Stores are hurting, but that could help you

Circuit City this week joins a growing list of retailers -- including Linens 'n Things, Steve & Barry's, Men's Wearhouse and others -- that are closing stores, laying off workers or even filing bankruptcy.

Don't expect it to end there, considering the rocky economy, lack of available credit and discretionary spending, and more unemployed consumers -- all just before the holiday shopping season kicks off, experts said Monday.

"We believe Circuit City will close as many as 400 stores because, from a consumer standpoint, credit is tight," said David Klein, senior vice president/financial consults for RBC Wealth Management in Vernon Hills. "And people are used to having equity and borrowing power. Now, the spigot for loans has been turned off."

What's that mean for consumers?

Fewer retail stores, more deeper discounts sooner and, very likely, giveaways and other incentives, experts said.

The International Council of Shopping Center reports that said 2,831 retailers closed during the first half of this year, compared to 1,522 in the same period a year ago. Many of those remaining stores have already started their holiday promotions before the traditional Black Friday, the day after Thanksgiving and start of the Christmas shopping season.

Now, the struggling Sears Holding-owned Kmart and other stores have started distributing ads with deep discounts off toys and other holiday favorites. They want to be among the first to grab the consumer's available dollar, which is dwindling, said John Melaniphy III, retail analyst with Melaniphy & Associates in Chicago.

"It's a scary time for both the consumer and the retailer," said Melaniphy.

Melaniphy reports that the holiday shopping season sales are expected to be up nationwide only about 1.7 percent, a sad chapter after last year's 2.2 percent disappointment.

"Yet more and more consumers talk about cutting back. But what they say and what they do aren't always the same," said Melaniphy.

The most likely retail survivors are those that attract consumers in a tough economy, such a discounters with good cost control and strong buying power, like Wal-Mart. said Thomas Rowen, director of institutional portfolio management at Fifth Third Bank in Chicago.

"High-end retailers that appeal to a more financially insulated clientele may be less affected, said Rowen.

Still, supply will continue to outstrip demand, said Diana Joseph, managing partner and senior portfolio manager at Dearborn Partners in Chicago.

"Stores are bulging fat with inventory while consumers' wallets are on a diet," Joseph said.