The following report from Challenger, Gray & Christmas, Inc. predicts a decline in job demand for retailers this holiday season.

CHICAGO - Bleak conditions for retailers as the holiday selling period approaches are expected to keep seasonal hiring well below last year's level, according to the annual holiday hiring forecast released Monday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

"Retailers are facing an uphill battle this year. Consumers are tapped and credit is increasingly harder to come by. Meanwhile, retailers' shipping costs are ballooning thanks to gas prices, and the weak dollar is raising the price of imported goods. With profits already getting squeezed, most retailers are going to be reluctant to take on the additional cost of extra staffing," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

While Challenger anticipates some holiday hiring this year, it is expected to fall well short of the 727,500 seasonal job gains averaged over the previous decade. In fact, if spring hiring is any indication, this could be the weakest holiday hiring season since 2001, when retail employment grew by only 585,300 jobs, as consumer and retailer confidence plummeted in the wake of September 11.

Spring hiring is typically much lower than holiday hiring. However, there are significant seasonal employment gains every year in May and June, as teenagers on summer vacation become fixtures at the nation's shopping malls as consumers and workers. From 1987 through 2007, retail employment grew by an average of 216,000 in May and June. This year, retailers added just 134,000 jobs, a 20 percent drop from the 168,300 added in 2006. It was the lowest May-June hiring total since 1980, when retailers added just 95,500 summer workers.

"Spring hiring is not always an indicator of holiday hiring, because conditions can change significantly between June and October, when retailers typically start to ramp up staffing for the holidays. Unfortunately, the retail landscape has not improved much since the spring. If anything, things have worsened," said Challenger.

The latest report from the Commerce Department shows that retail sales fell by 0.3 percent in August, after falling 0.5 percent in July, the biggest decline in five months.

Last year, with the extent of the housing collapse still unknown, retail employment grew by 698,300 between October and December, which was 6.5 percent lower than the 747,000 seasonal workers added to retailers' payrolls in 2006, according to data from the Bureau of Labor Statistics. Seasonal hiring in 2007 was the lowest since 640,000 retail workers were added in 2003.

"In 2007, the damage from the housing collapse seemed contained to a few related sectors, including the hard-hit financial sector. After holding off on hiring in October, optimistic retailers added nearly 458,000 workers in November, a record high for that month. However, December hiring fell below the decade average, when it became clear that there was not going to be a late season surge in consumer spending," said Challenger.

"We will probably not see another record November in terms of retail hiring. Last year, there were some reasons to be optimistic. This year, there appears to be no doubt that consumers are in deep trouble and will be on strict budgets during the holidays.

"The good news for retailers is that if there is a sudden change in consumer spending power, spurred by a second stimulus check, for example, they will be in a good position to enact a round of last-minute hiring. The labor pool is flush with qualified candidates who undoubtedly would be eager to earn some extra holiday spending money and take advantage of employee discounts," said Challenger.

According to Challenger, the best opportunities for seasonal job seekers will be at the large discounters like Target and Wal-Mart, which will be heavily favored by cost-conscious consumers this holiday season. However, job seekers may have to look beyond the sales clerk positions for available spots.

"The big box stores need extra workers on the floor, but they also need extra workers in their shipping facilities and overnight stocking positions. Opportunities also exist outside of retail, in areas like catering and with shipping companies such as UPS and FedEx," said Challenger.

Online shopping also continues to grow and could provide job seekers with opportunities during the holidays. Last year, online holiday sales increased 19 percent to $29 billion.

"We could see similar growth this year, as consumers stay home and shop from their computers in order to conserve gas and avoid the tempting in-store displays that can quickly drain the holiday spending budget," said Challenger.

When job seeking in retail or any other sector, it is important to remember some key interview guidelines: dress appropriately, be on time, show enthusiasm and follow up. According to one hiring manager, the biggest mistake job applicants make when seeking a holiday position is "demanding a specific schedule from prospective employers."

Temporary workers must be prepared to be flexible, whether it is hours or type of work. Either can vary as the holiday season progresses.

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