“A difficult economic environment combined with unfavorable weather during the last week of shopping made 2008 one of the most challenging holiday shopping seasons in decades,” says Michael McNamara, vice president of research and analysis for SpendingPulse. Online retailers may have benefited from the severe weather, which likely induced some late-season shoppers to buy via the web rather than at stores, McNamara says.

Retailers that sell food, such as grocery and general merchandise stores, and some restaurant sectors helped keep the overall retail sales decline in single digits, according to the report. But some key sectors suffered double-digit declines.

Apparel sales declined between 19% and 21% during the holiday season, with a 22-23% decline in women’s apparel and a 14.3% drop in sales of men’s clothing, MasterCard says. Footwear declined 13.5% compared with last year’s holiday season.

Electronics and appliances suffered declines of more than 26% in sales this holiday season versus last year’s. “Sales above $1,000 have been a consistent drag on this sector throughout the season,” McNamara says.

The luxury sector was hardest hit, registering a 34% decline from last year. When jewelry is excluded, luxury sales are down just over 21%.

The report is based on data from the MasterCard payment network and estimates for other payment forms, including cash and checks.