Even a minor Christmas miracle at the end of December couldn't make up for the rest of the month's malaise. And whatever magic retailers managed to muster doesn't seem to have lasted long. In December, retail sales unexpectedly dropped compared to the prior month, despite the glimmer of hope from a surge in last-minute shopping.

The Commerce Department said retail sales dropped by 0.3% in December, compared to an already nasty November; expectations called for a 0.5% increase. While retail sales increased 5.4% year over year, bear in mind that it's easy to beat last December's miserable figures, since the financial crisis was foremost on consumers' minds back then.

If there's any silver lining to this cloud, it lies in December's uptick in online sales, suggesting that Amazon.com (NASDAQ:AMZN) may deserve the premium price it currently commands.

Total retail sales for all of 2009 fell 6.2%. Over the course of this rough year, retail sales clearly picked up, jumping 1.9% in the final three months -- but even that data may be adjuted upwards.

As sales remain low, unemployment remains stubbornly high, further compounding retail's current woes. Jobless consumers simply don't spend that much, and there's no sign that employment will start rising anytime soon. Even mighty Wal-Mart Stores (NYSE:WMT) is closing a few struggling stores. Many retailers will need to follow suit, and you'd better believe the weaker ones will make far more dramatic cuts than Wal-Mart did.

Investors should weed weak retail and consumer stocks out of their portfolios. Supposed turnaround plays like Borders (NYSE:BGP) and Crocs (NASDAQ:CROX) are sketchy bets, even if their stocks have performed nicely in the last year. I'd also steer clear of companies that have a protracted recent history of bad operational performance, like naughty old Abercrombie & Fitch (NYSE:ANF).

Stocks like Wal-Mart, Costco (NASDAQ:COST), or Aeropostale (NYSE:ARO) all strike me as strong defensive contenders, since they cater well to budget-conscious consumers. With a difficult year for retail ahead, investors should position their portfolios to focus on strength for the long term. 

Costco and Wal-Mart are Motley Fool Inside Value selections. Amazon.com and Costco are Stock Advisor picks. The Fool has established a bear put spread position on Abercrombie & Fitch. The Fool owns shares of Costco. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.