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Independent retailers are cutting prices and adding personal touches in order to stay afloat.

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Eight Great Small-Store Holiday Sales

When Icelandic designer Steinunn Sigurd opened her flagship boutique in Reykjavik, Iceland, back in 2002, she didn't anticipate the financial avalanche that would come down on her country in September 2008.

However, Sigurd, whose namesake collection offers sexy, offbeat dresses, has chosen to press on despite the downturn. This holiday season, instead of holding one massive sale at the end of the year, she's promoting weekly sales--up to 70% off different products--in order to rid herself of as much inventory as possible.

Hers is one of many independent, high-end boutiques that are finding ways to cut prices or offer personal touches to make sure they see another holiday season--preferably one in which it doesn't take so much convincing to get consumers to spend.

"The world's financial situation is slowing down all future plans," says Sigurd, who hopes someday to expand to New York City. "My main goal is to stay with it. When things get better, so will I."

Widespread Pain
Sigurd's struggles, sadly, are not unique. The U.S. economy shrank by .5% in the third quarter of 2008, according to the Commerce Department, which is bound to affect up-and-coming businesses. And according to the European Union, the Eurozone--comprised of the E.U. countries that use the euro as currency--the economy shrank .2% during that same time period.

Howard Davidowitz, chairman of New York-headquartered Davidowitz & Associates, a national retail consultant and investment banking firm, says that smaller retailers truly suffer in times like these. Linda Dresner, the famed Park Avenue ladies boutique, is one of the downturn's first casualties--it will close after December. Shops like Dresner have it tougher in a downturn since they don't have mass distribution or access to public capital. Plus, their credit is reduced--or cut off altogether--much earlier.

"They have less leverage with lending institutions and creditors of all types," says Davidowitz. "They're the first ones to go, so to speak, because they can't compete with the big guys."