The Prepaid Press - May 15, 2008 - (Page 22)

RETAIL FOCUS May 15 · 2008 - 22 Blood in the Water Staff Report Retailers Compete for Tax Rebate Dollars The Survey Says . . . A National Retail Federation survey, conducted by BIGresearch, taken in February, said that consumers plan to spend 40.6 percent of tax rebate checks when they are distributed. This would provide an immediate $42.9 billion boost to the economy in the form of retail purchases. The money will also be used for other purposes. About $30 billion will be used to pay down existing debt and almost $20 billion will be saved ($19.8 billion). Smaller amounts will be invested ($4.4 billion), and used to pay down medical bills ($4.6 billion). NRF President Tracy Mullin said that the stimulus package was a crucial component to economic recovery and would provide muchneeded relief to American shoppers. “Tax rebate checks should have the desired effect of both bolstering the economy in the short-term and putting consumers in a better position to spend for the future,” said Mullin. A later survey, taken by H&R Block in March, had a different tilt than the NRF survey taken 5 weeks before. In the H&R Block study, the percentage that said they would use the rebates to pay down debit was 45%. The percentage that said they would invest the rebate money 18%. Of those surveyed, 21% expected to use it for necessities, such as groceries. Only 16% said they’d spend it on non-necessities, such as a vacation. The NRF study did not distinguish between necessities and non-necessities for spending, so the 40% might equate to the 37% quoted in the be used at that retailer’s stores, the retailer will add $60 to the rebate, giving the consumer 110% spending capacity. Of course, this means the consumer can only use the card at that retailer’s locations. As you might expect, retail grocery stores have maximum leverage on the consumer, because it is easy to spend the rebates on food and other grocery store merchandise. Kroger, for example, is offering customers 10 percent tacked on the value of their tax-rebate check for giving the consumer a gift card, usable only at Kroger. Consumers with a $300 rebate will then get a $330 gift card, those with a $1,200 check can get a $1,320 gift card. Cub Foods has a similar offer, as does SuperValu, parent company of Albertsons, Jewel-Osco, and Shop ‘n Save, among others. SuperValu says shoppers can exchange tax-rebate checks for store gift cards, with an extra $30 added for every $300 in rebate checks. The offer is valid through July 31, by which time all rebate checks should have been issued. Sears Holdings Corp. the parent company of Sears, Kmart and Lands End, is also offering to give customers a gift card with an additional 10 percent added to the tax rebate. The gift cards carry no expiration dates or fees, so the retail purchases could be used later, including for holiday spending at the end of the year. The nation’s biggest retailer, Wal-Mart has a different take on the rebates. The company is offering to cash the rebate checks free of charge at There’s no money like free money, and with $105 billion worth of it being handed out to U.S. taxpayers, retailers are circling to get their fair share. Tax rebates, part of a federal economic stimulation plan approved in February, are now finding their way to consumers. The purpose of the plan was to kick start a sluggish economy, and retailers are jockeying to get as much of it as possible. H&R Block survey. And, if you add the savings and investment categories in the NRF study, it totals about 25%, compared to 18% in the H&R Block study. Show Us the Money The rebates started appearing in taxpayers’ bank accounts on Monday, April 29. Paper checks were scheduled to go out starting May 9. The rebates are up to $600 for an individual and $1,200 for couples. Families with children will get an additional $300 per child. In all, 130 million households are expected to receive checks. Retailers, hoping to cash in on the stimulus plan, approached the opportunity from different angles. Some of them offered check cashing services, others bonuses and many increased advertising budgets to try and garner consumer interest, and thus their rebate dollars. Free Money, Plus Several retailers have come up with a creative way to guarantee themselves the maximum share of a consumer’s rebate. This is accomplished by offering a bonus, usually about 10%, to the amount a consumer loads on a gift card, funded with the rebate money. For example, if a consumer puts their entire $600 rebate on a closed loop card that can only any Wal-Mart. As an added benefit, it will load any portion of the rebate onto a Wal-Mart MoneyCard at no charge. This card can then be used anywhere that credit cards are accepted. This offer is targeted at taxpayers who don’t have traditional bank accounts. To get its fair share of the rebate dollars, Wal-Mart has cut prices on a “special selection” of in-store items, that it hopes will get itself a share of the consumer’s rebate. Home Depot is trying to tie the rebates to a green effort, by giving discounts on some of its extensive line of fluorescent light bulbs and Energy Star appliances. The company is using an advertising slogan to promote its program: “Turn your tax rebate into an update.” Holiday Inn is offering a “Sunspree’s Vacation on the Government Package.” The price is $1,200 for a five-night stay for two in Virginia Beach, Va., including breakfast and dinner, a savings of up to $60 per couple per night. Beginning May 4, RadioShackv will give a 10 percent discount on purchases of $50 or more when a rebate or tax refund is used to pay for purchases. The infusion of tax rebate cash is an opportunity that has certainly brought out the creativity in retailers, big and small. http://www.payzone.biz http://www.payzone.biz

Table of Contents Feed for the Digital Edition of The Prepaid Press - May 15, 2008

The Prepaid Press - May 15, 2008 Prepaid Attracts Press Attention First Data to Acquire InComm Contents The Retske Report: To Everything There Is A Season Regulatory Rundown: Rules, Bills and Probes Courtesy of the FCC 5 Minutes With Ray Horak, Telecom Author The Prepaid Press Expo Spotlight The Age of Prepaid Prepaid Wireless in Brief Prepaid Wireless Roundup American Wireless to Sell Virgin Mobile Openet Introduces Flexible Accounts Prepaid Reviews Launches Pay as You Go Podcast Motorola Reports Losses APC Wireless Buys Movida Virgin Mobile to Deliver Limbo Services The State of Prepaid Technology Start Your Engines! The Legal Line PhoenixSoft Adds Service Providers Blackstone to Distribute Viscom Calling Cards Spot Rates IVR Technologies Releases Talking SIP 3.4 Calling Cards in Brief Former IDT Employee Wins $10.5 Million Payments in Brief Hypercom SmartPayments Certified for Windows Pacific Resource Credit Union Selects TMG New Payment Software for QuickBooks POS Blood in the Water Prepaid 101: Give Me the Power 7-Eleven to Hold Innovation Event First Data Gives Ingenico I-Series Class A Support Coinstar Kicks Off Change Reuse Program Payment Application Data Security Standard Issued Forrester Predicts Online Sales to Climb Retail Focus in Brief Our Advertisers Contact Us

The Prepaid Press - May 15, 2008

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