All eyes are on back-to-school sales figures and the soon-to-be-released August same store sales numbers that will report those back-to-school results.  If the back-to-school consuming season is considered to be a reliable predictor of the Christmas holiday shopping season, then how can we predict that this year's retail Christmas is going to go?

The answer depends on how you interpret things.

A recent National Retail Federation (NRF) survey found that more than 40% of back-to-school shopping was completed by the second week in August, and that families did their shopping early because of coupons, sales, or promotions.  So, does that mean the shopping cart is half empty or half full? Bulls see spending. Bears see the same old highly competitive promotional environment that eats into profits.

The interesting thing is that even though many aspects of the U.S. economic situation are supposedly "up" compared to the 2009 mid-recession back-to-school season, the number of back-to-school consumers in 2010 who looked for back-to-school bargains and coupons was also up. This year 17% of people looked for back-to-school discounts and coupons to motivate their spending. That's up from the 14.7% of discount sales shoppers last year.

So, rather than spending more freely in this year's back-to-school season as the NRF predicted in its Back-to-School Intentions and Actions Survey, consumers seem to be getting even more price sensitive. Even though Ben Bernanke announced that the recession was over just about a year ago, he forgot to send a copy of that memo to U.S. consumers. They're bargain hunting more than ever, which bodes well for dollar and discount stores this Christmas holiday season, but not necessarily for the entire U.S. retail industry overall.

While most U.S. retail chains have been focused on luring back-to-school shoppers in the stores with back-to-school season promotions, one retail chain wins the prize for winning the attention of back-to-school consumers without heavy advertising of deep discounts. Kohl's (KSS) has created considerable buzz for itself on Facebook and in the news with its "Kohl's Cares" school contest.  By the time the Kohl's Cares promotion is completed this Friday, twenty schools somewhere in the U.S. will each be ready to cash their $500,000 checks and turn their educational wish lists into shopping lists, thanks to Kohl's.

Here's what other members of the U.S. retail industry can learn from the Kohl's Cares promotion. If you ever want to flip the switch on a viral marketing campaign, just hold a big bag of money out in front of a group of people who are stuck in a chronic state of not-enoughness. Here's just a sampling of what schools are doing to get their Kohl's Cares voting campaign (and the Kohl's name, by association) to go viral:

• A Jewish Chabad school in North Carolina enlisted 50 teenage alumni to bring their laptops to the school and participate in a vote-a-thon. One-by-one these cyber campaigners contacted all their online friends and asked them to vote. By the end of the teen-run vote-a-thon, the Chabad school had 45,000 votes, and Kohl's gained as many as 9,000 new Facebook fans.
• Since there is only a small built-in network of 276 students at Lucas Christian Academy in Plano, TX, students and supporters are reaching out to the community by setting up laptops outside of supermarkets, colleges and churches to get votes for their school, and new Facebook fans for Kohl's. Lucas Christian also reportedly formed a survivor-esque alliance with two other Christian Schools to share votes. And if that isn't enough, how about a little voting bribery? A vote for Lucas Christian Academy will also get you a chance to win a free iPad.
• Principles and staff from three schools in Racine, WI are camping out on the roof of one school to raise awareness and gain (sympathy?) votes.
• A couple of schools may actually win with a straight and simple sympathy angle. A Seventh-day Adventist high school in Bozeman Montana is the little-school-that-could with only 75 students. Another school in San Jose, CA sustained $10 million in damage last month and will use the money to replace teachers' supplies that their insurance policy doesn't cover.
• Two schools in Ely, MN have enlisted the help of a Facebook fan page dedicated to two bears. This, apparently, is an extremely active group of 111,000 bear fans who just helped the North American Bear Center win $100,000 in a similar online popularity contest. The Ely schools hope to rally the bear lovers successfully to create another social media voting victory.

Campers and fires and bears - oh my! The free publicity that Kohl's is getting in both the traditional media and online is as generous as the prizes they are giving away. Funny how that works, eh?

