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As summer winds down, retailers are gearing up, and the retail pundits are dusting off their crystal balls to try and get a sense of what the shopping public intends to do in the coming months.

As previously discussed in The Centurion (July 1), economic indicators are somewhat schizophrenic. Home sales dropped in July, setting off a new wave of worry, but August retail sales held their own, which is encouraging.  So is the latest report on factory orders, which posted an admittedly modest gain of 0.1 percent—but still reversing two months of declines.

Traditionally, back-to-school sales have been viewed as a barometer of what to expect for holiday sales, even in categories (like jewelry) not associated with a return to the classroom. But tradition isn’t law, or even carved in stone, as we saw in 2009. Last year, back-to-school sales were anemic, but holiday emerged stronger than expected, sparking a much-needed wave of optimism that has carried into 2010. One explanation might be pent-up demand; another that consumers chose to spend for one or the other, but not both, and limited BTS spending to needs while saving the wants for holiday. Either way, it blew a hole in the traditional theory.

This year, August retail sales were up, but more modestly than first predicted. Initially, retailers and parents faced off—parents waiting for discounts and retailers trying to hold out. Compromise was reached in the form of tax breaks in some states and couponing and other incentives that allow retailers to lure customers without resorting to fire-sale prices. Too, we’re only in the middle of BTS—more and more, kids (especially teens) want to wait until school starts so they can see what other kids are wearing before they commit to blowing their clothing allowances on the wrong thing. There’s also the persistent heat that’s blanketed much of the country. Who wants to think about wool when it’s 96 degrees? Consumers already shop much closer to occasion than they used to—that’s not news—but apparel retailers who cleared out summer merchandise early found themselves with no customers for much of the season.

So does this mean that BTS is irrelevant?  Not entirely.  But it does mean that smart retailers will rely less on what “should” happen and more on making sure it does happen.  Right now the pie isn’t getting bigger, so the only way to improve numbers is with a larger share of it.

As you’ve undoubtedly learned, marketing is no longer a one-way street but a two-way dialogue, with consumers becoming active participants in the messaging process. See also: Facebook, Angie’s List, ePinions, et cetera.

It’s part of the shift to participatory retailing in general. Consumers gravitate toward stores that engage them in the process, not just sell the product. Home Depot sells hammers but it also offers carpentry classes. Wegmans and Trader Joe’s have cooking demonstrations and tastings—with the recipe card and every last ingredient needed conveniently placed right next to the demonstration station so the customer can put dinner right into the basket.

In my opinion, this is why the bead lines are so popular. It’s not just the affordability factor—though you can’t disregard that—it’s the “I made it myself” factor. I designed my own bracelet. My hands picked out the charms and beads that will be on it, and it won’t look like anyone else’s. I helped my sister put together a special necklace for our mother—we didn’t just chip in on a Mother’s Day present that someone else put in a showcase. I learned something more about jewelry that I didn’t know before.

In reading InStore magazine’s 2010 “America’s Coolest Stores” issue, it’s not just pretty architecture that makes a winner. Every one of the winners has a beautiful store, sure, but more than that, they have a story that customers partake in. Whether it’s Lily & Co.’s dogs to cuddle, O.C. Tanner’s preservation of a beloved historic building, Cornell’s birthday parties, or Don Muller’s gallery chock full of American-made crafts, customers join in the story.

And that, whatever the economic indicators say, is a fail-proof strategy for success.

For further information email Hedda Schupak at hedda@centurionjewelry.com or heddaschupak@gmail.com. 

by Hedda Schupak, Editor, The Centurion