Analysts see retailers turning to IT

Retailers are expected to make the most substantial investments in efficiency-oriented IT systems during 2002, according to industry analysts.

Cap Gemini Ernst & Young LLP’s retail and consumer division is seeing “an explosion in retail-related IT spending” in North America, Fred Crawford, an executive vice president at the Paris-based consulting firm, said early this year.

Most spending is on warehouse and inventory management and financial controls, Crawford said. Surprisingly, the retail industry isn’t investing in customer relationship management (CRM) to the same degree as “every other industry segment, including consumer packaged goods,” he said, noting that his firm did much more retail CRM work two years ago.

Michael Niemira, an economist at Bank of Tokyo-Mitsubishi Ltd. in New York, predicted that sales growth for the year as a whole will reach three percent to 3.5 percent, compared with 2.6 percent in 2001. “It’s not going to feel good to every retailer, but it’ll feel better than 2001,” he predicted.

Those retailers that elect to invest in their e-commerce sites will be “buttoning down core functionality,” focusing on merchandising and improving their search engines and general navigation features, according to Ken Cassar, a senior analyst at New York-based Jupiter Media Metrix Inc.