So, why is Kohl's taking $10 million which could be used to advertise its Back-to-School Stock Up Sale and giving it away in this type of promotion?  Obviously there's the goodwill factor which Kohl's hopes will earn them some customer loyalty and goodwill spending in the educational community, whether their favorite school wins or not.  Certainly it's nice to pick up a few hundred thousand new Facebook fans, who Kohl's can send marketing messages to for a long time to come.

Perhaps, though, its just as simple as this... Kohl's has made the effort be a socially responsible retail operation and a friend to education because it can.  Kohl's is cash rich.  The Kohl's chain has more cash equivalents on hand than any other department store chain, and it was that way all throughout the recession.  When you're not mired down in debt, you can afford to be generous, and you also have the freedom to run a campaign with a focus that is completely different from the desperation discount marketing of your competitors.

Does Kohl's really care?  There are at least 22 groups of people who don't care if Kohl's really cares - the twenty schools that win half a million dollars each, and the Facebook customer acquisition team. Those groups are the big surprise winners of the 2010 back-to-school shopping season.

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Here's why the U.S. retail industry in general and Target (TGT) and Best Buy (BBY)  in particular can't afford to ignore the ongoing boycotts that are being led by the LGBT community in protest of corporate campaign contributions to an anti-gay rights politicial candidate. According to statistics quoted by the Human Rights Campaign (HRC), a gay rights advocacy organization:

• The buying power of the LGBT community was $759 billion in 2009
• 78% of LGBT people are likely to do business with companies that are known to have gay-friendly workplaces
• More than 300,000 people have used the LGBT shopping guide published by the Human Rights Campaign (HRC) to make buying decisions

The largest U.S. retail chains have a customer base in the millions, so 300,000 lost customers scattered around 50 states may not seem significant. But in the past three years, we've seen retailers do some crazy Hail Mary marketing in order to lure customers through the front door. To alienate 300,000 consumers in one fell swoop is not an insignificant thing. And certainly it is not fiscally responsible in the midst of what is only a technical recession recovery to drive consumers with $759 billion in their pockets to the doorsteps of the competition.

Last week the HRC announced that it would be removing both Target (TGT) and Best Buy (BBY) from its list of gay-friendly companies recommended on its LGBT shopping guide. The HRC has apparently made good on that threat because as of this writing, Target and Best Buy are now absent from that list.

Target has been the main target of the consumer protests that refuse to die, but Best Buy is equally as culpable in... >> more >>

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Four weeks after the Target Corporation (TGT) made a contribution to a political support group in Minnesota, the candidate that benefited from the Target money is still under fire, the controversy is still in the news, and angry consumers are still staging  brick-and-mortar protests and virtual social media rallies. Target is the target of a significant consumer backlash, and a grass roots boycott is demonstrating the power that Facebook, political protests, and customer dissatisfaction wield in the U.S. retail industry.

Just this past weekend, a group of approximately 50 consumers staged a rally in front of a Target store in Chicago to protest the retailer's recent contribution to the political campaign of a candidate who openly opposes gay rights.  Fifty people hardly represent a massive movement.  If there were, say, 62,000 protesters, then Target would probably need to take notice and do something about it.

At this writing, 62,000 is actually the number of fans of the "Boycott Target" Facebook page which was launched less than a month ago in response to Target's controversial political contribution.  There aren't too many retail leaders on the planet who don't recognize what a significant accomplishment it is to gather 62,000 Facebook fans organically in less than month.

But even 62,000 cyber protesters don't seem all that significant compared to the 1.6 million fans on Target's own Facebook page who presumably still "like" the discount retailer.  The truly significant thing about this consumer backlash is how it became organized.  The protesters boycotting Target organized with the speed of a cyber flash mob, proving once again the power of social media and its ability to support real-time grass roots movements in a tangible way.

The "Boycott Target" group seems to think this is a gay rights issue.  The MoveOn.org group that is sending out messages to its left-leaning e-mail list seems to think this is a corporate political contribution issue.  At this point, I think it's mostly a good old-fashioned service recovery issue.  From a customer satisfaction/dissatisfaction point of view,  Target needs to quickly realize that this is about damaged customer relationships that might become irreparable.

