Hoping to salvage a lackluster holiday season, retailers are looking to offer even steeper discounts in their day-after-Christmas sales.

After slashing prices by as much as half after Thanksgiving, some local stores plan to cut prices even more as they battle sagging consumer confidence and bulging inventories, retail analysts said.

"I've seen discounts of 20 percent to 70 percent," said Stephany Sofos, president of SL Sofos, a local real estate consulting firm that specializes in retail clients.

"We'll probably see some things down as much as 90 percent."

Nationally, analysts are saying holiday sales have been the weakest in years.

The $300 billion retail industry expect sales to be flat or down in a year that saw turmoil in the nation's credit markets, rising unemployment and a slumping real estate values throughout the Mainland.

The economic downturn has prompted big retailers such as Sears and Toys "R" Us to cut prices by up to 75 percent nationwide on select electronics and clearance items.

Others such as Kmart are taking 40 percent off on some clearance items, which have already been marked down significantly.

Expect similar discounts from local fashion and jewelry retailers, said Sofos.

Fred Paine, general manager of Pearlridge Center in 'Aiea, said he's already seen retailers offer discounts of 50 percent to 60 percent to boost customer traffic.

According to Paine, customer traffic and sales picked up during the past 10 days at the Leeward O'ahu mall due in large part to bargain hunting. He said he expects the aggressive discounting to continue during the day after Christmas sales.

"I've never seen that before," Paine said of the deep discounts.

"I think all of the doom and gloom about the economy has gotten retailers nervous so they want to get people into their stores."

Matt Derby, spokesman for Ala Moana Center, it's difficult to say whether retail tenants at the state's largest shopping center will cut prices even more. He noted that tenants have been aggressive in discounting throughout the holiday season.

"There are so many deals in the stores ... that customers are just buying," Derby said.

Mitch D'Olier, president and chief executive officer of Kaneohe Ranch Co. said he's also seeing more more bargain hunting than in past years.

While shoppers are buying the same number of gifts than in the past, they're buying at lower price points because of the economic uncertainties, said D'Olier. Kaneohe Ranch's tenants include more than 50 retailers in the downtown Kailua area.

But D'Olier noted that Kaneohe Ranch's tenants' sales are slightly ahead of last year's pace due in part to high fuel prices during most of the year.

When gasoline rose to more than $4 a gallon, many Kailua residents decided to stay on the Windward side for their shopping needs, he added.

The day after Christmas is traditionally one of the busiest shopping days of the year after the day after Thanksgiving. Typically, shoppers use the day after Christmas to redeem gift cards or exchange their gifts.

Retailers, in turn, slash their prices to get rid of their inventory to make way for their 2009 inventory.

Sofos said that many local retailers were anticipating a slow holiday season and stocked their stores accordingly.

What surprised them was the depth of the economic downturn and its impact on consumer confidence, she said.

"They have to move it as fast as they can," Sofos said.

"Everybody wants to start off with a clean slate. They want to get rid of the old product and get their new product in because only so much warehouse space available."