CMOs to increase discounts and promotions in 2007 Holiday Season.

According to a new study by BDO Seidman, LLP, almost three-quarters (73%) of chief marketing officers at leading U.S. retailers believe discounting and promotions will be more plentiful this holiday season compared to 2006 due to the current credit crunch. These same credit concerns have led almost two-thirds (64%) of the CMOs to be more cautious in their sales and inventory purchase plans than in 2006. Despite a majority (54%) predicting flat sales this holiday season, overall the CMOs are forecasting a 5.03 percent increase in same store sales.

“When you consider that discounting was widespread during the 2006 holiday shopping season, the forecast of even more discounting this season communicates both a growing anxiety among retailers about reaching sales goals and the potential for value buying for consumers,” said Al Ferrara, a Partner in the Retail and Consumer Product Practice at BDO Seidman. “The 5.03 percent holiday growth forecast is a full percentage point higher than the forecast of the National Retail Federation, but represents a large drop in optimism among retail CMOs when you consider this same group of professionals predicted 7.8 percent growth for the 2006 holiday season.”

These findings are from the most recent edition of The BDO Seidman Retail Compass Survey which examined the opinions of 100 chief marketing officers at leading retailers located throughout the country regarding their expectations of the 2007 holiday shopping season. The retailers in the study were among the largest in the country, excluding automotive dealers and restaurants, with revenues of more than $100 million, including 15 percent of the top 100 based on annual sales revenue. The survey was conducted in October of 2007.

Some of the major findings of The BDO Seidman Retail Compass Survey of CMOs:

– A Flat Holiday Season. More than half (54%) of CMOs at leading retailers expect same store sales to be flat during the 2007 holiday shopping season. A sizable minority (41%) still expect increased sales results over the 2006 holiday shopping season, while only 5 percent are predicting a decrease in sales.

– C-Level Forecasts. Overall, the CMOs are predicting a 5.03 percent increase in same store sales this holiday season, compared to 2006. In September of this year, a BDO Seidman survey of chief financial officers at leading U.S. retailers predicted sales growth of 5.6 percent for all of 2007.

– A Crucial Season. According to the survey, these leading retailers generate 26 percent of their annual sales revenue during the holiday shopping season. Last year, the CMOs said they generated 24 percent.

– Critical Concerns. Credit concerns have overtaken high energy costs as the most critical issue impacting holiday shopping sales this year. When asked to pick one external issue that will have the greatest impact on the holiday shopping season, more than a quarter (27%) of the CMOs cited credit concerns compared to 22 percent who focused on high energy costs. Other issues cited were the weak housing market (17%), product safety issues (15%) and the stock market (14%). In 2006, a majority (52%) of the CMOs viewed high energy costs as the clear number one issue impacting the holiday season.

– The China Factor. More than one-quarter (26%) of the CMOs say the safety issues surrounding Chinese products has affected their planned inventory assortment and led them to focus more of their marketing efforts on U.S. made products. However, only 15 percent of the CMOs say they have made changes to their supply chain due to the much publicized product recalls linked to Chinese suppliers.

– It’ll be a Green Christmas. More than a third (37%) of the CMOs say they are increasing their marketing focus on “green” products this holiday season compared to 2006.