NEW YORK (CNN/Money) - The retailing industry faces ruthless competition, a growing heap of unsold goods, and a nebulous sense of when things might turn around. From a different angle, the situation also looks ripe for consumer-oriented companies to either buy or get bought.

"There's no question that competition in retailing is rampant and out of hand," said Kurt Barnard, retail economist and president of Barnard's Retail Consulting Group. "It's getting increasingly difficult for companies to keep their heads above water. That's why the industry is getting into gear for more merger activity."

Last week, it was the apparel end of the industry that garnered attention. VF Corp. (VFC: Research, Estimates) announced it was acquiring clothing designer Nautica (NAUT: Research, Estimates). Three days later, Nike (NKE: Research, Estimates) threw out the bait and hooked Converse Inc., the maker of the Chuck Taylor All Star sneaker.

Although Barnard is reluctant to speculate on who might be next, he said he's "perplexed" with paper company Boise Cascade (BCC: down $1.56 to $21.87, Research, Estimates)'s announcement Monday that it is buying the No. 3 office supplies retailer OfficeMax (OMX: Research, Estimates) in a $1.2 billion cash-and-stock deal.

"I don't quite understand what the synergy is between the two companies," said Barnard. "Boise makes paper and OfficeMax sells it -- that's obvious. But Boise hasn't been doing well, either. The real question is, does Boise understand retailing? We'll see if this marriage is made in heaven or in hell."

A few industry insiders, however, are willing to speculate about other takeover targets in retail. Among the names being bandied about are electronics retailer Circuit City (CC: up $0.13 to $9.17, Research, Estimates) and casual apparel manufacturer Tommy Hilfiger (TOM: up $0.29 to $10.30, Research, Estimates).

"Acquisitions are a way of life now," said Marshal Cohen, chief retail analyst with market research firm NPD Group. "They are part of a way that the American market expects companies to boost their dollar sales, especially when companies are also unable to provide organic growth."

Said Cohen, "Profit margins have almost taken a back seat to revenue growth and retailers nowadays will be condemned for not meeting their monthly sales targets."

According to Cohen, Tommy Hilfiger looks like a strong contender to be acquired, even though the company itself has indicated that it is on the prowl to make its own acquisitions.

"Anyone saying that they are looking to acquire wants to be bought," said Cohen. "The more a company says 'Look at me, look at me,' what it's really saying is look how great I look as an acquisition. Nautica did that recently and VF bought it."

Shares of Tommy Hilfiger are up 76 percent this year. The company logged total sales of $1.8 billion for its fiscal year 2003, almost unchanged from the previous year.

"Tommy Hilfiger supplies its clothes to department stores and we all know that that's the weakest channel in retail in terms of sales," said Howard Davidowitz, chairman of New York-based national retail consulting firm Davidowitz & Associates Inc.

Said Davidowitz, "The other problem is that Tommy is essentially in the men's apparel business, and that too is facing a sales slump, while its women's clothing business is still underdeveloped."

Meanwhile, Richmond, Va.-based Circuit City, the No. 2 electronics retailer after Best Buy (BBY: Research, Estimates), with 626 stores nationwide, has seen its profit fall 67 percent in fiscal 2003, compared with the same period last year. Sales grew just 3.7 percent over the previous year as it struggles in a brutally competitive environment, with competitors superior to it.

"Circuit City just hasn't been able to compete on price or variety," said Davidowitz. Sales at rival Best Buy in 2003 grew almost 7 percent over the previous year.

"Circuit City's profits have struggled over the last couple of years and it's uncertain when it can recover," said David Campbell, analyst with Davenport & Co. "There aren't any major bidders for the company yet but any buyer for it will have some real challenges on their hands."

Last month Circuit City rebuffed a takeover offer from one of its shareholders, Mexican billionaire Carlos Slim, for $1.6 billion. Slim apparently was seeking to merge Circuit City with CompUSA Inc., a company he owns.

Karen Bell, spokeswoman for Tommy Hilfiger, said the company does not comment on rumors. Circuit City did not immediately return calls for comments.

Best Buy said the company does not comment on its competitors.

Cliff Neimeth, co-chair of New York-based law firm Greenberg Traurig's M&A practices, anticipates consolidation taking place between the independent designer labels such as Giorgio Armani and Donna Karan. French company LVMH bought Donna Karan in 2001.

"These apparel companies need to consolidate in order to ensure the perpetuity of their brands," Neimeth said. "Clothing companies suffered because spending in the critical fourth quarter was down. Weather has also hurt spring and summer sales. Overall, I expect to see lots of plain vanilla acquisitions across the retail industry.

An Armani spokeswoman, who did not want to be named, said the company has no immediate plans to be acquired. LVMH could not be reached for comment.