A statistic that is frequently quoted by customer service experts and widely attributed to the Harvard Business School addresses customer dissatisfaction which results in the loss of business to competitors.  Reportedly, companies that reduce their customer defections by 5% could improve their profits by 25%.  Doing the math, the 62,000 fans of the Boycott Target Facebook page is equal to 4% of Target's own Facebook audience.  If statistical extrapolations hold true, then Target has alienated 4% of its customer base, which should result in an immediate plunge in profits - possibly as high as 20%.

This seems like an extreme statistical prediction, but it is not too much of a stretch to believe that there will be some negative financial fallout for Target.  It's even possible that Target may be in the process of joining BP as a cautionary case study illustrating the fiscal consequences of losing customer trust and respect.

In the land of the free and the home of the opinionated, businesses are allowed to have a point of view and to assert that point of view with their products, services, and public policies - even if that means alienating potential customers.  American Apparel (APP) and Abercrombie & Fitch (ANF) are great examples of companies that openly express a point of view that many consumers find offensive.  But these two retailers stay true to their offensive identity without apology.  Whether consumers "like" American Apparel and Abercrombie or not, at least it's clear what these two companies value (and what/who they devalue).

Target, on the other hand, is fueling the wildfire of consumer disapproval by seemingly pretending to be something that it is not.  The boycotters would probably have been pacified fairly quickly if Target had taken some kind of definitive and sincere action immediately.  Instead, the best response that consumers have gotten so far is an e-mail sent by CEO Gregg Steinhafel to his employees which said, "Let me be very clear. ...Target's support of the LGBT community is unwavering, and inclusiveness remains a core value of our company."

Target wants the public to believe that it is unbiased towards both the gay community and political parties.  The political contribution evidence, however, is pointing consumers to a different conclusion.  I think it's going to take more an internal employee communication leaked to the press to get this wildfire of customer dissatisfaction under control for Target.

Transparency is neither a fad nor an option in the U.S. retail industry any more.  Consumers can easily find out about the size and source of political campaign contributions made by retail companies and their leaders.  It's also fairly easy for consumers to find out about CEO compensation, environmental responsibility, reputation, customer service practices, and the workplace environment of just about any company in America.  Major retail organizations and leaders can't hide things behind boardroom doors for very long any more.

Retailers around the world should be following this Target customer retaliation movement closely because it could affect the balance of power between retailers and consumers dramatically.  If a social media-fueled consumer uprising makes a substantial impact once, rest assured the strategy will be used by consumers again.  I would be willing to bet that Gregg Steinhafel has fielded more than one phone call or e-mail from retail heavyweights in the past four weeks reminding him that it is not a good idea to negotiate with terrorists, kidnappers, political activists, or a consumer with a picket sign, a Facebook account, and an attitude.

What is the takeaway so far for corporate leaders whether they're in the retail industry or not?    Say what you mean, mean what you say. Be who you are without apology. And don't assume that consumers are gullible, stupid, or politically unaware.

Apparently, consumers don't like that.

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Retail analysts must not spend much time in the malls because if they did, they would know not to have such high expectations of consumers who are willing to wait in a queue line to save less than $100 at the Apple store on tax free weekend.  July same store sales may have overwhelmingly disappointed analysts, but for those who have had their expectation dials tuned to consuming reality in 2010, July results were neither surprising nor unexpected.

Expensive credit minus a plentiful job market multiplied by a newfound frugality yielded little or no consuming without sales, discounts, promotions or the motivation of an obligatory holiday in the first six month of 2010.  Only analysts who still believe in their own "pent up demand" fairy tale were disappointed in the July 2010 same store sales.  To everyone else, July same store sales told the same sales story that consumers have been telling every month.  More shopping doesn't mean more spending and splurging this month is balanced by saving next month.  Consumers have proven many times this year that... read more >>

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