Gadgets still a centerpiece of holiday shopping

"You will see more bargain hunting and lower pricing, and more advertising for Black Friday. However ... pricing probably won't be what drives people into the stores," said analyst Stephen Baker of research firm NPD.

"If people still feel the way that they do now, (stores are) going to have to keep reminding them that these things have never been more affordable," he added.

TVs POTENTIAL BRIGHT SPOT

Next year's shift to digital broadcast signals is also expected to spur sales of better TVs.

Television broadcasters must begin airing only in digital starting February 17, 2009, ceasing their analog signals. That requires customers with "rabbit-ear" antennas who don't subscribe to cable, phone or satellite television services to replace their TV or get an analog-to-digital converter.

Lower-priced TV brands such as the Vizio sold at Wal-Mart Stores may have an advantage as consumers look for values. "Consumers might be going for some of the cheaper alternatives out there," Frost & Sullivan's Krishna said.

Regardless of the gloomy outlook, CEA's Herbert said emotions may drive shoppers to the store as the holidays draw closer.

"Historically, for a lot of Americans, shopping is therapy. People want to give gifts to their loved ones," he said. "If these products can enhance family time or serve as a substitute for that trip to Disney World for a vacation ... consumers view that as a way to keep their spirits up."

"I don't think anyone wants to outright cancel Christmas," Herbert added.