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Tax Rebate Checks Bolster Deep-Discount May Sales

Consumers using the earliest wave of income tax rebate checks helped boost May retail sales — and the leading beneficiaries were dollar stores, closeout chains and warehouse supermarkets, according a TNS Retail Forward study released today.

In its May ShopperScape survey, TNS found some positive effects — in particular for everyday purchases — as predicted in its February canvass. The latest TNS survey uncovered these key findings about consumer behavior in May:

  • Some 28% of households reported using their rebate for everyday expenses such as groceries and gasoline, which is about the same share, 26%, that planned to do so in February.

  • Fewer shoppers, 14%, used their tax rebate for a special purchase such as a vacation, jewelry or consumer electronics item than planned to, 20%.

  • Fewer shoppers, 29%, put their tax rebate into savings than planned to, 34%.

  • More of the tax rebates, 14%, appear to be going toward miscellaneous "other" purposes than planned, 8%.

  • A combined 41% of households used the rebate to pay credit card or mortgage debt, the same share that stated such plans.

"The retail numbers suggest those [rebate] dollars are starting to have an impact that should last for several months as more shoppers get their rebates," said Frank Badillo, senior economist at TNS Retail Forward.

The TNS survey also showed that among customers changing their shopping patterns, Target and Kmart have been getting fewer of their visits, while Wal-Mart supercenters have been holding steady. The big pickups have been by chains such as Dollar General, Family Dollar, Big Lots, and deep-discount warehouse supermarket operators such as Save-A-Lot, Cub Food, and SaveRite.

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