April 17, 2008
Retailers Willing to Deal for Stimulus Checks
Sears and Kmart want your stimulus checks and the chains are willing to sweeten the pot to get them. The retailers announced that consumers who bring their government stimulus checks to either store to exchange for a gift card will receive a bonus card worth an additional 10 percent.
In other words, bring in your $300 stimulus check straight from Uncle Sam and Sears or Kmart will give you two gift cards: one for $300 and the other for an additional $30. Gift cards can be redeemed in stores or online at Sears, Kmart and Lands’ End. The promotion is scheduled to last from May 14 to July 19, 2008.
“In this tough economy, we know that our customers are focused on how to make their money work harder for them,” said W. Bruce Johnson, interim CEO and president Sears Holdings Corporation. “Every day we Sears, Kmart and Lands’ End are intent on bringing our customers the value, quality and style they deserve — and our stimulus check program now provides even more value.”
Kroger is offering a similar program to Sears with gift cards for the full price of the stimulus check plus an additional card equal to 10 percent of the value of the government rebate.
“Grocery bills represent a significant expenditure for the average American family. In fact, the average family of four spends between $105 and $235 per week on food purchased at a store and prepared at home,” said David Dillon, Kroger chairman and chief executive officer, in a company press release. “Kroger’s program allows our customers to stretch their grocery dollars further.”
Scott Krugman, a spokesperson for the National Retail Federation, told The Associated Press, “You’re going to see a lot of retailers that focus on necessities follow suit. What we’re seeing at Kroger and Sears definitely raises the bar.”
Discussion Questions: What do you think of the Sears Holdings and Kroger stimulus check gift card programs? Do you expect to see others follow suit or is there another type of program that you believe would be more effective?
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As a marketing approach, this strikes me as rather tone-deaf and transparent. It comes across as a pure money grab. Which is what it is.
Both Sears’ and Kmart’s offer to exchange stimulus checks for a gift cards is a nice try, but unlikely to work. This is just another example of the lack of retail and customer understanding by these companies. All the research indicates consumers plan to use these checks to pay down debt, not to buy more. Sears’ and Kmart’s attempt to grab all the money at one time will only work if they are the only retailer in town. This is just another example of them being a financial real estate firm, not a retailer.
Retailers know that it is going to be difficult for them to get customers to part with their payment. That money has already been earmarked for necessities or to pay down some debt. Retailers have to actually change the customer’s mind at this point. By adding a bonus, I think it’s a start but I suspect we will start seeing some killer deals for those checks especially for auto sales and electronics retailers.
When retailers copy each other they all lose. Remember when every grocer offered double coupons? Remember when every gas station offered free drinking glasses? Remember when every bank offered 0% balance transfers? Remember when every web site offered free shipping? Remember when every car dealer offered no money down? Remember when every shoe store offered buy one get one at half price (“bogo”)? Remember when every supermarket offered a free turkey or ham for Christmas if you spent $250? RetailWire should run a copycat contest: the retailer who has the most copycat marketing programs wins a free trip to…(uh-oh, that’s a copycat hook, too!)
Sears will need to do better than 10%. That’s not much of a bargain at Sears. Kroger is more compelling because they have more locations and more demand for their products. I’m not quite sure how this will work since most people I know have direct deposit with the IRS. Then again, most people I know won’t be getting a check anyway.
My views largely coincide with others’ but with one additional proviso i.e. how’s about giving some change so people don’t have to spend the full value of the gift card in one fell swoop? Or several gift cards, each smaller in value but totalling the larger amount? The grocery deal seems a much more attractive offer than the others which, I agree, seem to reek of greed.
I fully understand that all any retailer wants to do is sell their stock and make as much profit as possible but that is not quite the same as profiteering, eh wot chaps? It could even backfire as people resent the attempt to separate them from their checks and the more important things on which they have decided to spend. They might, in fact, decide not to go anywhere near Sears, Kmart or others making similar offers for a long long time to come if they think the stores are trying to take advantage of them.
For the family that plans to put its $600 toward a new digital TV or washing machine, the Sears offer may hold some interest. But if the retailer’s prices on those items aren’t truly competitive, the offer goes hollow.
Most folks are likely to put their incentive checks toward existing bills – I don’t see a big up-tick in non-essential spending coming from this.
