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Executive Editor

Holiday rush pushes retailers to spend

Jan 12, 20044 mins
BudgetingEnterprise Applications

National Retail Federation to showcase aisles of wares to improve operations.

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

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.

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.

As for RFID, most retailers are more interested in browsing than buying at this point, she says.

AMR Research recommends retailers focus their IT investments in four key areas: customer-facing technology that enables more-interactive selling; analytic tools that project the impact of merchandising, pricing and promotion decisions; pricing-management tools that track product and pricing strategies from introduction through final closeout; and sourcing technologies that let retailers adjust manufacturing and supply-chain strategies based on consumer demand changes.

In addition, AMR suggests workforce optimization tools can yield labor and scheduling efficiencies. Retailers currently allocate 32% of their store operations budget to workforce management applications, according to the research firm.

New products being unveiled at the NRF show align well with these areas, such as:

Marketing assistance: Blue Martini is expected to announce Messages@POS, an in-store selling application for retailers that delivers personalized marketing messages to customers at POS. Triggered by the purchase of a particular brand or spending amount, the messages might promote store events, new merchandise or special offers.

Pricing expertise: 4R Systems is expected to unveil MaxOut, an optimization tool designed to help retailers identify the most profitable end-of-life merchandising tactics, such as markdown, consolidation and liquidation.

Inventory tools: Retail Technologies International will demonstrate the latest version of its Retail Pro store management software, due out this month. New features – such as serial number tracking and multi-vendor item identification – are aimed at helping retailers better manage and track their inventory.

Workforce efficiencies: POS and back-office software maker 360Commerce in December acquired Simplified Workforce Solutions for its workforce management software, which is designed to help companies control labor costs and reduce employee turnover. The first integrated products will be on display at NRF, the company says.