Have you heard that the holiday season is going to be a challenging one? Yeah, we've heard it too.

Susan Dickenson looks at some of the forecasts and tells how retailers can combat this in her Retail Update column on page 24.

The National Retail Federation forecasted sales during the last two months of the year to dip 1% from last year's not-so-great holiday season. But even so, Marshal Cohen, that group's chief industry analyst, said, "I don't think it's going to be all doom and gloom. There's a lot of pent-up demand among consumers."

Cohen may be right. A poll taken by market research firm NPD in August reveals that consumers appear to be feeling more optimistic about the economy. Almost half of those polled said the economy is showing signs of stabilizing, while an additional 16% said the economy is getting a little stronger.

Small business owners are starting to feel better, too — with 58% saying they are confident in the future of their businesses, according to the National Small Business Association Mid-Year Report, which was released in July before much of the better economic news had really gotten a good footing.

Our own Dana French, director of research here at Home Accents Today and our sister publications, recently shared some new consumer data from a Citi poll that shows support for the belief that there's now a "new normal" — meaning that frugality is here to stay and that consumers may not go back to previous spending levels. This is especially true for women and mothers. Women account for about 80% of all household spending, and 75% of polled mothers said their spending habits will never go back to pre-recession levels.

"Some say that historically consumers act like Puritans during recessions/depressions and then immediately act like Hedonists when times get better, but data leads to this recession as being different," French said. "Spending will increase due to pent-up-demand, but it might not have the boomerang effect that we've historically seen. I think it means a slow, but steady recovery."

She said this reinforces the idea that retailers need to work to differentiate themselves with unique product and need to keep bringing consumers through the door with special events. "And promotions are very important, as is perceived value."

WSL Strategic Retail's Oct. 29 How America Shops report noted the trend toward smaller, better retailing is growing. Tightly edited selections that serve specific customer niches are more important than ever for stores. And, the experience matters.

"Shoppers continue to tell us they are looking for — and expect — easier, more efficient, customized ways to shop everyday," the report stated. "The current retail trend to smaller formats, more edited offerings, and more efficient ways to buy everything is one way retailers are addressing this. And that's good. However ... let it be said here, the shopper truth is that less is not necessarily more. Cutting SKUs, reducing promotions, reducing the store footprint are not solutions unto themselves. The solutions to satisfying shoppers are: the right mix (for me), the right value (for me), the right experience (for me), when and how I (the shopper) need/want it."

Who better to offer this than a specialty store? You are nimble and innovative enough that you can be the lead driver on this long path out of recession. Let's hit the road.