Retailers Turn to Technology
Retailers expect to maintain or boost their spending on technology in the coming year, according to a new survey by investment banking firm SoundView Technology Group Inc., based in Greenwich, Conn.
Despite current economic conditions, retail information technology (IT) spending remains robust and continues to outpace overall applications, according to feedback from leading retail executives canvassed by SoundView. Most executives said investments in information technology would be flat or increased for 2002 compared to the previous year. Supply-and-demand planning technologies are likely to receive the largest share of investment, while revenue enhancement and cost containment are driving current spending.
“Retail historically has underinvested in IT,” said Peter Coleman, senior analyst at SoundView. “However, as the industry matures and competition grows, efficiency has become a leading driver for success. Investing in IT is no longer optional for many retailers.”
Half of those surveyed by SoundView expect their IT budgets to increase during the current fiscal year, with only 11 percent indicating that spending may decrease. Many retailers also said they continue to rely on homegrown solutions, although almost two-thirds of survey participants expect to spend more on packaged solutions over the next two years.
Merchandise planning is now the main area of focus, and during the next two years, software investments will be focused most heavily on supply planning (58 percent), demand planning (53 percent) and warehouse management systems (53 percent), according to the retailers surveyed.
Gap and Pacific Sunwear are among the California-based retailers investing big in technology this year. Pacific Sunwear recently launched software by Houston-based Scalable Software that helps it run more efficiently by monitoring different aspects of its operations, while Gap has enlisted Retek Inc.’s merchandise forecasting software. —Robert McAllister
