For retailers, it doesn't get bigger than the holiday season, but even a raving success may not be enough to push an uneasy economy on the road to recovery. Basically, the retail sector has to do well to keep people from worrying more, but we'll all have to wait a while for some economic bliss. According to an MSNBC report, gift sales aren't as powerful as many believe.

So, here are five reasons why a great visit from Santa won't be enough to kick-start the economy:

No, don't expect to see windmills and solar panels -- consumers are leaning toward a different kind of green this holiday season: cash. Rather than hit their credit cards, shoppers will only be spending money they have (and can see and touch). Seventy-one percent of consumers are looking to cash and debit cards as their primary form of payment for holiday shopping this year, which the National Retail Foundation pegs as the highest level since 2005.

This could be a problem for the retailers.

Sure, you'd think that the merchant fees on credit cards make cash more attractive to the sellers. But, Ellen Davis, a spokesperson for the NRF, says that most retailers have found they can talk credit card buyers into up-sells more easily. That leads to a bigger basket size and more revenue. Done successfully, it should comfortably absorb the impact of merchant fees. James Roberts, a marketing professor at Baylor University, adds that using plastic makes consumers more likely to buy at all, let alone more.

It's going to get worse before it gets better, according to Stone & McCarthy Research. Early 2010 has "the more troublesome outlook," as the economy will have to walk on its own, the research firm says. This year, it's had a pair of crutches: tax credits for first-time home buyers and the cash-for-clunkers program. So, if the stimulus hasn't taken hold by the end of the year, the first quarter could be a bruiser.

The firm adds that "continued growth in aggregate demand" is needed, bringing the discussion back to consumer spending . . . which is where it will always land. We're likely to see the 3.2% growth rate from July through September drop to 2.4% at the end of the year because the crutches will have been gone. And, let's not forget that unemployment is expected to break the 10% level next year.

Massive bookselling chain Borders Group, Inc. (NYSE: BGP) reported today that holiday sales for the nine-week period ended Jan. 3 fell to $868.8 million, down 11.7% from a year ago. Same-store sales for the holiday season plunged 14.4%. The retailer said that holiday sales started off slow, but accelerated as the season continued.

Additionally, the bookseller said that CEO George Jones will be replaced by private equity executive Ron Marshall. The new chief executive has previously helmed turnarounds at food distributor Nash Finch Co. and supermarket chain Pathmark Stores Inc. Borders stated that the new appointment will help to "more aggressively drive a turnaround of the company within today's challenging economy."

Borders Group is also getting a new chief financial officer; Mark Bierley will be internally promoted to the position, replacing Ed Wilhelm.

BGP could definitely benefit from Marshall's turnaround prowess. The stock has endured a stomach-churning 52-week plunge of 95.2%, and is currently trading below 50 cents per share. By contrast, competitor Barnes & Noble, Inc. (NYSE: BKS) surged more than 9% today after scoring an upgrade from Sell to Neutral at Goldman Sachs.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Stock markets are poised to open higher as investors -- those that are not taking a holiday break -- reacted favorably to news that the government will allow GMAC LLC to become a bank holding company, giving the finance arm of General Motors Corp. (NYSE:GM) the opportunity to qualify for the government's $700 billion rescue fund.

That news will be tempered by data indicating the holiday shopping season was godawful. Retail sales fell between 5.5 percent and 8 percent compared with last year, according to SpendingPulse. Without auto or gas sales, the decline is between 2 percent and 4 percent, according to the Associated Press. Sales plunged as much as 25 percent in November alone.

Retailers are hoping to lure customers into their stores today with early-morning bargains. Whether that brings the companies some late Christmas cheer remains to be seen. With rising unemployment and falling home prices, many people skipped the holiday season entirely because they could not afford it. Many who could afford presents probably were not feeling very merry.

Other factors that may move the market include oil prices. Prices rose above $36 as investors bet that members of OPEC would stick to their production cuts even as demand continues to fall amdist the economic slowdown. The gain may short-lived.

"All the economic figures are pointing to demand destruction, and that's not going to change soon," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore, in an interview with the AP. "There seems to be no end to the bad news from economic data."

Buy.com led the Cyber Monday charge this year, having the best sales day in its history. While predictions for this year's retail holiday season have been pretty dire, it would seem more holiday gift buyers have the "shop in your shorts" mentality, taking advantage of free shipping and no sales tax to ramp up online holiday retail sales.

Buy.com, which competes with larger retailer Amazon.com (NASDAQ: AMZN), has been around for over 10 years and features retailer categories just as diverse as its larger competitor. Some of the folks I've talked to say that, for the first time, they are doing the majority of their shopping online this year, mostly due to the deals they receive, the lack of local sales tax and with the majority of goods being offered with free shipping.

In other words, we're all value shoppers this holiday season. Once the Black Friday novelty wore off last weekend and prices returned to normal, shoppers kept lining up at the virtual doors of online merchants and will continue to do so until the end of the Christmas holiday. When one of the largest online retailers has its best sales day in its history despite the bleakest economy in its history, perhaps that is a signal of a paradigm shift. For many of us, it happened a long time ago. For the others, the gravy train of online shopping is becoming a clearer picture every day.

