Posh Boutique is adding Acne jeans and accessories at its Hillsboro ...

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"We're barely above water," said Tony Owen, manager of HickoryHollow Mall's Dress Code, where sales are down 30 percent and hisapparel store is almost $20,000 in debt.
In response to the sour economic headlines, retailers plan to hirefewer seasonal employees, streamline or reduce inventory and rampup discounts.
Other shop owners and chain stores say they'll focus on a handfulof must-have gifts such as electronics and educational toys oroffer enticements like discounted online shipping andfree-of-charge $10 gift cards mailed in bulk to lure shoppers totheir aisles.
But it's likely to be an austere season. "It's going to be prettyimpossible for retailers to have any positive retail sales," saidBritt Beemer, chairman of Charleston, S.C.-based America's ResearchGroup. "I think mall retail stores are going to be challenged likenever before this year, and the question is how many of them willmake it."
Beemer estimates that at least one in four parents will not swapgifts with each other in order to put presents under the tree fortheir children. That means a number of stores are betting onchildren's toys to get them through the season.
For instance, Wal-Mart is selling the Fisher-Price Kid-ToughPortable DVD Player, which costs about $150 on Walmart.com, bettingthat if parents buy any gift, they'll feel good about paying for atoy that is educational and interactive, said Glen Gabardi,Wal-Mart's vice president and regional general manager forTennessee.
Wal-Mart, like other discount retailers, has been among the fewstores that have fared well in recent months. The retail giantposted record second-quarter earnings for the three-month periodending July 31.
Apparel and specialty stores, though, are expected to see flat tono growth this season, and department stores will be especiallyhurt as higher-income shoppers shy away from stores, according toTNS Retail Forward's analysis.
"Unfortunately, the trends in economic conditions offer no signs ofan impending recovery," said Frank Badillo, the firm's senioreconomist.
Many clothing and department stores are planning to reduceinventory for the Christmas season  meaning there will be fewergifts to buy and less variety.
"Retailers are going into the holiday season with eyes wide open,"said Scott Krugman, spokesman for the Washington-based NationalRetail Federation. "They are managing their inventories verycarefully & they don't want to be left with too much to clear out"after Christmas.
The amount of cargo shipped to retailers this year is expected tofall 6 percent compared with a year ago, the National RetailFederation said.
Belk, the department store chain that has beefed up its presence inMiddle Tennessee, said it would reduce the variety of colors itstocks on various items and is eliminating inventory that did notsell well last year. J.C. Penney also plans to reduce inventory.
"It's to be in line with demand, in line with the current economicenvironment," said Quinton Crenshaw, a J.C. Penney spokesman. In search of $300 jeans
Higher-end stores like Posh Boutique are hoping a smaller but moreexclusive inventory will still attract wealthier consumers.
Terrah Hamilton, buyer and district manager for Posh Boutique, saidshe has become pickier, reducing overall inventory but adding 10 to15 brands that aren't sold at neighboring competitors. For example,she has added jeans from Swedish companies Nudie Jeans Co. and AcneJeans, which retail for $200 to $300 a pair.
Lauralee Robey, 20, said uniqueness is a selling point for her.Robey, who lives downtown and works at the Hill Center at GreenHills, said she once spent $80 on a unique bracelet for a friend'sbirthday. She said the economy hasn't affected her plans forChristmas shopping this year. "It's memorable," Robey said. Smaller staffs planned
Retailers plan to hire fewer seasonal employees this fall andwinter, though, in an effort to trim costs. Wholesale and retailhiring intentions were at the lowest levels since 1991, accordingto a recent survey by Milwaukee-based Manpower Inc. in which 13percent of retail and wholesale companies said they'd reduce hiringbetween October and December.
J.C. Penney in CoolSprings Galleria will hire 10 fewer employeesthis Christmas season, a 17 percent decrease from last year, storemanager Denise Mann said.
Shoppers can also expect a more intense, competitive marketing pushbecause there are five fewer shopping days between Thanksgiving andChristmas this year, said analyst Betty Chen of Wedbush MorganSecurities in San Francisco.
"I think the concern is, 'How do you maximize those days as much aspossible?' " Chen said.
One idea is to lure customers in with free gift cards. AtMacAuthority, an electronics store that sells Apple computers andiPods, the company plans to mail gift cards of at least $10 invalue to entice customers to come in and buy Apple products, saidMark Gregory, the company's CEO and president.
Other analysts say major chains are likely to soften theirmarketing messages to better appeal to increasingly fragileconsumers, who not only are grappling with shrinking 401(k)accounts and diminished home values but also may be losing faith inthe U.S. financial system in the wake of the upheaval on WallStreet.
"This is like watching a car crash, but the two vehicles haven'thit yet," said Marian Salzman, chief marketing officer for publicrelations agency Porter Novelli. "Consumers are going to beparalyzed through Christmas."
Advertising gurus say that stores need to tweak their salesmessages to be more sensitive to uneasy consumers, similar to whatmany did after the Sept. 11, 2001, terrorist attacks.
"We are facing a difficult time, and retailers need to be consciousof that and be very flexible," said Richard Kirshenbaum, a founderof advertising company Kirshenbaum Bond & Partners. Merchantsshould reconsider any "highly confident and optimistic tone," hesaid.
Instead of trying to sell a dress, clothing stores should sell theattitude, style and confidence consumers get from the product, saidPeter Arnell, chairman and chief creative officer of The ArnellGroup, a subsidiary of Omnicom. Stores "need to give them trust andencouragement," he said.
That may be particularly true if consumers grow even more worried.
Deloitte Research predicts total holiday sales, measured Novemberthrough January and excluding motor vehicles and gasoline, willrise 2.5 percent to 3 percent over the year-ago period. A rise of2.5 percent to 2.8 percent in the November through January periodwould be the smallest gain since 1991, Deloitte noted. Online sales to dip
Retail Forward said online sales growth could reach 9 percent thisholiday season, but even that seems weaker compared with the 19percent growth turned in last year for the category.
"These shoppers who are more likely to shop online have turnedincreasingly value-focused in recent months as they have felt worseoff with regard to investments, home values and other economicmeasures," Badillo of Retail Forward said.
Some online retailers hope to attract shoppers with low shippingfees. Harry & David is sweetening the deal for online and catalogshoppers by giving as much as a 35 percent shipping discount onsome orders in hopes that consumers buy their well-known giftbaskets with fruit at a higher volume, said Bill Ihle, thecompany's executive vice president.
Re-Re Mayfield, an avid shoe shopper strolling past stores in theHill Center at Green Hills one day last week, said she'd spend $200on shoes for herself this Christmas. Last year, she spent $1,200 onshoes for her entire family.
"The gas prices are so high, I can't afford to buy my shoes,"Mayfield said, adding that her favorite pair of shoes are her $275Kenneth Cole sandals. She recently bought knockoff shoes in orderto save money.
Melissa Brown, 39, of Franklin, plans to spend $2,000 on gifts forher four kids, down about $1,000 from her spending level in 2007.And instead of giving presents to extended family members, she'sconsidering going on a vacation with them in order to save cash.
"There is not enough money," said Brown, an account executive."Groceries cost way too much."
Reach Wendy Lee at 615-259-8092 or wlee@tennessean.com . Tennessean researcher Christine Irizarry and The Associated Presscontributed.