(Source: Business Wire)Faced with one of the most challenging years on record, retailers and those who supply them believe that consumer spending will lag the turnaround of the U.S. financial markets. According to a new study released today by CIT Group Inc. (NYSE:CIT), a leading provider of financing to small businesses and middle market companies, 47% of retail respondents believe the financial markets will turn around next year; separately, 45% believe that consumer spending will not return to 2007 levels until 2011 or 2012.

The continuing softness in the retail market has caused many retailers to reevaluate and adjust their business models. They are taking a more conservative and cautious approach to the upcoming holiday season by controlling their inventories, and are planning more aggressive discounts earlier in the season. Other key findings among retail respondents include:

67% will stock less inventory than in 2008;

69% will expand online and direct selling;

56% will advertise more aggressively;

66% will offer greater discounts; and

68% will hold clearance and other sales prior to New Year's Day.

The research report, "U.S. Small and Middle Market Outlook 2009: Retailers and Suppliers Take Stock of Economic Downturn," examines how retailers and their suppliers are navigating through the current financial crisis. It is the third in a series of four studies that Forbes Insights has produced this year in association with CIT.

"These results corroborate what we have been hearing anecdotally from the marketplace," said Burt Feinberg, Managing Director and Industry Group Head of Retail Finance at CIT. "Many retailers continue to be concerned about consumer demand and are following conservative inventory and pricing tactics in anticipation of the upcoming holiday season, trying tomaintain liquidity, so that they can be better positioned for what is hopefully resumption in consumer spending in 2010."

Jon Lucas, Executive Vice President and Chief Sales Officer of Trade Finance at CIT, said, "The decline in consumer spending has trickled down from retailers to the manufacturers and vendors that supply them. Many of these suppliers are managing through this business cycle by cutting expenses, imposing more stringent credit terms on their retail customers, and doing less business with slow paying retailers. In addition, many have turned to factoring and credit protection services to protect the value of their accounts receivable, if they do not already have those relationships in place."

Noteworthy findings:

Cautiously awaiting the return of consumer confidence.