• by Sarah Mahoney  @mahoney_sarah, November 3, 2015

The CMOs of leading retailers expect electronics to be among the hottest gift categories season, but expect that stores will have to discount those gadgets heavily in order to compete. And they predict that demand for gift cards, long on the top of many “Dear Santa” lists, will level off.

That’s the latest from BDO’s tenth annual Retail Compass Survey of CMOs, which also has the execs forecasting a 4.2% increase in holiday sales, just slightly ahead of the National Retail Federation’s expectation of a 3.7% gain. The study is based on responses from 100 CMOs at leading retailers.

Most — 67% — think electronics will be the year’s hottest category. But 51% expect it will also be the most heavily discounted. And apparel, mentioned by 14% of CMOs, is likely to continue as the second-most in-demand gift category. And consumers may find fewer gift cards in their stockings, with just 43% of CMOs predicting sales of these cards to rise this year -- down about one-third from 2013, when 61% of CMOs said they thought gift card sales would grow. (Those findings differ from the National Retail Federation, which recently said gift cards still topped people’s wish list, as they have for the past nine years. It says 58.8% of the consumers in its survey would like to get a gift card, followed by clothing and accessories, at 52.2%.)

BDO chalks the CMOs’ tempered optimism up broader economic gains, including a stronger housing market and lower energy prices. But after a not-so-hot back-to-school selling season, stores have plenty of reason to doubt consumers will go wild with Christmas spending.

“The modest year-over-year increase could be attributed to increasingly parsimonious consumers, who are a product of the recession and not consuming as much as they once did,” the consulting firm says in its release. “And because of this consumers are favoring a more strategic and cost-conscious approach, no matter the season.” 

The CMOs are well aware of how willing this new consumer is wait stores out, “knowing retailers will turn to an intense discounting strategy to move product and spur sales.”