• by Sarah Mahoney  @mahoney_sarah, November 5, 2014

Get ready for gadgets. A new holiday forecast from BDO predicts that consumer electronics will be tops in Santa’s sack this year, and that they will also be the most heavily discounted.

In its 2014 Retail Compass Survey of CMOs, a poll of 100 retail CMOs on their holiday shopping season outlook, it reports that the latest iPhone, smartwatches and other new tech toys will be on shoppers’ wish lists. In fact, 73% of the CMOs think they will be top sellers, and 58% believe they will be the most aggressively discounted.

The Consumer Electronics Association is expecting that Americans will spend a record $34 billion on electronics this season, a 2.5% increase in tech spending. (Last year, it managed only a 0.9% increase.) BDO predicts that clothing will be the second-most important category. And while gift cards are still popular, CMOs expect a plateau, with just 38% expecting sales to climb this year -- down from 61% last year.

And overall, the CMOs are anticipating a 4.1% gain, in line with the forecast from the National Retail Federation. And optimism, especially after a not-very-impressive back-to-school season, is strong: Only 12% in its survey expect sales to fall, compared with 65% who expect a gain. BDO attributes that a stronger housing market and consumer confidence. And while the employment outlook is better, jobs continue to be the single issue that worries retailers most, with 45% naming it their top concern.

Retailers with omnichannel capabilities are more optimistic, while those with strictly brick-and-mortar stores are feeling more challenged, says Doug Hart, partner in BDO’s retail and consumer product practice. 

And along with stronger consumer sentiment, declining fuel prices are also likely to rev up holiday sales, he tells Marketing Daily, “especially at the discount end of the spectrum. But that won’t impact all consumers equally. For a Neiman Marcus shopper, gas savings represents a much smaller percentage of disposable income, so they’re not apt to go out and spend that difference immediately.”

Another worry of the CMOs is inventory levels, especially given the ongoing concern about labor agreements in important West Coast ports. “It may be more difficult to replenish items in season, and you might have some hot products out of stock.”