• by Sarah Mahoney  @mahoney_sarah, October 6, 2009

Pity poor Neiman Marcus. On the one hand, its annual Christmas Book has to live up to its reputation of over-the-top excess, even in the midst of a recession. On the other, along with other luxury retailers, it has taken a thorough shellacking over the last year as consumers have cut back on luxury goods.

The solution? Present all the insane extravagances that the Christmas Book -- now in its 83rd year -- is best known for, like the adorable little Cupcake Car, a whimsical confection first introduced as an art car at Burning Man, enabling its owner to go up to 7 mph ($25,000.) Too slow? Try the world's fastest electric motorcycle ($73,000.) Or fly, and select His and Hers Aircraft, including pilot training ($250,000). This year's car is a stunning 2010 Jaguar XJL Supercharged Neiman Marcus Edition ($105,000, including a five-piece set of luggage.)

This year's version also includes the requisite number of experiences, topped with dinner at the Algonquin, with the likes of Christopher Buckley, Delia and Nora Ephron, John Lithgow, and George Stephanopoulos ($200,000, with proceeds going to First Book, the Dallas-based retailer's chosen charity for the year) as well as breathtaking one-of-a-kind items, such as the astounding chandelier made entirely of plastic soda bottles ($12,000.)

But the Dallas-based retailer also brags that in this year's catalog, more than 40% of its gifts are priced below $250. There are colorful iPhone cases for $175, Cole Haan gloves for $148, and a Patience Brewster piggy bank for $70, for example. And there are some downright steals -- koi ($58) or bulldog ($55) salt-and-pepper shakers, or $28 for some jeweled handbag hangers.

That emphasis on less expensive items -- as well as sharply reduced inventory levels -- will doubtless be a necessity for most luxury retailers this season. A new survey from Unity Marketing, which focuses on affluent shoppers, reports that among the most affluent consumers (those in the top 20% of earners), 40% say they expect to spend less this year than they did last year. (About 50% say they will spend roughly the same amount.)

"Retailers haven't the luxury of optimism this year," writes Pam Danziger, Unity's president, in her report. "They need to prepare for the worst, especially if the H1N1 flu keeps people at home and avoiding crowds. With flu the wild card in this year's retail calculations, Unity Marketing expects sales in many retail sectors -- but most especially those that cater to the luxury shopper -- to be down from last year's dismal showing."

Last month, Neiman Marcus reported that comparable revenues tumbled 23.4% for the quarter and 21.4% for its fiscal year, and that it would enter the holiday selling season with 23% less merchandise than last year.