Why Kroger Will Get Your Tax Refund (and Sears Won't)

Plenty of retailers have focused their ads on the expected wave of economic stimulus checks. Sears and Kroger have taken things a step further, giving shoppers an extra 10 percent cash if they trade their whole check for a Kroger, Sears, or Kmart gift card. Now Kroger, the biggest supermarketer in America, has sweetened the deal — they’ll trade IRS or state tax refunds for cash plus 10 percent, as well.

While both companies clearly hope to lure new customers for the long term, Kroger has a much better chance for three reasons:

More flexible. Not only does Kroger accept state and federal tax refund checks for the bonus program, it will accept printed proof of direct deposit, according to spokeswoman Meghan Glynn. This gives Kroger consumers in most states three dollar amounts from which to choose (federal refund, state refund, and stimulus check), if they’re not ready to go steady with one store for their whole $1,500 rebate. Sears requires a live stimulus check, although they’re trying to figure out how to handle direct deposited amounts, spokeswoman Kirsten Whipple says.

More reliable. Kroger, which sold $70.2 billion last year, benefits from strong financial performance, straightforward supermarket brand identification (Ralph’s, Fred Meyer, Fry’s, King Soopers), and established shopper habits in 44 major markets. There’s no risk in paying $1,200 for $1,320 in future groceries, but nobody really knows what might happen to shaky Sears.

Hits consumers where they live. People are sweating the increasing cost of food, health care, and gasoline. Along with pharmacies in nearly every store, Kroger sells fuel at almost 1,500 locations. Sears and Kmart, meanwhile, are places you go for discretionary spending, which the skittish 2008 consumer is just not doing, Future Merchants’ Don Delzell comments on RetailWire. “Much deeper promotional activity happens every day and hasn’t had much impact on destination retail choice,” he notes, while a 10 percent discount at the supermarket, gas pump or pharmacy is a pretty good motivator to change your habits.