WASHINGTON - AS A dismal US holiday shopping season draws to a close, ailing retailers say the sector is in deep trouble and will need a further stimulus to lead an economic recovery.

'This has been an incredibly tough and challenging environment for the entire year,' said Mr Scott Krugman of the National Retail Federation.

'Consumers are suffering from a crisis of confidence and are not spending. And when they are not spending it has an impact on the entire economy.'

The retail group urged president-elect Barack Obama to incorporate a series of national sales tax holidays into upcoming economic stimulus legislation.

The retail federation said it was not yet revising its original forecast for a 2.2 per cent increase in overall sales to $470.4 billion (S$683.5 billion), and will await government surveys after the holidays on retail sales.

Mr Krugman said sales have been 'tracking behind' the initial forecast and added: 'Even if we hit our forecast it still represents a very weak holiday season for retailers.'

A survey by the retail group found that as of December 19, the average person had completed 64.7 per cent of holiday shopping, and 20.5 per cent had not yet started.

A survey released on Tuesday by the International Council of Shopping Centers said chain-store sales rose 2.6 per cent over the past week but were down 0.6 per cent compared with last year.

Consumers were 'buying more gifts instead of gift cards,' said ICSC chief economist Michael Niemira.

'Unfortunately, though, the year-over-year sales pace remained depressed. Even with this week-over-week pickup, ICSC Research expects monthly comparable-store sales will be down one percent or slightly more for December.'

The holiday season is seen as a make-or-break period for many retailers and a key for the struggling US economy, which relies on consumer spending for 70 per cent of activity.

The season has witnessed bankruptcy for big consumer electronics seller Circuit City, which is reorganising, as well as KB Toys, which is liquidating and closing more than 400 stores.

Mr Bryan Perry, an analyst at OptionsZone, said retailers have been among the weakest performers in the stock market with lackluster results at all ends of the spectrum, ranging from Sears to Tiffany, getting little help from US tax rebates this year.

'That $300 billion in checks that fell out of the sky from government helicopters back in the March to May timeframe didn't find its way to the malls at all,' he said.

'Instead, people paid down credit card debt, and tuition, medical and other bills, leaving little for spending on non-essentials.'

Online sales also showed some catchup after a weak start.

A survey by the research firm ComScore showed retail e-commerce spending for the first 51 days of the season was down one percent through Sunday at $24.71 billion.

Online spending over the past weekend totalled $677 million, nearly twice as high as the final pre-holiday weekend a year ago.

'Because of the way the shopping days fall this year with five fewer days between Thanksgiving and Christmas, there is no perfect adjusted-day comparison to make at this point in the season,' said comScore chairman Gian Fulgoni.

'However, online spending over the most recent weekend was clearly substantially heavier than the corresponding weekend nearest Christmas last year, which suggests that many consumers opted for the cosier confines of online shopping rather than having to brave the severe cold and snowstorms affecting much of the northern half of the country.'

Even though sales figures may not show a dramatic decline, some analysts point out that retailers have had to resort to steep price cuts to bring in shoppers and avert a calamity. -- AFP