Consumers are finally spending more, with September posting the first gain in more than a year. The International Council of Shopping Centers and Goldman Sachs (NYSE: GS) found that retail sales inched 0.1% higher last month. It doesn't seem like much, but a gain when you anticipate a fall is good news magnified. But, it came at the expense of great deals and other tools to entice somewhat hesitant customers into stores.

Kohl's (NYSE: KSS) and Limited Brands (NYSE: LTD) reported sales increases in September for stores open more than a year. J.C. Penney (NYSE: JCP), Macy's (NYSE: M) and Target (NYSE: TGT) posted declines, but they were better than expected. Delayed school openings thanks to a late Labor Day helped push to September sales that might have occurred in August otherwise.

Of course, all eyes are on the coming holiday season. The National Retail Federation forecasts U.S. consumer spending of $437.6 billion – up only slightly from $433.7 billion four years ago. So, we still have a lot of ground to make up before we can celebrate a recovery. As long as the situation is staying steady, though, we'll at least have a solid starting point.

I've heard of retailer J.C. Penney (NYSE: JCP) doing things recently like expanding stores outside malls in an effort to compete better with retailer Kohl's and the company's most recent results add the aggressive strategy Penney's apparently has onto the success of several of its fashion initiatives.

The retailer saw a 13% increase in first-quarter income which it reported a little over a week ago based on increased sales of exclusive fashions. Late last week, the retailer even upped its profit outlook for 2007. Is Penney's making the right moves to ensure sustained competitiveness and profitability? From all appearances, yes it is. And price has little to do with it -- the retailer is focusing on branding (exclusive brands) and upper-scale advertising (combined with a sense of "discountedness") to drive sales.

Sound like any national discount retailer you know? That's right -- to a point, I believe Penney's is trying to duplicate pieces of Target (NYSE: TGT) strategy -- and so far, it's working. Getting fashions on the shelves more quickly is precisely what has led to recent success for Penney's (inventory control must have improved drastically), and it's something that Wal-Mart has failed to do recently that led to a sales miss on its part. If Penney's can continue to execute on what is working and drive newer strategies that lead to what customers respond to, it's in for a win in 2007. But, the retail war is always taking on new battles. No rest can ever be given, right?

After reading a recent Q&A, I was left wondering and pondering about the future for retailer J.C. Penney Company, Inc. (NYSE:JCP). The company has recently re-invented its marketing and is standing tall among many retailers in the field like Marshall Fields, Kohl's Corporation (NYSE:KSS), and Sears Holding Corporation (NASDAQ:SHLD) -- although discount competitors Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT) have eaten a little of JC Penney's lunch.

The "A" part of the session linked here talked about JC Penney's modern inventory management system. Many companies can say that, but the proof is in the pudding -- do you ever have a hard time finding that certain regular-price or sale-price item on a trip to JC Penneys?

If not, the retailer's inventory management system must be working. If you've consistently had issues finding products in stock, the system must not be working, regardless of internal metrics. Because the end measure is customer access to merchandise (merchandise uptime). Do you agree? And, how is JC Penney doing here?

More retail same-store sales results came in this week, and retailer J.C. Penney Company, Inc. (NYSE: JCP) stated yesterday that same-stores sales rose 2.6% in December. The hot categories in December during the holiday shopping season were, not surprisingly, children's merchandise, fine jewelry and fashion jewelry.

Shares of JCP were mixed this morning as the retailer's results for December beat analyst expectations of 2.4%, and Penneys also beat the year-ago same-store sales growth amount of 2.2%, which it reported in January of 2006.

Penneys also said that seasonal and gift categories like home entertainment also contributed to solid gains i December. Regarding January predictions, the retailer indicated that a low-single-digit rise in same-store sales in January would occur, and that it expects direct sales to be down slightly compared with a 4.3% growth rate in the year-ago period.

Department store chains like Kohl's Corp. (NYSE:KSS) and J.C. Penney Co. Inc. (NYSE:JCP) are starting to learn that if they don't respond to the ultra-hip marketing and perceived "chic" and good quality merchandise perception certain discounters have made for themselves (like Target Corp. (NYSE:TGT)), they may continue to lose customers.

So the stodgy department stores are fighting back with their own designer labels and brands of trendy clothing and home decor in an attempt to gain back the shoppers who have fled to discounters. Shoppers chose discounters instead of "going to the mall," where low prices (but with good quality) is not the marketing message that wafts in the air. In fact, it's anything but.

Kohl's is offering the Chaps label by Ralph Lauren, while J.C. Penney has a new and exclusive line of clothing from famous designer Nicole Miller. These are generally not the brand associations you see at Target so it's interesting for these two department store retailers to "bump it up a notch" as they try to gain some of the cash back from Target and others. But, is it enough to stem the customer defections?