• by Sarah Mahoney  @mahoney_sarah, November 17, 2009

While it won't be as bleak as last year, a new report predicts that sales will gain just 1.8% on both Black Friday and Cyber Monday. The estimate comes from BDO Seidman's "Retail Compass Survey," based on a poll of 100 CMOs at leading retailers.

The biggest surprise in the results, says Ted Vaughan, a partner in the retail and consumer product practice, is just how widespread markdowns will be, "with 96% of the CMOs saying they are going to be discounting. That level of promotion, even after what happened last [year], shows that given the current consumer mindset, retailers believe that deep discounts are just a fact of life, and the way to entice consumers. And when the major player -- Wal-Mart Stores -- is announcing so early in the season that it won't be beat on prices, there's not much else other stores can do."

Consumer confidence continues to be a big issue, despite positive signs in the economy. (That includes the survey's findings that most retailers believe business will pick up in the second quarter of 2010, which means they will begin to increase their orders for more merchandise soon.) "The unemployment rate is weighing on consumers," he says.

The emphasis on early, strategic promotional pricing is forcing retailers to rethink their holiday calendar, making Black Friday (Nov. 27 this year) less of an event, with shopping spread out over a longer period. "This year, discounts started before Halloween, which means that Black Friday is just one large shopping day," he tells Marketing Daily. People won't spend more, he says, but they will do their Christmas shopping over a longer period of time.

Last year, the same survey predicted flat growth, and the year before -- a distant "good old days" memory for most retailers -- an 8.3% sales growth for Black Friday and 21% for Cyber Monday.

In addition to the ubiquitous discounts, CMOs say they will rely heavily on online campaigns and email promotions (53%), as well as special events (43%.)

Another indication of the changing landscape, says Vaughan, is that more CMOs named toys as the strongest category, with 39%. "One of the shifts in consumer mentality we've seen is that more and more, people are focusing on what's most important to them," Vaughan says. "They may cut back in other areas, but they won't cut back on toys for their kids."

Conversely, only 24% believe that consumer electronics -- a darling in many Christmases past -- will be the strongest. As a result, it's where CMOs expect to see the biggest discounts: 37% say it will be the leading category for markdowns.

Respondents also believe gift-card sales will be underperformers this year, accounting for just 5% of stores' holiday sales, down from nearly 12% in 2008.

The good news is that stores seem ready for what's coming, and with leaner inventories and more controlled promotions, most do not believe that sales will decline, "a sign that the economy is stabilizing," Vaughan says.

As a result, he expects to see fewer retail bankruptcies than last year. "So many chains have closed underperfoming stores, laid off employees, and restructured credit. At this point, for many, any more would mean cutting into the bone," he says. "If they've made it this far, they can hang on."