The author of two influential Christian retail market studies, Beemer said it was his first negative prediction in 23 years of conducting Christmas surveys.

"This year looks so bad," said Beemer, also chairman of ARG, "that even normally good signs for retail sales, such as more Americans staying home this Christmas, can't save the season for retailers."

ARG's survey of 1,000 shoppers across the country found that 40% of consumers say they will spend less, while 35.3% will buy fewer gifts this year. These were the highest figures in 13 years for "spending less" and the largest percentage in eight years for "buying fewer gifts," ARG said.

Consumers will be more bargain-driven this year with 87.2% expecting retailers to cut prices just before Christmas, up from 81.6% last year. A 13-year high, 85.5% of consumers say they will wait for 50% off sales this season before they buy, up from 46.5% in 2007.

The economy continuing to slide played a large part in consumers spending less—44.6% will spend less this year due to higher grocery prices, 46.3% will buy fewer gift cards because they fear that stores could go into bankruptcy and not honor the cards, and 22.3% expect to buy online compared to 30.2% who bought from the Internet last year.

In contrast to the ARG prediction, the National Retail Federation projects that holiday sales will rise 2.2% this year to $470.4 billion. Meanwhile, TNS Retail Forward forecasts online sales to grow 9% this holiday season compared with a total retail sales growing just 1.5% this year. TNS also projects online sales to reach $42.5 billion in the fourth quarter, up $3.5 billion from last year.

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