Eye on Retail: Tax refunds are coming this way
Most consumers plan to spend their tax refunds on the home sector
Consumers’ income tax refunds present opportunities to retailers — particularly those in the home sector.
According to a study by Valassis, 53% of respondents said they plan to save the majority of their refund, but 21% are looking to spend all or most of it.
In terms of where consumers most commonly plan to allocate their tax refunds this year, the study found that home improvement or furnishings ranked highest (15%), followed by a vacation or experience (12%) and material items such as apparel or electronics (7%).
The study also found that 20% of shoppers are unsure of how they’ll use their refund, representing another key target for marketers. Research from RetailMeNot shows that 67% of consumers have made unplanned purchases solely based on finding a coupon or discount for an item, meaning retailers can be opportunistic, encouraging impulse buying.
“Tax season presents a unique opportunity for marketers to motivate consumers with high purchase intent, or those who are unsure how they’ll spend their refund and can be readily influenced,” said Curtis Tingle, chief marketing officer, Valassis. “Having extra cash on-hand can encourage consumers to spend more freely on experiences like dining out or high-consideration areas like home improvement projects. Retailers can capture a portion of this spend throughout tax season and beyond by placing relevant deals in front of consumers.”
Additionally, consumers that are planning to save their tax returns still present a window of opportunity for retailers. While 40% are planning to put away a portion for an emergency fund, 19% would like to use it toward a home improvement project or furnishings; 15% for a vacation or experience; and 9% for a car purchase or general automotive maintenance. Having this spending intent data allows retailers to capture these delayed buyers with year-round advertising and promotions across print and digital channels, the study said.
It's not too late for Hardware and Home Improvement Retailers to promote their brands to capture tax refund dollars. In fact, according to the National Retail Foundation, as of right now, more than 30% of households have not filed their taxes! Promote now so you are top of mind when those refund checks arrive!