MasterCard (NYSE:MA) runs one of the best retail tracking systems in the country. That makes sense given how many transactions involve its cards.

Numbers from its data collection system verify that retail sales are bad, but the latest numbers show how bad. According to Reuters, "Overall apparel sales are down 19 percent from the same period a year ago, according to a report by SpendingPulse," Appliance sales dropped 22% about the same amount as purchases of luxury goods.

A week ago, the America's Research Group said it expected retail sales to drop 1% this season," the first time the research firm has forecast a decline in almost a quarter century of surveys." That number is almost certainly bogus and wildly optimistic.

Same-store sales at a number of the nation's largest retailers fell by double digits in October, yet analysts persist in saying that, while the holiday season will be rough, it will not be catastrophic. The deep trouble is already clear now, and it will certainly be confirmed when November and December numbers have finally been tallied. Those looking for a silver lining won't find one.

Douglas A. McIntyre is an editor at 247wallst.com.

Upscale menswear firm Perry Ellis International (NASDAQ: PERY) is the latest firm to hit Wall Street with a bleak outlook on retail sales. This morning, the company unveiled its preliminary third-quarter results and dramatically slashed its earnings guidance for fiscal 2009. Chairman and CEO George Feldenkreis warned, "Our retail partners are expecting an extremely promotional Christmas season, but at this point, we have no visibility on what the Thanksgiving weekend and the Christmas season will bring."

In the third quarter, PERY anticipates diluted earnings per share of 30 to 33 cents per share, compared to 55 cents in the same quarter of 2007. Revenue for the period is expected to decline 2% from last year to $222.8 million. The final results will be released on November 20, ahead of the opening bell.

Looking ahead to 2009, the clothing concern trimmed its fiscal-year earnings guidance from $1.67 to $1.72 per fully diluted share to a range between 90 cents and $1.10 per fully diluted share. The updated forecast accounts for one-time expenses of 10 to 15 cents per share related to a strategic review of the company's brands and businesses. Revenue for 2009 is now projected to fall between $875 million and $900 million, down from a prior forecast of $910 million to $925 million.

Feldenkreis noted that the formal review process should help make PERY "a stronger and more nimble company when the economy turns around."

In light of today's slashed forecast and uncertain outlook from Perry Ellis, the stock could be hit with downgrades or price-target cuts. Zacks reports that 3 out of 5 analysts following the shares maintain a bullish Strong Buy opinion, while Thomson Financial pegs the average 12-month price target at $16.40. This consensus estimate implies an expected upside of 211% from PERY's closing price on Wednesday -- leaving ample opportunity for potential downward revisions.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Up until very recently, retail executives were hoping holiday sales might be up 2% or 3%, but most of that optimism has faded. According to The Wall Street Journal, "Chief marketing officers at 100 retail companies said in a survey by BDO Seidman LLP that they expect their companies' same-store sales in November and December to fall an average of 2.7%."

Declining sales mean some retailer companies either won't make it or will be faced with significant store closures and layoffs. Circuit City (NYSE: CC) is likely to fold as may some small retailers.

Watch for a number of other retailers to hit 52-week lows, especially those that were struggling before the downturn.

At the top of that list put Sears (NASDAQ: SHLD). Same-store sales are already weak. The stock is off to near a 52-week low at $47.57 against a 52-week high of almost $140. The retailer could easily close hundreds of stores and see its share move toward $30.

Another retailer that is having huge sales problems is Gap (NYSE: GPS). It should have closed its Old Navy line a year ago. Now, that is more likely. The stock trades at $11, down by half from its period high. Unless it does some store triage, Gap stock would go below $7.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Amazon.com (NASDAQ: AMZN) had one heckuva holiday shopping season this year. In fact, it was the best season ever in terms of sales in the 13-year history of the company, according to the world's largest internet retailer.

Saying that the 2007 holiday shopping season was the strongest ever since opening its virtual doors in 1994, Amazon said that customers ordered more than 5.4 million items -- 62.5 items per second -- in a single day (December 10). In 2006, Amazon's busiest day saw sales of 4 million products, so this year was quite a lift indeed. The top items this year? The Jakks EyeClops Bionic Eye, Nintendo Wii game consoles, GPS systems and flat-panel television sets.

Have most customer shifted to online merchants this year instead of visiting local brick-and-mortar outlets for their holiday gift needs? Many retailers expect to see soft retail sales throughout December this year, but the shaky consumer environment apparently did not affect Amazon's sales this year. Of course, now all those credit cards are probably more plumped than the Christmas turkey.

With the last full shopping week before Christmas well underway, retail analysts are scrutinizing every sale at many national retailers to see how consumer spending is shaping up this holiday season amid recession fears that drove the stock market down a pretty decent chunk yesterday. Consumer electronics giant Circuit City (NYSE: CC) is set to report earnings come this Friday in what is expected to be another disastrous quarter for the retailer. Will this follow through to other retailers due to a soft holiday shopping season? With larger competitor Best Buy (NYSE: BBY) reporting Q3 numbers today, we may have quite a contrast in results come this end of this week -- or not.

