THE INCREDIBLE SHRINKING HOLIDAY SALES : Retailing: Shoppers across the nation are scaling back purchase plans from last year’s low levels. Southland stores, in particular, are in for a tough season.

Rebecca Kubacki, a housewife in tony San Marino, has a hard time believing it herself. But this year, for the first time, she’s doing the bulk of her Christmas shopping from the Sears catalogue.

“I’m pinching pennies this year,” explains the 39-year-old mother of two. “In the past I haven’t paid as much attention to price, but now I feel that I have to be more careful.”

The reason stems from the Kubacki’s worry about the overall econony, not their own personal finances. Her husband earns well over $100,000 a year as a banker, and his job with a Midwest-based bank is secure, she says. In fact, their household income is higher this year than last.

But this Christmas the Kubacki’s are cutting what they spend on their children’s gifts in half, to a total of $200, and are giving each other “something for the house.”

“We’ve just decided that we have to spend more wisely,” she says. “You hear about so many people being out of work. . . . We just want to make sure that we’re putting away money in case we need it rather than spending it just because we have it.”

Such sentiments, voiced by thousands of wary families across the nation, are not what America’s retailers--who count on Christmas for more than 50% of their sales and profits--want to hear.

Entering what promises to be their third bleak holiday selling season in a row, retailers have no cause for cheer or reason to believe that Christmas will rescue what has been an already dismal year.

“It could be the worst Christmas in 10 years. All the signs are bad,” says Richard Feinberg, a consumer psychologist at Purdue Retail Institute at Purdue University in Iowa.

Hardest hit among the nation’s retailers, analysts say, will be the traditional, full-line, full-price department and specialty stores, a list that includes retailers ranging from Montgomery Ward and J.C. Penney to Macy’s, Saks Fifth Avenue and Broadway. The biggest winners are expected to be discount and off-price merchandisers, including Price Club, Target, Wal-Mart, Kmart and even Pic ‘N’ Save.

“The consumer is still worried about taxes, unemployment, inflation and world uncertainties,” adds Walter Loeb, a retailing analyst in New York. “The result is that they won’t spend.”

Overall, most analysts expect 1991 holiday sales to be about on par, after adjustment for inflation, with those of a year ago, when consumers spent an estimated $7.8 billion on their Christmas shopping. Several analysts have even predicted a drop in holiday spending this year of as much as 3% to 4% in the wake of several consumer opinion surveys reporting that 25% to 40% of the nation’s families say they plan to spend less this year than last on holiday gift giving.

Customers also say they are shifting how they will shop for the holidays this year. Many are increasingly taking their business to discount stores, outlet centers and other off-price merchandisers as they search to stretch their dollars, accelerating a trend away from traditional department store shopping that has steadily gathered momentum during the past decade.

According to Barnard’s Retail Marketing, a New York newsletter, sales at the nation’s conventional department stores grew at an annual compound rate of 2.9% from 1987 through 1990 compared to a 7.6% rate for discount stores. And Kurt Barnard, publisher of the newsletter, says the trend will be more evident this Christmas:

“The discount stores, such as Price Club, Costco, Wal-Mart and Kmart, will get more of the consumer dollars than they have in the past. This is shaping up to be a practical, back-to-basics holiday.”

Although the holiday shopping outlook is miserable throughout most of the nation, it is especially bleak here in Southern California, a region that had eluded the effects of the recession in the late 1980s and that once believed it could escape its ravages entirely.

But beginning late last year, a wave of layoffs in the aerospace, retailing, finance, insurance and real estate industries has hit virtually every important segment of the region’s economy. By some counts, Southern California has lost as many as 250,000 jobs in the past two years, says Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County.

And there are no signs that we’ve hit bottom yet.

“It’s bad in Southern California,” says Nicholas Galapo, a retailing consultant with the Arthur Anderson accounting and consulting firm in New York. “California is the one area in the country that shows no sign of turning around. Even the Northeast is showing some signs that it has bottomed out, but California, especially Southern California, is still falling.”

Experts say Southern California consumers are especially shellshocked because we are unaccustomed to the tough times that have plagued other regions during the past decade and because our sense of personal wealth is so closely tied to residential real estate values.

In the Southland, economists note, even homeowners uninterested in selling their homes tie their spending to the price they believe they could get if they sold it. When real estate values decline, as has been the case throughout the region for nearly the past two years, consumers tighten their grip on their pocket books.

