NEW YORK - In the holiday shopping season's dwindling days, retailers are accelerating their use of survival tactics - slashing prices further and pulling merchandise off shelves to send to liquidators.

But January and beyond look scarier for even relatively healthy merchants as the passing of the holidays will give shoppers no reason at all to spend.

What's worse, the industry expects a rise in returns after the holidays as shoppers seek to convert their unwanted gifts to much-needed cash as they struggle with rising layoffs, tightening credit, and shrinking retirement funds.

Many retailers are in panic mode as they try to liquidate inventory in a season that's expected to show the first drop in sales in nearly 40 years.

For this last weekend before Christmas, Sears stores are offering up to 70 percent off on fine jewelry and up to 60 percent off on outerwear, while Macy's is dangling early morning discounts of up to 75 percent. J.C. Penney Co. Inc. is featuring 300 early morning specials on items from pajamas to handbags.

"The retailers are doing everything possible to be lean and clean by the end of Christmas, because the shoppers are not going to be there" next month, said New York-based retail consultant Walter Loeb. "This is more about survival."

But the casualties in the industry are rising. Circuit City Stores Inc. and KB Toys Inc. have filed for Chapter 11 bankruptcy protection in recent weeks. Finlay Fine Jewelry Corp., which operates stores such as Philadelphia-born Bailey Banks & Biddle, warned Wednesday that it may not have enough cash to finance its operations through the end of its fiscal year Jan. 31 and may have to "significantly curtail" its business or pursue other options.

Kerri Reed, 34, a Lyndhurst, N.J., hairdresser who was outside Macy's flagship store Wednesday in Manhattan, said she finished her shopping and didn't plan to go back after Christmas. Reed said that she and her husband have secure jobs, but that she's worried about the overall economy.

"It's a done deal. I covered my bases," said Reed, who said she bought gifts for fewer people this year, spending $2,000 instead of last year's $3,000.

In a sign of how grim the future looks for consumer spending, even fairly healthy companies are making big shifts in their plans.

Best Buy Co. Inc. announced Tuesday that it would slash capital expenditures by half in 2009 and would offer voluntary severance packages to virtually all its 4,000 corporate employees. The nation's largest consumer electronics chain also said its third-quarter profit skidded 77 percent.

"We believe that the environment for consumer spending is likely to get worse before it gets better," said Brad Anderson, chief executive of Best Buy.

Children's clothing chain Gymboree Corp. is cutting salaries up to 10 percent for senior management and corporate staff to prepare for what it believes will be a deepening spending slump.

"Consumer demand is much less than most of us understood even in September," said Richard D. Hastings, of Global Hunter Securities. He expects retail sales to fall as much as 8 percent for the November-through-January period from a year ago.

His forecast: The spending malaise will not hit bottom until the second half of 2010 as mounting layoffs depress sales.