December 27, 2001, 12:00 AM

Don`t let up on web investments, a new IDC study urges

Retailers’ investment in web initiatives is failing to keep up with the pace with which consumers are adopting the web, says a new IDC report.

Retailers with online operations who do not invest in technology now will miss out on significant sales next holiday shopping season, says a new report from IDC.

To take advantage of the continued strong growth in web-based retail spending that IDC foresees, retailers need to invest in online inventory reporting, logistics and fulfillment systems and in technology to coordinate offline and online marketing and promotions, Rick Villars, vice president of Internet and e-commerce research at IDC, tells "There are a lot of content management issues that retailers will need to address," Villars says. "It’s not simply a matter of putting up web content that matches your offline promotions."

Retailers have done a good job of providing content, but they need to take the next step and update their technology, says IDC’s new report The Ghost of Christmas Future: Don`t Miss Next Year`s Holiday Rush.

Retailers spent 17.7% of their information technology budgets on web initiatives-including online selling and supply chain functions-and that is expected to increase to 19.2% this year, Villars says. Dollars spent are expected to increase by 16%, he says, but that’s not enough. "2002 will be the year that lack of investment in the web will result in problems in the future," he says. "Companies that will be more aggressive will increase their web spending by 30, 40 or 50%," he says. "For companies who don’t make that web investment, consumers will notice that the sites haven’t improved and they’ll make their choices of where to shop accordingly."

A new survey from IDC shows the continuing importance of the web. Dollar volume of retail purchases on the Internet will grow 46% this holiday season over last year, says an IDC survey of U.S. consumers. The survey also report that 72% of consumers will spend the same or more this holiday season compared with last year. The dramatic growth in web-based spending indicates that the Internet is displacing offline spending, IDC says.

"Although consumers are spending more of their holiday budgets online, e-shopping and consumer e-commerce in general will be constrained by supply, as reduced IT investments resulting from the economic slowdown limit some e-retailers` ability to meet the demand," says the IDC report.


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