“California has always prided itself on having a diversified economy and not being dependent on any one industry,” says Richard E. Giss, a retailing specialist with the accounting firm Deloitte & Touche in Los Angeles. “But now all of our industries are hurting at once. And we’re really feeling it.”

Consumers’ lousy outlook isn’t being helped by the quirks of the calendar. This year, Thanksgiving, always the fourth Thursday in November, also falls on the final Thursday of the month, leaving the traditional, “official” holiday selling period with just 26 days. This makes comparisons with last year especially tough because 1990 had the most number of official holiday selling days possible, 32.

The retailers’ woes, however, will benefit customers.

Like Christmases immediately past, the current holiday selling season is shaping up to be what the retailers euphemistically term “highly promotional and competitive.” That simply means lots of price cutting, lots of sales--and earlier and earlier in the season.

Many retailers have already moved up the dates of their traditional holiday special and promotional sales. Earlier this month, nearly every major department store chain in Southern California was advertising one sort of a sale or another. Robinson’s even staged its first “one-day” sale.

Of course, the most important reason for the early promotions and sales is to spur consumer interest and generate customer traffic. But another, less obvious reason is that retailers received shipment of their holiday goods earlier than usual this year.

Because orders were so light, explains Larry Gresham of the Center for Retailing Studies at Texas A&M; University, manufacturers were able to complete and ship them far earlier than in prior years and merchants moved them onto their shelves to get their money back as fast as they could.

However, the light holiday ordering has a flip side that shoppers might not be used to: selected shortages and reduced selections for those who wait too long to shop.

Dvonne Pitruzzello of Riverside spent the Veteran’s Day holiday stocking up at the Riverside Toys R Us for her three children and their cousins. The reason she started so much earlier than usual, she explained, was because she and her friends had “heard” that the stores won’t have as many goods to sell and that even popular items won’t be reordered if they sell out.

“My goal is to be done by Dec. 1,” she says. “You gotta buy this stuff when you see it.”

But the move toward shopping earlier in the season also has retailers worried because it reduces the last-minute frenzy that leads people to overspend. When customers start earlier, they have time to think about what they’re buying--and, usually, they spend less as a consequence.

“It takes away that Christmas spirit that leads people to go crazy and buy impulsively,” said Deloitte & Touche’s Giss.

In addition to spending less this holiday season, may consumers are reporting that they are changing the types of gifts they are selecting. For many families, frivolous products, luxury items, fancy name-brand goods and top-of-the-line gifts are out. Practical, basic goods, such as sweaters--wool and cotton, not cashmere--flannel robes, small home furnishings, videos, compact discs and books are seen as among the top sellers.

Joseph Artino, 41, who was laid off from his job as the controller of a dietary products maker in Newport Beach in June and has been working sporadically since, is planning a back-to-basics holiday for his wife and four children. The older two children, out of school and out of the house, can expect some household items; the younger two can look forward to some clothing. “It’s going to be pretty basic because that’s what people need and what the times call for,” Artino explains.

Says Robert Kahn, a retailing analyst in the San Francisco Bay Area: “We’ve gotten past the yuppie period when a great deal of emphasis was placed on the label. Labels don’t matter that much anymore. Who really cares if you have a pony on your shirt or not?”

Certainly not Rebecca Kubacki. Last year, she bought her daughter, now age 9, a designer doll with all the accessories, and wound up spending well more than $100 on just that gift alone. This year, her daughter and 6-year-old son will receive far more practical and educational gifts, though Kubacki wants to keep them a secret.

It’s the same story at the Wucetich house in Pasadena. Last year, Cindy Wucetich bought her 11-year-old daughter a handmade dollhouse that cost $400. This year, although Wucetich would like to get a doll house for her 8-year-old daughter, she won’t. All four of her children will get wristwatches and a few other items.

In all, Wucetich plans to reduce her holiday spending dramatically--from $5,000 in prior years to less than $3,000 this year.

“These are insecure times. I’m just not going to spend anywhere what I used to spend,” says Wucetich, whose husband is an attorney in private practice. “I won’t be as extravagant.”

And she won’t be alone. “You know, I thought I was the only one feeling this way,” Wucetich says. “But now I’m seeing all my friends at Target and the Price Club.”