Halloween hasn’t arrived yet and already retailers are spooked by what the upcoming holiday season will bring.

As the credit crunch has deepened to give way to a financial crisis, consumers are confronted with a myriad of economic hardships, including rising unemployment, elevated energy prices and tighter credit. With consumers tightening their spending habits, retailers are expected to face one of the most grim holiday seasons in years.

Today’s retail sales report serves as a precursor to what the holiday season may bring. Retail sales for the month of September plunged nearly double what economists projected, marking the largest decline since August 2005 as consumers reined in spending.

To see how lackluster this holiday sales season will be, as well as to get a look into retailers’ strategies and overarching trends this holiday season, SmallCapInvestor.com interviewed six retail experts. Our panel of experts includes Mercedes Gonzalez, CEO of Global Purchasing Group; Peter Collins, chief financial officer of True Religion Apparel, Inc.; Jim Reed, lead portfolio manager for the UMB Scout Stock Fund; Jeff Van Sinderen, senior equity analyst at B. Riley & Co.; Eric Beder, senior retail analyst at Brean Murray, Carret & Co.; and Wendy Liebmann, founder and president of WSL Strategic Retail.

According to our panel, this slowdown will be broad-based, from low-end to luxury. Retailers will focus on discounts and tighter inventory management to move merchandise and shore up bottom-lines. Those that offer value and unique items will weather this holiday best. Discounters will be the sweet spot.

Here’s what our experts had to say:

What is your sales outlook for the holiday shopping season? Will we see a repeat of last year or will things be worse and why?

Reed: “It will be worse than it was last year. We’re expecting essentially a 1% increase versus a 3% increase last year. We’re taking our lead from the back-to-school sales, which were kind of punk due to high gasoline prices, which remain high and are still taking a bite out of customers — although it’s not extreme as it once was. Then there are job losses. The September jobs report saw 40,000 jobs . . .

For access to the full article, you must be a registered member - it's FREE.