By Sarah Coffey

NEW YORK, Nov 26 (Reuters) - Times are so tough for retailers, you might just get a standing ovation the next time you go shopping.

U.S. retailers hope to put shoppers in a merry enough mood this holiday season by decking the halls with even more boughs of holly, stacking store aisles with more brightly-colored merchandise and even lining up to clap as customers come through the doors.

From filling the air with the scent of pine and cinnamon to hanging crystal-covered snowflakes, malls and stores across the country are going even further with the tinsel to try to avert what might be the worst holiday shopping season in nearly 20 years.

Stores "are looking to draw in customers any way they can, and make it feel very festive to get them in the spirit," said International Council for Shopping Center spokeswoman Erin Hershkowitz.

U.S. consumers grappling with falling home values, tightening credit, job losses and a slowing economy have pulled back on purchases of all but essential items.

Shoppers are expected to keep a tight grasp on their wallets well beyond December -- more bad news for retailers who rely on the holiday season for as much as 40 percent of sales.

Some leading chains, like electronics retailer Best Buy Inc , have cut back on holiday sales staffing to save money. Bankrupt chains like Mervyns will be liquidating merchandise.

But others hope to appeal to as many of the senses as possible to entice customers when the shopping season gets its official start this week on "Black Friday," the day after Thanksgiving.

Mall operator Macerich Co MAC.N is pumping scents through hidden outlets in decorative displays to get people happy and jazzed to shop.

Last Thursday, when the Dow Jones Industrial Average fell below 7500 points, Macerich also asked employees to clap and cheer for customers as they enter the malls on Black Friday, to thank them for showing up.

"This year really, really makes us think about the entire picture, and being grateful that there will be people there and making people feel comfortable," said Macerich marketing executive Susan Valentine.

"This holiday season everything has to be about the consumer, their comfort, and making sure they enjoy the experience."

BRING ON THE HO-HO-HO

Retailers are also heaping on bright colors and putting more sparkle in holiday displays.

Department store operator J.C. Penney Co Inc will feature a lot more red in its aisles this year and decorations will be more festive, since cheery stores and brightly colored merchandise put customers in the mood to shop, said Chief Executive Myron Ullman.

"If anything, we were under ho-hoed last year," Ullman told Reuters in an interview. "In fashion, when things get tough, bright colors sell better."

On New York's Fifth Avenue, upscale department stores like Saks are unveiling holiday windows with luxury touches such as Swarovski crystals hanging from designer dresses under twinkling lights.

A large snowflake covered with crystals hangs from the ceiling in the middle of the first floor of Saks Inc's flagship store.

"It all adds a lot of glitz to the holiday season," said Saks' marketing manager Terron Schaefer. "Even as jaded as New Yorkers are, it is really a wow to see Saks all lit up with snowflakes."