Holiday rush pushes retailers to spend

Flush from a strong holiday shopping season, retailers are gathering this week in New York to hear about a slew of technologies aimed at helping them improve in-store and online operations.

The National Retail Federation's (NRF) annual conference and exposition will feature about 350 exhibitors and dozens of educational sessions focused on retaining customers, improving supply chains and increasing margins. NRF expects 12,000 attendees.

Analysts expect retailers to be in buying mode this year, even though their IT budgets are expected to remain relatively flat. Budgets are predicted to grow modestly from an average of 2.75% last year to 2.88% this year, according to AMR Research. However, pent-up demand for IT upgrades - to newer point-of-sale systems, for example - might accelerate some spending.

"With last year's economy not as good as everyone had hoped, some technology decisions were delayed," says Sunita Gupta, a vice president at retail management consulting firm LakeWest Group. "But there comes a time when retailers have to move forward, especially the ones that have software and hardware that is eight or nine years old."

In addition, healthy holiday sales may kick-start spending.

Holiday online shopping tallies surged to $12.5 billion during the period from Nov. 1 through Dec. 31 - a 30% increase over last year, according to Internet tracking firm comScore Networks.

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In-store sales, too, were upbeat at some big retailers. Best Buy last week announced a 9.3% increase in December store sales over last year, and Wal-Mart and Target reported store sales up 4.3% and 4.1%, respectively, for that period.

At the NRF show, Gupta predicts retailers will be on the lookout for POS products, radio frequency identification (RFID ) technology, and a variety of specialty software products for tasks such as merchandise planning, forecasting and replenishment.

"POS continues to be on CIOs' minds," Gupta says. In LakeWest's annual POS benchmarking survey released last week, 37% of respondents said they plan to replace their POS hardware, and 38% plan to replace their POS software, within the next two years. "That means they're going to be out there looking," Gupta says.