Despite widespread price-slashing this holiday season, retailers are already calling 2008 one of the worst seasons on record. Sales plunged in most categories of retail this year as consumer spending continued to decrease, despite retailers’ best efforts to entice shoppers with big discounts.

Retail Sales May Have Been the Worst On Record in 2008
Retail Sales May Have Been the Worst On Record in 2008

Total retail sales, which excludes cars and other vehicles, dropped by 5.5% from last year in November and 8% compared to last December.

These numbers are much worse than were expected by industry analysts, who predicted that sales would drop 1% in the worst forecasts.

“This will go down as the one of the worst holiday sales seasons on record,” said Mary Delk, a director in the retail practice at consulting firm Deloitte LLP. “Retailers went from ‘Ho-ho’ to ‘Uh-oh’ to ‘Oh-no.'”

Luxury items took the biggest hit this year, dropping 35% from last year’s levels. Electronics and appliances fell 27%, furniture dropped 20% and women’s and men’s apparel slid 23% and 14% respectively from last year.

Despite major discounts offered in the front-end of the holiday shopping season and more big promotions during the last days of the season, shoppers did not take the bait. Worried by bad economic news and perhaps constrained by the lack of available credit, consumers remained comparatively stingy with their money.

In a year where retail has already been suffering, the holiday shopping season was seen as an opportunity to turn things around. Already this year, the country has seen several retail bankruptcies, including Circuit City and KB Toys. The weak holiday sales may mean that more retailers will also file for bankruptcy and close their doors.