If Kroger can persuade large numbers of shoppers to store their refunds and rebates on account, it stands to make a bundle on the float. Also, gift card experience suggests that a portion of the liability will never be collected by card holders. Put two and two together, and the 10% offer seems affordable.
Now if Kroger offered an opportunity to pre-pay for gasoline at fixed, pre-summer prices using tax refunds, I’d be on board.
I agree with the comments concerning the validity of the Kroger offer. Loyalty in the grocery business is hard to generate, and growth is often a function of promotional activity and market share acquisition. Offering these gift cards is an excellent way of giving the consumer an even greater lift on essential purchases. I can easily see, extant other grocers matching the offer, some meaningful percentage of rebate recipients taking advantage of this. And honestly…a 10% discount is a relatively inexpensive way of generating traffic.
I’m not so impressed with the Sears/Kmart offer. With direct respect to Sears, the merchandise at Sears does not represent essentials, but rather discretionary spending. Yes, at some point, particularly for kids, new clothes are a requirement. April and May are not generally those times (think BTS and winter). Outside of apparel, I really can’t see this having much impact. Worse, I’m somewhat concerned that customers already intending to use their rebate check for a discretionary spend will simply take the 10% and not buy anything more than would have otherwise, nor will it motivate a change in retail brand choice. Is a 10% incentive enough to shift traffic from Target to Sears? No way. Is a 10% incentive enough to shift traffic from Wal-Mart to Kmart? Extremely doubtful. Much deeper promotional activity happens every day and hasn’t had much impact on destination retail choice.
Good move Kroger, bad move Sears.
On one hand, it sounds like a novel way for retailers to raise working capital in tight credit markets.
As a shopper, however, I’m not so sure I’d swap my cash for a non-refundable gift-card promise from one retailer. What if they raise the price of their groceries? What if they go bust? Sharper Image, anyone?
Kroger says proof of e-filing works as well as a live check, and their deal includes state and federal tax refunds. No call back from Sears, in other shocking news.
Sears I’m not so sure about. Kroger’s a different animal–everybody buys groceries. Note, their offer applies to both the stimulus check and tax refunds. For our family, that’s three checks in vastly different amounts. Putting our state refund on a supermarket card and getting 10 percent more chow for the money? That’s sound.
I expect to see a lot of copycat offers in the next 24 hours. I’m also curious about customers who get their refunds/stimulus checks as direct deposits rather than live checks. Do they miss out? I’ll post the answer when I find out.
The bigger question is how the government could have executed this better in order to really stimulate the economy.
The IRS, instead of rebate checks, could have issued gift cards–like a Mastercard or Visa type gift card, in the same way that manufacturers and wireless companies give purchase rebates in the form of a gift card that could be used at all retailers, restaurants, gas stations, hotels, airlines, etc. The gift card would have a 90 day expiration date to make sure that people use them quickly. This would have ensured that the money was spent across sectors to stimulate the economy. While people could use the cards to pay their utility bills, they couldn’t use it to pay down debt or put it away in a savings account.
If the point of the stimulus checks is to get consumers to purchase new products, this is an intriguing approach. If consumers are using the stimulus checks to pay down current debt, this may not work.
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As a marketing approach, this strikes me as rather tone-deaf and transparent. It comes across as a pure money grab. Which is what it is.
Both Sears’ and Kmart’s offer to exchange stimulus checks for a gift cards is a nice try, but unlikely to work. This is just another example of the lack of retail and customer understanding by these companies. All the research indicates consumers plan to use these checks to pay down debt, not to buy more. Sears’ and Kmart’s attempt to grab all the money at one time will only work if they are the only retailer in town. This is just another example of them being a financial real estate firm, not a retailer.
Retailers know that it is going to be difficult for them to get customers to part with their payment. That money has already been earmarked for necessities or to pay down some debt. Retailers have to actually change the customer’s mind at this point. By adding a bonus, I think it’s a start but I suspect we will start seeing some killer deals for those checks especially for auto sales and electronics retailers.
When retailers copy each other they all lose. Remember when every grocer offered double coupons? Remember when every gas station offered free drinking glasses? Remember when every bank offered 0% balance transfers? Remember when every web site offered free shipping? Remember when every car dealer offered no money down? Remember when every shoe store offered buy one get one at half price (“bogo”)? Remember when every supermarket offered a free turkey or ham for Christmas if you spent $250? RetailWire should run a copycat contest: the retailer who has the most copycat marketing programs wins a free trip to…(uh-oh, that’s a copycat hook, too!)
