This year, the Port Washington, N.Y.-based consulting group says that 26% of consumers in its survey plan to spend less money on holiday shopping than they did last year, compared with 18% who were planning to cut back in 2007.

"This 8% decline illustrates that consumers are already focused on the idea of spending less," Marshal Cohen, chief industry analyst, says in its release. "For the first time I am predicting flat to declining sales for the holiday season. With consumers already saying they plan to spend less, stores with lean inventories, those inventories on sale as soon as they hit the floor, and tightening credit both for businesses and consumers, where can growth come from?"

Another problem, it says, is that there are few "must-have" gifts--last year, for example, many retailers used GPS systems as door-busters, and without a similar draw, sales could suffer.

Shoppers, surveyed in mid-September before the stock market's major downturn, were already planning to put less on their credit cards. And 60% say that lower prices, sales and special values will dictate where they shop.

Clothing continues to be the top gift item, with 49% planning to put apparel on their shopping lists. But NPD predicts that apparel will have a tough time hanging onto that No. 1 spot. Clothing stores are "not doing enough to keep their products front and center for consumers," it notes, and "with the lack of color and style changes, there truly is no excitement being generated, nothing to ignite consumers' passion."

Toys are the second-most-popular gift item, with 37% planning to purchase, followed by movies (29%), books (27%) electronics 23%) and video games (22%.) What will be hot, NPD predicts, are TVs--driven by the switch from analog to digital--and sunglasses, which it calls the sleeper category of the year.

"They are the most sought-after item by young adults and will surely be their most desired gift," it says--particularly those with large logos. "Sunglasses will be this year's handbag."

And at least so far, gift cards are losing favor among shoppers, with 38% saying they plan to purchase one, compared to the 49% who say they purchased one last year.

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