Although November retail numbers were better than expected due to the full week of holiday shopping after the Black Friday shopping day, that kind of result should not be expected in December. Marshal Cohen of research firm NPD Group said that "while the November numbers make it look merry, some challenges lie ahead. Discounts work to some degree, but retailers still need generate excitement ... and there's still a lack of new products." Enough said? But I love this quote from Britt Beemer of the Americas Research Group: "I have to conclude that retailers don't try to understand today's consumer as they focus on Wall Street and their share value." I agree 100% from my end.

So, what will December retail holiday sales bring? A string of disappointments to add more fuel to consumer spending fears and an upcoming recession, or a mild reaction from Wall Street when the smoke clears on December 26th? If you own retail stocks now, be watching for results next week -- and you may not want to keep tabs on your portfolio at the same time unless you have a large stomach.

Target (NYSE: TGT) generally is not in the spot of releasing depressing news, but it does happen occasionally. The Wal-Mart (NYSE: WMT) competitor, who is flashier and trendier despite selling much of the same merchandise (but marketed much better) said this week holiday shopping began slower than it had expected, and that Q4 profits might fall "well short" of analyst expectations.

Them's fightin' words, and as such, Target shares slid about 7% on the news yesterday. Target shares, which closed above $60 Wednesday, saw a slip to below $54 yesterday and has recovered a bit to over $55 this morning. Is this the end? Of course not, but when a holier-than-thou retailer with a rosy amount of Wall Street cred announces a downfall in guidance and disappointing holiday sales (at least, at the start), things are sure to happen. And happen they did.

Although Target execs said that sales the two days after Thanksgiving met its expectations, sales during the final week of November were soft in hot holiday categories such as toys, holiday merchandise and home and apparel goods. In addition, same-store sales rose just 1.1% when adjusted for an unusual full week that existed this year after Thanksgiving. Are customers really pulling back on holiday spending this year as Target's results would seem to indicate? Outside of the Black Friday and Cyber Monday shopping days, maybe that's the case. We won't know real details until December's conclusion, though.

This week's Cyber Monday retail event on the internet is shaping up to be the best ever, according to many retail industry watchers. Retailers Wal-Mart Stores Inc. (NYSE: WMT) and Circuit City Stores Inc. (NYSE: CC) had heavy promotions this past Monday, along with online-only retailers Amazon.com (NASDAQ: AMZN) and Buy.com.

Did possible record sales come after heavy price chopping, or was the Cyber Monday sales push more customer-driven? Heavy discounting already is being looked at as the cause, and although legit, it could cause a large dip in profits to those retailers overexercising the strategy.

Now that Black Friday and Cyber Monday are over, retailers nationwide will continue the price discounting this week (and beyond) to keep those sales pouring in all the way until the end of December. Some retailers are taking the discount versus profit line this week, as 50% off is being seen at many online outlets, which is sure to cause a profit knock at the end of the day.

Is this any surprise? Not really -- loss leaders are always used to hook consumers looking for bargains into stores (and online retailer websites) where they are either ferociously upsold more expensive products or are extensively cross-sold more products than they came looking for.

It's the savvy consumer who seeks out a good bargain and leaves with just that item (or items) that retailers don't really want. But the U.S. consumer is a savvy one indeed, and the more tactics retailers use to push non-bargain products, the more consumers shrug them off.

It's been said that there are no "must have" gift products this year. These products, based on the law of supply and demand, command premium prices. When there is a lack of that kind of product, the only recourse many retailers have is to slash prices to get customers lifting up their spending. Although the holiday shopping season this year may indeed be a large one, will any companies make significant profit? Is there a goal of selling as much as possible while making very little profit in the process?

The next time you're in a retail store paying for your purchase with a credit or debit card, you may want to take a deep breath. That credit card machine that verifies your customer status and credit line/checking account balance may be broadcasting that sensitive financial information right into the air. With the right equipment, data thieves may even be able to snatch it.

Similar to how some folks piggyback on their neighbors' Wi-Fi wireless internet connections, data thieves could be sitting outside the entrance to a local Best Buy (NYSE: BBY) or Target (NYSE: TGT) location just waiting to snatch those wireless transmissions from the air and possibly see all that personal, financial information. Yes, it's the kind used to steal one's identity.

According to some industry watchers, purchasing goods this holiday season using a website and credit card may actually be safer than swiping a physical card at a retail location just due to the security provided. Are those wireless credit card machines securely encrypted at all your favorite retail locations?

Sounds odd, but it never hurts to ask for a store manager and see what the answer is. Otherwise, one of those retailers could be broadcasting your information to whoever is listening just outside the door. With millions of credit card transactions set to take place in the next month, perhaps the information technology teams of these retailers should ensure customer information is completely protected.