Businesses angling to get piece of stimulus checks

With federal economic-stimulus checks arriving in mailboxes soon, retailers are scrambling to lure customers, checks in hand, to their stores.

Many offer 10 percent bonuses, for example, if you buy store gift cards with the government checks. That idea is spreading to local businesses. Restaurateur Derek Davis pondered the idea today and declared, "I can do that. Only I'll give a 15 percent bonus."

The deal's good at Derek's, his restaurant on Main Street in Manayunk, but not at his upscale retail store, Mainline Prime in Ardmore.

He is offering the deal even though business has been better than last year. He attributes that to neighborhood people coming in to avoid the high price of gasoline, choosing to stay local rather than venture farther away for entertainment.

High gasoline prices may be helping Davis, but they hurt others.

"Business has been tough," said Joe Magarity, who sells Chevrolets in Flourtown and Fords in Chestnut Hill. He said he would knock $500 of the price of a car, new or used, in addition to any other deals he may be offering, if the customer signs over their stimulus check as part of the payment.

"We need to sell some cars," Magarity said.

He and others hope the checks - $600 for individuals, $1,200 for married couples who filed joint tax returns - will help.

Wal-Mart Stores Inc. and its Sam's Club stores, which typically charge up to $3 to cash government and payroll checks, say they will cash these federal checks free.

Sears, Kmart, Lands' End, big grocery chains and others are among those offering a 10 percent bonus if customers buy gift cards with their federal checks.

ShopRite grocery stores said today that, beginning Friday, it would add a 10 percent bonus to $300 gift cards that are purchased with either stimulus or tax-refund checks.

For some businesses, such a discount would wipe out their profit and undercut the impact of the stimulus program. It is hard for a travel agent "to discount even 10 percent. We work on 10 percent margin," said Helene Singer, of Singer Travel, of Reading.

The checks are part of a Bush administration proposal and have prompted broad skepticism about whether they will lift the economy or get eaten up by the debt crisis.

William Madway, a marketing and market research professor at the Villanova University School of Business, said the stimulus checks were not how he would have tried to help the economy. But, he added, "pumping over $100 billion into the economy is going to have some impact. If I'm a retailer, I want to figure out how I can get my share . . . and how to get people into stores with their checks."

Promotions that give "consumers more bang for the buck," Madway said, "will help the economy." If the checks just go to offset higher gasoline costs, he said, "that money is not going to stay in the country."

Madway said he would urge businesses to resist the temptation to deeply cut prices. The idea behind the stimulus package "is to put money into a company's hands so it will hire more people. If they're not able to make money, that won't happen."

Erica Hession, a Drexel University junior majoring in entrepreneurship, was asked what she would do if she was running her own business.

"If I owned an auto dealership, I would offer incentives to promote hybrid cars that use less gasoline, which would get other rebates" and further stimulate the economy, Hession said.

If she owned a grocery store, she would build promotions of locally grown products around the stimulus checks. In a home-improvement store, she would promote energy-saving products and workshops on how to make homes use less energy.

These approaches, she said, would keep the stimulus money "cycling within the local community" and send less overseas to buy oil.