Retailers Hope to Stimulate Sales With Stimulus Checks
Wednesday, February 13, 2008SUSIE GHARIB: President Bush signed the stimulus plan into law today and the IRS says the rebate checks will start hitting mailboxes in early May. The checks could be up to $600 for an individual depending on income and up to $1,800 for a family of four. With that much money on the line, you can be sure retailers are wondering what it means for them. Darren Gersh reports on just who benefits from the plan.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The president called the economic stimulus act of 2008 a booster shot.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The bill I am signing today is large enough to have an impact, amounting to more than $152 billion this year or about 1 percent of GDP.
GERSH: Put in retail terms, that means 130 million customers with extra coin. At market researcher NPD Group, chief retail analyst Marshal Cohen thinks the money will give shoppers an emotional lift.
MARSHAL COHEN, CHIEF INDUSTRY ANALYST, NPD GROUP: It's really trying to get the consumer to think about spending the money again, to feel confident again. We're in a new economy now and the consumer is such a critical part of that. Getting the consumer to feel good in their psyche is really an important role.
GERSH: Cohen says consumers tell him they'll use their rebate checks to reward themselves and that means categories like jewelry will shine, electronics too. Travel may also tempt consumers. Mass retailers should get a lift. Wal-Mart plans to cash checks for free to draw in buyers and boost revenues. But Cohen says retailers will have to be aggressive.
COHEN: The retailers are going to be looking to offer, even in some cases bring in your $600 check and we'll give you a credit for $800 worth of merchandise. So you're going to see some deep discounts, some piling on for the revenues.
GERSH: The other big competitor for rebate checks is that stack of bills from previous buying binges. Consumer activist Stephen Brobeck is urging Americans to take this chance to pay off credit cards and other high interest debt.
STEPHEN BROBECK, EXECUTIVE DIRECTOR, CONSUMER FEDERATION OF AMERICA: It could be a very big deal for low and moderate income households with say $1,000 in payday loan debt. They can completely pay off that debt freeing them from huge interest obligations.
GERSH: So will they spend it or will they save it? Polls show eight out of 10 consumers plan to pay off bills or invest the money. But if they do what they did with the last stimulus, most Americans will end up like Ina Brodnax and split the difference.
INA BRODNAX: They want you to put it back in the economy, so I'll do a little bit of both.
GERSH: Timing will be an issue for retailers. It's likely some shoppers will put off buying now until the checks come later this spring. NIGHTLY BUSINESS REPORT, Washington.
