Updated

The pace of retail job cuts, which increased dramatically after Sept. 11, has accelerated in 2002 and this year's losses could be the worst in at least two decades, as the industry consolidates, according to a major employment study to be released Monday.

During the first three months of this year, 51,078 retail job cuts have been announced, including the 22,000 job losses that Kmart Corp. announced in the wake of its bankruptcy filing, according to a survey by Challenger, Gray & Christmas Inc., an employment research and recruiting firm.

That is already half way toward matching last year's record of 96,741 cuts, Challenger said.

Based on the first-quarter figures, merchants are eliminating an average of 17,026 jobs per month, and John Challenger, chief executive, expects that pace will continue, with this year's total estimated to exceed 200,000.

"This is going to be the year in which retailers come to terms with changes of consumer behavior that was precipitated by the recession," Challenger said. He said the job losses will be the worst since the early 1980s.

Challenger believes the retail category could be ranked among the top two industries, rivaling the telecommunications and automotive sectors, as having the largest downsizing this year. Last year, retailing didn't make it to the top 10 industries hardest hit by layoffs. The sector, whose job losses were driven last year by liquidations of Montgomery Ward and Bradlees Inc., was overshadowed by telecommunications. That sector lost 317,000 jobs.

Since 1993, when Challenger officially started tracking the employment data, 586,523 job cuts have been announced by retailers — 41 percent of which have occurred since 2000.

Despite reports of an improved economy, retailers_ particularly department stores and mall-based apparel retailers_ have been pummeled by consumers' continued shift toward discounters, particularly Wal-Mart Stores Inc. and Target Corp. To woo shoppers, department stores have had to resort to price slashing, though they have still recorded sales declines.

Discounters, with their low prices and exciting merchandise, all continue to outperform the retail industry, generating strong sales gains. They are also planning major expansion plans this year. Wal-Mart, for example, plans to expand its square footage by 9 percent this year, following an 8 percent gain last year.

The major exception is Kmart, which filed for bankruptcy in January, and is struggling to reinvent itself.

Specific retail categories, like home furnishings and electronics, have also enjoyed strong growth.

C. Britt Beemer, chairman of Charleston, S.C.-based America's Research Group, and other analysts are closely watching Dillard's Department Stores Inc. to see whether it will be acquired.

Merger talks between Federated Department Stores and May Department Stores Inc., have cooled off, but both are scrutinizing the profitability of their stores. Federated announced last month that it will explore the sale of Fingerhut's assets immediately and lay off 3,300 workers by Friday.

"Major department stores are groping for any lifeline that is out there," Beemer said.

Analysts also expect apparel chains like Gap Inc., which has been on a two-year slide, will have to shutter stores this year.