Magazine Article | May 20, 2008

Are You Stimulated?

Source: Innovative Retail Technologies

Grocers and mass merchandisers will benefit most from the economic stimulus package.

Integrated Solutions For Retailers, June 2008

I recently wrote a whimsical online column prognosticating on my post economic stimulus check purchases. Since then, the checks have begun to be disbursed, though I have yet to see mine, and the pundits have yet to receive any 'results data' to sink their teeth into. I did read a report by American Century Investments that found only one in four Americans surveyed will spend their stimulus checks, while most will pay off debt or add to savings. I don't believe it.

It's not that I don't trust American Century Investments or its survey methodology. It's that based on history, I don't believe that Americans — despite their best intentions — can resist the temptation to go shopping when a windfall of sorts lands in their mailboxes. I back the statement up with a historical reference to the 2001 tax rebate. According to the National Bureau of Economic Research (NBER), consumers spent 20% to 40% of their 2001 tax rebates on nondurable goods during the three-month period in which the rebate was received, and 2/3 of the rebates were spent during the quarter of receipt and subsequent three-month period.

What To Do? Cash In!
Here's your takeaway: In 2001, households spent  $51 more on food and $179 more on non-durable goods in the quarter they received their checks. Never mind the overall impact on the economy; this is proof that grocers, restaurateurs, and retailers of consumables, apparel, and footwear stand to cash in over these next couple of months if they play their promotions right. Wal-Mart, by the way, is playing its promotions right; it will cash your check for you right in the store. Brilliant. Sears and K-Mart are offering a 10% bump on gift cards purchased with stimulus checks — get a $600 rebate, get a $660 gift card. Smart.

Even if it's too late to apply marketing genius to your stimulus package promotions, my advice is to promote something, and promote it right now. The money is out there, and consumers will spend it.

For the record (and if you're interested), according to the NBER, "The timing and magnitude of [consumer] response is consistent with the rebate program playing a large role in counteracting the 2001 recession, which ended in the fourth quarter with strong growth in aggregate consumption."

Good luck retailers, and God bless America.

More Info

 On The Web: More promotions and payment advice at