Meanwhile, the U.S. consumer is facing a number of pressures: the largest single age group today are 49-year-olds, who are facing rising health care costs and educational expenses, possibly for the next largest age group, the 19-year-olds. And the current collapse will leave its scars, resulting in a permanent change in consumer attitudes.

Globalization is also becoming a factor. The US is one-quarter of the world's economy, with the rest of the developed world another quarter. The rest is in emerging markets, including China, South America and Eastern Europe.

"We used to be a domestic environment," Ullman said. "Today, much of the innovation is coming from overseas."

Retailers aren't helping themselves, Ullman acknowledged. Though retail employs 25 million people around the US, and lost 579,000 jobs last year (twice the total employment of the auto industry), the industry has not articulated its plight well to political leaders.

Future growth likely will be found outside the country. Affordable financing encouraged both retailers and consumers to overexpand in the United States: retail as a share of the nation's economy rose from about 63% in 1980 to 71% today, said Mark Zandi, Chief Economist and co-founder of Moody's Economy.com. That is now reversing as strapped consumers cut back on spending. Meanwhile, emerging nations such as China are becoming consumers. Today, the Chinese save 50% of their GDP, but that is changing.

"If 10 or 15 years from now, [the savings rate] is 25%, they're still saving a lot," Zandi said. "Growth in retail will be overseas."

Meanwhile, the US industry must wait and watch while both the outgoing and incoming administrations struggle to fix the economic mess. The government thus far has not acted consistently, exacerbating the problem, Zandi said. TARP funds must be used more wisely, with a large amount given over to foreclosure mitigation.

"The [incoming] administration has a challenge to get a stimulus big enough and fast enough to get us out of this," Ullman said. "This could drag on way longer than could be healthy four our role in the world. And the world crisis will last longer than the U.S. crisis."

The fundamental issue is confidence, Solomon said.

"Leadership equals confidence equals credit. There is only so much [Obama] can do," Solomon added. "His program is reasonable, but may not be radical enough."

"The Federal Reserve is acting aggressively, literally printing money to get us back on our feet," Zandi said. "They'd buy a Picasso painting if they thought that would make a difference."

But all that money will have to be pulled back at some point to avoid a massive inflation, which Solomon predicted in three to five years.

"We're in an era right now of retail Darwinism," said Christopher Donnelly, an executive partner at Accenture. "There will be some companies that won't survive, [though] most will. But some will take this opportunity to reinvent themselves and the retail industry."