Many retailers feeling squeeze

When mass numbers of employees refuse to work, it's called a workplace strike. When mass numbers of consumers refuse to shop? "Shopping strike," said retail analyst Eric Beder.

Consumers walked the "picket line" instead of the malls last month, handing the nation's retailers a 0.9 percent decline in sales compared with last year. It was the worst October sales result in 35 years, according to the International Council of Shopping Centers.

"It's going to be a really, really tough Christmas," said Beder, of Brean Murray Carret & Co. "If consumers stay where they were in September and October, it's going to be impossible for retailers to make their holiday sales goals."

Save for Wal-Mart Stores Inc. -- which saw sales increase 5.3 percent at its U.S. stores and 4.5 percent at Sam's Club -- few retailers were spared dismal results. Sales at Costco Wholesale Corp. fell 1 percent, the worst since 1997, when Thompson Reuters began collecting estimates. Department stores as a group fell 10 percent, according to RetailMetrics.

Minneapolis-based Target Corp. saw sales drop 4.8 percent among stores open at least a year, a key indicator of a retailer's financial health. Not only is traffic declining, but so is the average amount its customers are spending. Target saw low double-digit declines in items for the home, and high single-digit declines in clothing.

Although sales of basics, such as food and health care items, are increasing modestly, the company expects November sales to be even more dismal. It projects a drop of 6 to 9 percent from last year -- half of that due to soft sales, the rest because of an accounting calendar shift that gives it fewer sales days in the month compared with last year.

Wal-Mart said it expects same-store sales to rise between 1 and 3 percent in November.

Even with the presidential election decided and the government now floating millions to banks to ease the credit crunch, some retail watchers think retailers may see flat or even negative holiday sales.

"It could happen," said Britt Beemer of America's Research Group. "Except for Wal-Mart, I don't see how anybody in the country has a chance of being up in December."

'Panic-survival mode'

Beemer's polls show that a third of parents say they'll forgo giving gifts to each other, and that a growing number of Americans who fear layoffs are in "panic-survival mode."

Corporations stung by the financial crisis will pare back lavish holiday parties and eliminate bonuses, which could reverberate in the usually resilient luxury market. Beemer said corporate perks drive 20 to 40 percent of high-end jewelry and apparel sales.

The International Council of Shopping Centers, which tracks 36 of the nation's largest chain stores, on Thursday downgraded its projections for sales growth in the November-December holiday period to 1 percent, after earlier forecasting a 1.7 percent bump.

Wal-Mart exceeded Wall Street's expectations, and continues to draw from a more affluent customer looking for deals. The retailer has gussied up its stores in hopes of keeping those customers, and is using signs and toy promotions to try to gin up interest in holiday buying.

Tough everywhere

On Thursday, it announced an aggressive price-cutting promotion on thousands of products, including many consumer electronics, toys and grocery staples.

Beder said it's going to be tough for retailers everywhere to convince shoppers to put down their on-strike signs.

A survey released Thursday by Consumer Reports backed him up: About 12 million Americans still carry debt from last year's holiday shopping and nearly 76 percent of consumers say they'll cut back on everything from gifts to travel to charitable giving.

"October sales didn't seem to make much of a difference for consumers, and October's a big sales month," Beder said. "It's going to be touch-and-go for a lot of retailers this year."

Jackie Crosby • 612-673-7335