Pent Up Demand May Be Stronger Than We Thought.
Is a Bike Rebate Program Necessary?
Is there enough pent up demand to push consumers into buying a bike this spring? Maybe so, based on what happened with the government’s appliance stimulus program this month in Minnesota and Iowa.
But it may take an exciting promotion from OEMs to prime the pump.
In the last 18 months, consumers have been busy paying down credit cards and building up savings accounts. The savings rate has been the fastest in a decade. And January was a record 16th consecutive month of declining credit card debt; it dropped $1.7 billion to $864.4 billion, according to the Federal Reserve.
Now consumers may be ready to take a break from that fiscal conservatism and spend a bit of money.
Look at what happened in Minnesota and Iowa this month: The two states ran through almost $8 million in government appliance rebate programs in less than a day.
Minnesota consumers were so excited about the retail program launched March 2, that they flooded the state’s dedicated phone lines and swamped its website. More than 25,000 persons signed up for the $5 million program in less than two hours, and by 10 am on the first day, there was a waiting list of 10,000 persons, when the program was shut down. That’s 35,000 persons jumping on the program that offered a $200 rebate on the purchase of an energy efficient major appliance such as a refrigerator.
I really can’t believe that 35,000 Minnesotans suddenly decided they wanted a new refrigerator or washer. I wonder if it’s more a case of WANTING a new appliance, rather than NEEDING one, and using the rebate as an excuse to dig into that fat savings account. And it’s not a freebee, give-away program.
In Minnesota, a qualifying refrigerator is going to run you more than $1,000, so a consumer is still on the hook for close to $1,000 after sales tax, even with the rebate. Minnesota’s top rebate of $200 was much higher than many other states.
An energy-efficient refrigerator qualified for only a $50 rebate in Georgia, $75 in California and $100 in New York. Nearly $300 million in rebates will be available to consumers across the country through April.
The Minnesota story was much the same in Iowa where its $2.8 million program was exhausted in the first day.
Not all consumers liked the program, though, perhaps an indication of tight cash in some regions. New York had to extend its $18.7 million program and Michigan used up only about half of its $9.5 million in the first month of its program. Because of the state’s weak economy, it’ll take an estimated four months for Michigan consumers to sign up for all of the rebate money.
More Good News
Here are another couple of bright notes for retailers: Most retail sales reports improved in February over February 2009, despite heavy snowstorms for much of the month throughout the country. (Okay, February 2008 wasn’t such a hot month and it didn’t take great numbers to beat it.)
Another positive sign: the pace of home foreclosures slowed in February; it grew only 6% for the year, the smallest annual jump in four years, and was down 2% from January.
If the recent appliance rebate program was any indication, perhaps we’ll see consumers parting with some of those savings dollars and popping for a new bike or ATV soon. Now, wouldn’t that be nice?
I wonder, though, if the OEMs will have to prime the pump a bit to get consumers excited about spending money for a bike they way they were spending for appliances. JD
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