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Kroger, Sears have eyes on your rebate check

/ Source: The Associated Press

You may have to wait until May to see your economic stimulus check, but some retailers already have their sights set on how you will spend it.

Both Kroger Co., one of the country's largest grocers, and department store operator Sears Holdings Corp. are already offering discounts and freebies to consumers who turn the rebate checks into gift cards.

Other retailers like Home Depot Inc. are launching advertising campaigns to helpfully suggest ways to spend those extra dollars.

Many retailers have yet to announce any special promotions and some, like Target Corp., say they aren't planning to. But industry watchers say its likely more companies will announce ad campaigns and special deals as the weeks go by to try to convince shoppers to spend.

"Certainly it does seem like retailers are planning for a battle on where to spend that check," said Chris Donnelly, a partner in the retail practice at consulting group Accenture. "We're going to see a lot of competition from a promotional standpoint among retailers really trying to lay claim to that."

The checks, set to arrive in mailboxes and bank accounts beginning next month, are part of an $168 billion economic stimulus plan passed by Congress. Under the plan, individuals who have filed their tax returns for the year can receive up to $600 and families can get up to $1,200.

The checks are meant to provide a cash cushion for strapped consumers, as well as a cash infusion for retailers struggling to grow sales in a weak economy where shoppers are increasingly cutting back.

Retailers who cater to consumers' needs rather than wants may see the most benefit, said Morningstar analyst Mitchell Corwin.

"It's your grocery bill, it's your electric bill, it's your fuel bill," Corwin said. "Just for everyday type purchases, consumers are facing higher prices today than they ever have."

If consumers use the checks to buy the necessities, that could be great news for Kroger. The company said Wednesday they will offer shoppers free groceries through a gift card program. It works like this: if a customer turns his $300 tax refund or economic stimulus check for a Kroger gift card, he will receive an additional $30 on the new card. A $600 check would garner another $60 dollars and a $1,200 check would warrant another $120 to spend in groceries.

"Consumers are stretched, we recognize that with the economy," said Kroger Chief Operating Officer Don McGeorge.

Sears, meanwhile, said Tuesday it will offer a 10 percent bonus to anyone who converts their check into a Sears or Kmart gift card.

"I do think you're going to see a lot of retailers that focus on necessities follow suit," National Retail Federation spokesman Scott Krugman said.

It won't be the first time retailers have nudged consumers to spend their economic stimulus checks. In 2001, when consumers received smaller tax rebate checks to stimulate the economy, Krugman said retailers allowed consumers to cash the checks in stores.

Some also coordinated marketing campaigns around the program. Online travel company Expedia Inc., for example, launched a campaign called "The Great Tax Rebate Vacation."

But Krugman said "what we're seeing at Kroger and Sears definitely raises the bar."