Sears will need to do better than 10%. That’s not much of a bargain at Sears. Kroger is more compelling because they have more locations and more demand for their products. I’m not quite sure how this will work since most people I know have direct deposit with the IRS. Then again, most people I know won’t be getting a check anyway.
My views largely coincide with others’ but with one additional proviso i.e. how’s about giving some change so people don’t have to spend the full value of the gift card in one fell swoop? Or several gift cards, each smaller in value but totalling the larger amount? The grocery deal seems a much more attractive offer than the others which, I agree, seem to reek of greed.
I fully understand that all any retailer wants to do is sell their stock and make as much profit as possible but that is not quite the same as profiteering, eh wot chaps? It could even backfire as people resent the attempt to separate them from their checks and the more important things on which they have decided to spend. They might, in fact, decide not to go anywhere near Sears, Kmart or others making similar offers for a long long time to come if they think the stores are trying to take advantage of them.
For the family that plans to put its $600 toward a new digital TV or washing machine, the Sears offer may hold some interest. But if the retailer’s prices on those items aren’t truly competitive, the offer goes hollow.
Most folks are likely to put their incentive checks toward existing bills – I don’t see a big up-tick in non-essential spending coming from this.
If Kroger can persuade large numbers of shoppers to store their refunds and rebates on account, it stands to make a bundle on the float. Also, gift card experience suggests that a portion of the liability will never be collected by card holders. Put two and two together, and the 10% offer seems affordable.
Now if Kroger offered an opportunity to pre-pay for gasoline at fixed, pre-summer prices using tax refunds, I’d be on board.
I agree with the comments concerning the validity of the Kroger offer. Loyalty in the grocery business is hard to generate, and growth is often a function of promotional activity and market share acquisition. Offering these gift cards is an excellent way of giving the consumer an even greater lift on essential purchases. I can easily see, extant other grocers matching the offer, some meaningful percentage of rebate recipients taking advantage of this. And honestly…a 10% discount is a relatively inexpensive way of generating traffic.
I’m not so impressed with the Sears/Kmart offer. With direct respect to Sears, the merchandise at Sears does not represent essentials, but rather discretionary spending. Yes, at some point, particularly for kids, new clothes are a requirement. April and May are not generally those times (think BTS and winter). Outside of apparel, I really can’t see this having much impact. Worse, I’m somewhat concerned that customers already intending to use their rebate check for a discretionary spend will simply take the 10% and not buy anything more than would have otherwise, nor will it motivate a change in retail brand choice. Is a 10% incentive enough to shift traffic from Target to Sears? No way. Is a 10% incentive enough to shift traffic from Wal-Mart to Kmart? Extremely doubtful. Much deeper promotional activity happens every day and hasn’t had much impact on destination retail choice.
Good move Kroger, bad move Sears.
On one hand, it sounds like a novel way for retailers to raise working capital in tight credit markets.
As a shopper, however, I’m not so sure I’d swap my cash for a non-refundable gift-card promise from one retailer. What if they raise the price of their groceries? What if they go bust? Sharper Image, anyone?
Kroger says proof of e-filing works as well as a live check, and their deal includes state and federal tax refunds. No call back from Sears, in other shocking news.
Sears I’m not so sure about. Kroger’s a different animal–everybody buys groceries. Note, their offer applies to both the stimulus check and tax refunds. For our family, that’s three checks in vastly different amounts. Putting our state refund on a supermarket card and getting 10 percent more chow for the money? That’s sound.
I expect to see a lot of copycat offers in the next 24 hours. I’m also curious about customers who get their refunds/stimulus checks as direct deposits rather than live checks. Do they miss out? I’ll post the answer when I find out.
The bigger question is how the government could have executed this better in order to really stimulate the economy.
The IRS, instead of rebate checks, could have issued gift cards–like a Mastercard or Visa type gift card, in the same way that manufacturers and wireless companies give purchase rebates in the form of a gift card that could be used at all retailers, restaurants, gas stations, hotels, airlines, etc. The gift card would have a 90 day expiration date to make sure that people use them quickly. This would have ensured that the money was spent across sectors to stimulate the economy. While people could use the cards to pay their utility bills, they couldn’t use it to pay down debt or put it away in a savings account.
If the point of the stimulus checks is to get consumers to purchase new products, this is an intriguing approach. If consumers are using the stimulus checks to pay down current debt, this may not work.