on the rebate bandwagon, partnering with Turbo Tax, to package promotions for consumers' regular tax refunds with the rebate and counting on consumers to spend before either arrive. Sony's campaign, which ran ads recently in print, radio, and online, urged consumers to "Turn your 1040 into a Sony 1080p" for the 1080p HD-TV and offered $400 discounts on its high-definition Bravia TVs through April.

Some retailers are willing to spend money to get consumers into the door. This week, Sears unveiled plans to allow customers to bring their stimulus checks to a Sears or Kmart cash register and convert the check into gift cards, plus receive a bonus gift card worth an additional 10 percent.

H. Brandt Jewelers in Natick, meanwhile, is adding 20 percent to the face value of rebate checks toward any purchase over the amount of the check. In other words, if a customer agrees to spend their entire $1,200 rebate in the store, they will get a credit of $240 to spend on merchandise.

"We're hoping to grab some of the Mother's Day business with this," said Stew Brandt, owner of the store. "My bread-and-butter clients have had to shift their funds into fuel, groceries, and college tuition. People are hurting."

Retail analysts expect a short-term boost from the rebates, but they remain cautious about consumer spending over the long term. Marshal Cohen, chief retail analyst for the NPD Group, a market research firm in Port Washington, N.Y., said he has seen a shift over the past month in consumer attitudes toward the tax rebate.

More Americans, Cohen said, now say they are thinking of "rewarding themselves for enduring the tough winter they went through, especially now that the heating bills are going away."

Andrea Maffeo, who used her $2,300 tax refund to pay bills, said she feels more comfortable now putting the $1,800 rebate she anticipates toward a family vacation.

Yet others, like Erin Willett, see no joy in the rebate. The Lunenburg resident is expecting about $2,100, but is planning to pay off heating bills. She and her husband will use leftover money on gas.

"My husband and I are really annoyed that the government thinks this tax rebate will help people because with outrageous oil prices, it's just going to go right back into our living expenses," Willett said. "There will be no money left over for vacations or other fun stuff."

Jenn Abelson can be reached at abelson@globe.com.