Online sales climbed 24% year over year, while Best Buy’s overall sales were flat.
The evidence is mounting. It is time to declare the recession in retail IT over—and to prepare for a new round of investment in Internet-based retail technology solutions.
The evidence is mounting. It’s in the comments of vendors at retail industry trade shows, many of whom report that their business outlook has taken a decided turn for the better. It’s seen on Wall Street, where the Dow has jumped 21% since the onset of the war in Iraq and the tech-laden Nasdaq has grown at an even healthier 34% clip during that period.
It’s in the comments of retail economists, such as the NRF’s Rosalind Wells, who expects retail sales in the second half of this year will grow at twice the 2.2% rate of the first half, itself a remarkable performance in light of the unsettling distraction of the Iraq war. It is in the forecasts of such respected research organizations as IDC, which earlier this year released a report predicting that retail IT spending would grow at an annual compounded rate of 5.4% through 2007 to about $30 billion-a complete turnaround from last year, which witnessed a 3.4% decline in retail IT spending.
And closer to home-our home at Internet Retailer-it’s in a 40% increase in advertising revenue during the first half of 2003. The second half looks even better. Indeed, the first issue of this half-the 2004 Buyers Guide that you are now reading-sets a new single-issue record for advertising for our 4-year-old publication. With 118 paid classified listings and 18 display advertisers, this year’s Guide has more than double the ad revenue of last year’s Guide.
Tech development never sleeps
It is time to declare the recession in retail IT over-and to prepare for a new round of investment in Internet-based retail technology solutions. Retailers who fail to do so will surely be at a competitive disadvantage to those who spend. The free market may forgive those who are cautious during a lull in the economic cycle; it is not at all forgiving of foot-dragging in the midst of a nascent recovery that should get the competitive juices flowing. Making the transition from a robust economy to a sick one can be a daunting task, but failing to catch the wave of reinvestment in a market can be fatal.
That is particularly true when it comes to Internet-based solutions which are raising the retail technology bar. While investment in such solutions languished following the bursting of the Internet investment bubble in mid 2000, development of that technology has raced along. The Internet retailing solutions and services offered by the vendors in this year’s Buyers Guide are an order of magnitude better than those marketed in the roaring economy of late 1990s. And they go well beyond the limited scope of first-generation e-retailing technologies, which focused largely on the novelty of web-based merchandising.
Today’s vendors of e-retailing solutions offer web-based systems that automate the supply chain, track customers at every touch point with the retailer, develop a one-to-one marketing relationship with each customer, provide real-time data on individual store sales, track store inventories to provide just-in-time replenishments, provide Internet access at the store level to fulfill customer orders even when the store is out of stock, and for the first time offer all retailers an efficient way of integrating sales of all channels into a seamless collection of merchandising entities that present one branded image, espouse one merchandising philosophy, deliver one marketing message, and rely on one supply chain. And, of course, the vendors offer a broad array of web merchandising solutions that make each new generation of retail web sites vastly superior to what they replaced.
The Internet has dramatically altered the ground rules for competition among retailers. Retailers that embrace the web in every phase of their operations will become the leaders of the emerging multi-channel retailing market. Those who postpone investment now, just as positive economic signs appear, will surely suffer loss of market share to those who have a better sense of the market’s direction and invest in the future today. In short, the decisions retailers make now about IT investments in 2004 will determine whether they ride the wave of new technology or are engulfed by it.
For retailers and catalogers who are ready to take the leap into a new round of web-based technology investment, Internet Retailer’s 2004 Buyers Guide can be an extremely useful shopping tool. With 667 separate vendor listings, conveniently organized in 54 product and service categories, the Guide is the most comprehensive directory of resources available on the Internet retailing market. In addition, the Guide highlights 10 technology categories that deserve special editorial treatment because of the significant impact they are having in shaping this relatively new industry. For each of these, our editors have prepared separate editorial reports describing the application of the technology, the impact it is having, and the trends that herald future developments.
The printed Guide is intended to be a desktop reference to be used throughout the coming year. By the first week of September, the Guide will also be available online at our web site, InternetRetailer.com, where technology shoppers will have the ability to click on a paid listing and be taken directly to that vendor’s web site.
Reaching the decision makers
While the increased size of this year’s Buyers Guide is partly a reflection of the improving economy for all things related to e-retailing, it also reflects the dedication of our staff. Two people in particular should be recognized for their Herculean efforts in putting this year’s Buyers Guide issue together. Judy Dellert, our classified advertising sales director, worked tirelessly for three months contacting every vendor in the market to insure they were included in the Guide, either with a free basic listing or paid enhanced one. Judy’s persistence, attention to detail and dedication to serving her clients have made this year’s Guide an invaluable shopping resource for retailers.