SHTFplan contributors opined about the 2009 holiday retail season in The Recession in Pictures, with many coming to a similar conclusion to Alan Cohen, Chairman of Abacus Advisors.

From An Unbiased View of The Holiday Shopping Season:

Deep concern about both the credit crisis and cutbacks in consumer spending has translated into retail strategies marked by caution, Cohen noted. “Manufacturers produced less, and retailers ordered less. In the run-up to the 2009 holiday season, everybody was in a conservative mood.”

Visual confirmation of this can be found at most major retailers, including Hobby Lobby. A quick visit to the retailer of art supplies, holiday decorations and crafts suggests that they are holding much lower inventory levels this year, as compared to last. Normally, Hobby Lobby is loaded with merchandise, but it seems quite low this year, and it looks like popular items, once sold, will not be restocked for the very reasons mentioned above. So, if you’re waiting for the last minute to pick up some popular gift and hoping it will be discounted, you risk the possibility that it will be sold out and unavailable, as retailers will not be reordering mid-season. And even if they chose to reorder, the manufacture may not have any inventory to send.

When all is said and done after the holidays, filing for Chapter 11 bankruptcy protection may be the only option for many chains, Cohen added. “I certainly see more bankruptcies down the road,” he said. “And we will also see vacancies going up at shopping centers and malls across the country. With a limited number of conventional retail, restaurant or entertainment tenants actively looking for space, landlords will be exploring alternative uses like dental or emergency clinics or, in the case of large big-box spaces, flea markets.”

It was Gerald Celente who has suggested that shopping malls will become ghost towns. Perhaps this is how the overt collapse in commercial real estate may be triggered. If retailers can’t deliver this season, they will have no choice but to bail on landlords. The landlords will subsequently lose their ability to service their debts and the CRE meltdown may begin. There may be a delay of course, as a CRE meltdown will likely lag bankruptcies and not be felt until later in the year. Look for bankruptcies as early warning indicators for problems in commercial real estate.

Despite some stock-market gains and a few positive economic indicators, Cohen believes the recovery will be a hard, long slog and is anything but right around the corner. “Most of the profit increases you are seeing at publicly held companies are not being driven by traditional revenue improvements,” he said. “These gains are related to cost-cutting, and you just can’t cut costs forever to improve profits.”

You can only layoff so many employees, and lower prices so much before you start losing money. Retailers have spent the last year slashing prices and laying off employees. It now comes down to the 75% – 80% of consumers who still have jobs to deliver the sales numbers and prove the economy is on the mend. Retailers are at the mercy of the consumer, who is coming into stores with less money to spend, no credit and anxiety about continued financial hardship.

An underperformance of retail sales this season could be quite disasterous for not just the economy, but the stock market as well. Could a Christmas Crash be in the cards, similar to last year’s stock market lows which started around mid January and bottomed in mid March?