Memorial Day crucial for retail recovery

NEW YORK (CNNMoney) -- While plenty of Americans make grilling and beachgoing a priority over the Memorial Day weekend, retailers are hoping that shopping also made it high on consumers' holiday to-do list.

Britt Beemer, chairman of retail market research firm America's Research Group, said this three-day weekend typically isn't regarded as a critical shopping holiday for merchants the way July 4th and Labor Day weekends are. But it's a little different this year.

"If sales [were] bad over the weekend, then the fear is that retailers will have no momentum going into the July 4th holiday," Beemer said. And retailers certainly are jittery after they suffered disastrous sales in April.

Although the weekend sales tally isn't in yet, Beemer said his national survey of 1,000 consumers, conduction Monday night, indicated that traffic to stores was up between 5 to 6 percent over last year's Memorial Day weekend while total spending declined between 2 to 3 percent over the same period a year ago.

What's more, Beemer said 90 percent of consumers polled said they only shopped for bargains.

"That's the only way retailers will get consumers to buy something, because a lot of people are telling us that they are struggling with less money to spend because of paying more for gas, higher property taxes and home insurance," Beemer said.

While some chains blamed April's cold and wet weather for hurting sales of summer clothes, others like Wal-Mart, the world's biggest retailer, said record-high gas prices and the ongoing housing slump are eating into its consumers' wallets.

According to sales tracker First Call, combined sales at chain stores open at least a year - a key measure of retail performance known as same-store sales - fell 1.8 percent in April.

That's the worst performance on record since 2000, when the firm began tracking that measure for 56 of the biggest retailers including Wal-Mart, Target (Charts, Fortune 500), J.C. Penney (Charts, Fortune 500), Gap (Charts, Fortune 500) among others.

First Call is expected to release Memorial Day holiday sales numbers Tuesday afternoon.

To be sure, low-end sellers like Wal-Mart (Charts, Fortune 500) are especially vulnerable to these types of economic shifts since they mostly cater to paycheck-to-paycheck consumers.

For that reason, low and mid-priced chains pushed lots of promotions over the weekend.

Historically, Memorial Day tends to be big sales weekend for a handful of categories like summer clothes, home furnishings and seasonal outdoor merchandise like patio furniture, garden and grilling products.

To that end, J.C. Penney offered as much as 50 percent off on clothing, and 50 to 60 percent off on home furnishings such as bedding and bathroom products.

Sears (Charts, Fortune 500) had taken 50 percent off on swimwear, and made more moderate discounts on patio furniture and its range of Kenmore grills.

Mid-priced department store chain Macy's, operated by Federated Department Stores, offered discounts of between 10 to 50 percent on apparel and home decoration items.

Craig Johnson, president of retail consulting group Customer Growth Partners, said he felt optimistic that retailers' pulled in a decent weekend sales performance.

"My sense is that with the warmer weather finally here, retailers may have a bang up holiday weekend," said Johnson. "If not, it could be a real bad omen for them."

A solid sales finish on Memorial Day would cap off a much stronger month of May for retailers. According to First Call, same-store sales were tracking up 2.8 percent mid-month, and up about 4 percent excluding sales at Wal-Mart.

Besides Macy's performance, Johnson said he was also keeping close tabs on the home improvement chains Home Depot (Charts, Fortune 500) and Lowe's.

"With Home Depot and Lowe's, the question is whether sales picked up just for seasonal items like barbecue and patio products, or also for special order projects like deck installations which are higher-margin sales for them," Johnson said.

According to Lowe's spokeswoman Chris Ahearn, gas grills, flags and seasonal plants were among the top-selling items at Lowe's stores over the weekend.

"In terms of store traffic, it was a very busy weekend. We saw wonderful weather around the country and that also brought people out to our stores," she said.

For these two retailers, the housing downturn has delivered a double whammy by denting sales of building supplies, and limiting consumers' ability to pull cash from their homes to finance home repairs and renovations.

Home Depot and Lowe's, both of whom recently reported weak first-quarter results, warned that their businesses could suffer for the rest of the year unless the housing market stabilizes.

Wal-Mart, J.C. Penney, Macy's and Sears could not immediately be reached for comment.