Fearing a holiday letdown, retailers shifting strategies

— -- It's beginning to look a lot like Christmas at some of the nation's stores, as retailers struggle to find ways to make shoppers forget about their battered 401(k) plans.

Neiman Marcus' trees have been sparkling since mid-September, and Wal-Mart began opening its Christmas shops last week. But that hardly means many are in a holiday spirit: It's all part of an effort to extend a holiday shopping season that some analysts say could have the slowest sales growth since the 1991 recession.

Consumer confidence — a measure of people's attitudes about the current and future state of the economy and their own financial situations — had its biggest single-month drop in September since RBC Capital Markets began calculating its index in 2002. And this season, which brings stores most if not all of their annual profits, is likely to be a make-or-break one for many small retailers and those that were struggling before the economy's dramatic slide.

"Things will appear to be similar," says Richard Hastings, a consumer strategist at Global Hunter Securities. "Yet underlying those appearances will be a lot of caution regarding inventory, promotions, displays and advertising. Retailers know the consumer is not reliable right now."

Jen Valliere, an Ashburn, Va., mother of three boys, is one of those cautious consumers.

"I do plan to spend less, because I have less to spend," says Valliere, whose husband is a real estate agent.

She's been selling things on consignment and just sold gold jewelry to pay for her sons' Christmas gifts. Along with her sister, Valliere plans to strip the wallpaper in their parents' kitchen and paint it as a Christmas gift.

The National Retail Federation said last month that retail sales for November and December are expected to increase just 2.2%, the least since 2002.

A week earlier, the market research and consulting firm TNS/Retail Forward predicted sales for the fourth quarter would be up just 1.5%, which would be the smallest increase since 1991.