Lowe's challenges Menards with its own 11-percent rebate offer

Lowe's Cos. is challenging Menards' 11 percent rebates with a similar promotion this weekend, a ratcheting-up of competition in one of the retail industry's hottest segments.

In a new promotion running through Sunday in markets that include the Twin Cities, Lowe's customers who make a purchase for any amount will get a coupon printed on their receipt good for 11 percent off at a future visit between Oct. 31 and Dec. 31.

"No mail-in rebates required because we want to see you more often," the company said in an e-mail to customers this week.

No direct mention of Menards is made. But the Eau Claire, Wis.-based chain, with 300 stores chiefly in the Midwest, is running one of its 11 percent rebate offers this week, ending Saturday.

Lowe's didn't respond to a request for comment. A spokesman for Menards said the company couldn't comment on sales strategies. A representative of Home Depot, the nation's largest home improvement chain, said it generally matches discounts from competitors, including Menards' 11 percent rebate when it is offered.

This has been a good year for home improvement retailers, which have seen comparable sales grow at a faster rate than retailers in other categories. The business has been helped by strong home sales and construction growth in much of the country.

To get the Menards rebate, customers fill out a slip given to them at the store, enclose original receipts, mail them, and wait six to eight weeks for a merchandise credit check. The lengthy process is a turnoff for many shoppers.

"I just hate sending in the rebates. Just put things on sale," said Lori Pieper while shopping at Home Depot in Plymouth on Friday. The Minnetonka resident said her husband doesn't mind them as much. "My husband takes them and gives them to his secretary to send in."

Retailers offer rebates to satisfy two kinds of shoppers at the same time — the regular-price shopper and the discount shopper. The regular-price shopper ignores the rebate program while some bargain shoppers will take advantage of it.

If the retailer lowers the price all the time, it potentially alienates the shopper who likes discovering a bargain. The retailer also makes less money from the shopper who would've paid full price. "A frictionless scheme doesn't suit the purpose of the seller," said George John, professor of marketing at the University of Minnesota's Carlson School of Management.

Many discount shoppers never get around to sending in the rebate form or fail to follow the instructions, preventing the completion of the rebate. Hal Stinchfield, founder of Promotional Marketing Insights in Orono estimates that fewer than half the people who intend to send in a rebate form actually do so. "And 20 percent of the people who get the rebate check don't cash them," he said.

John thinks Lowe's new promotion is evidence that it wants to appeal to millennials and others wanting less friction or hassle to get a discount. "Young people rarely think of clipping coupons or filling out rebate forms," he said. "Lowe's has hit on a smarter thing."

Carl Peach of Plymouth likes the more immediate gratification of the Lowe's promotion but wants even less friction. "They should make it more like the REI rewards program where you get a check once a year," he said. "I probably have half a dozen receipts from Menards but they have to add up to at least $5 before I send them in."

Stinchfield said that whether it's from Menards, Lowe's or Home Depot, calling it a rebate is really a misnomer. "It's a discount on a future purchase, not a rebate," he said. "It's an incentive to drive store traffic."

John Ewoldt • 612-673-7633