Retailers poised for seasonal sales rush

'Tis the season for retailers to test the brawn of their IT systems.

In anticipation of shoppers buying online in record numbers, savvy retailers had moved earlier in the year to improve their Web infrastructures to handle the seasonal spike. Now it's showtime for the likes of:

• Sportswear retailer Finish Line, which pulled its Web operations in-house and launched a new e-commerce platform.

• Apparel maker Vans, which enlisted a content delivery service provider to speed Web downloads.

• Gift retailer Lillian Vernon, which invested in Web tracking and acceleration products.

Ernst & Young's Retail and Consumer Products Group is predicting that total holiday sales will increase 4.8% over last year - a better-than-expected growth, it says, given the economic climate and foreign affairs. Early indicators for the online realm bode even better, as comScore Networks reports online consumer sales for the post-Thanksgiving shopping week totaled $2 billion, or 34% more than for last year's comparable period.

Ernst & Young also cites other factors that are positive indicators for the industry: Retailers have achieved better management control of inventories and operating expenses; most have improved liquidity; Internet distribution channels are growing robustly; and higher-margin, private-label merchandise is increasing market penetration.

Retailers aren't known for spending IT dollars liberally. Their budgets tend to lag behind those of other industries such as high-tech and financial services. Gartner reports that retailers devoted an average of 2.4% of revenue to IT spending in 2002 compared with 8.9% among telecom companies and 6.6% among banking businesses.

But Gartner says retailers are starting to think more strategically about IT and will become more aggressive in their adoption of technology over the next few years. Huge increases in IT spending aren't likely, but Gartner says the industry will make moderate increases in IT spending in 2003 with continual growth through 2005.

Retailers also will dramatically change how they spend their budgets, shifting to prepackaged software and away from custom applications, Gartner says.

One retailer with new investments in packaged software is Finish Line. The Indianapolis athletic retailer selected ATG's Commerce software to run its retail Web site and Portal  product to improve communication among its 481 physical stores.

Finish Line had outgrown its old Web setup, which it outsourced, and took the opportunity to build a more robust infrastructure that it now manages in-house, says Kent Zimmerman, e-commerce director.

"We really found ourselves limited in what we could do" with the old site infrastructure, Zimmerman says. "We kept having to write code for every little thing we wanted to do." For example, simply changing the rules about how coupons are accepted required weeks of code writing, he says.

Finish Line launched its new ATG-powered Web site last month. For customers, the platform translates into a more streamlined checkout process and more payment options, including gift cards. The new software also improves the site's search capabilities, Zimmerman says. Finish Line plans to eventually use ATG's personalization features to create customized offers based on user preferences and order history.