Supply chain efficiency will be a top priority for retail industry in 2005

The retail industry will be focusing more than ever on supply chain efficiency to stay competitive this year, according to new research by the NRF Foundation and BearingPoint Inc. The study, "Retail Horizons: Benchmarks for 2004, Forecasts for 2005," reveals that the majority of retailers cite supply chain optimization as a priority initiative for getting closer to the customer.

"In today's competitive environment, retailers understand the importance of leveraging their customer information," says Scott Hardy, a managing director with BearingPoint, a business consulting and systems integration firm. "Shopping data collected from the store level can be leveraged as valuable real time data and shared throughout a retailer's supply chain network of suppliers, factories and distribution centers to meet anticipated product demand."

Other key findings of the study include:

* Almost 25% of retailers plan for half of their merchandise assortments to be private label;

* In the next 12 months, more than half of retailers (57%) plan to replace or upgrade their point-of-sale systems;

* While 38% of retailers will focus on domestic expansion, 17% will focus on international expansion;

* This year, 33% of retailers will focus on redesign and relocation of stores;

* More than one in five retailers (21%) list outsourcing as a priority for 2005.

"Retailers realize that in order to improve their businesses, it is important for them to reinvest in new technologies and programs," says Tracy Mullin, president and CEO of the NRF. "Consumers are rewarding retailers who utilize resources to feature new merchandise, new technology, and new ideas."

The study suggests several approaches the retail industry can adopt to provide competitive advantage and generate robust prospects for profitability:

* Create true supply chain visibility with a synchronized demand network that eases inventory pain by providing trading partners with optimal flow through of product and near-real time sharing of forecasts and demand signal;

* Link disparate systems for common connectivity to aid in retailers' streamlining of operations;

* Target and segregate high-value customers from low-and no-value customers and provide the right combination of product and services to earn loyalty.

This third annual study surveyed more than 300 retailers from a wide assortment of department, specialty, apparel, grocery, and home center stores, with as few as a single store to more than 2,000. The study focused on nine functional areas, including store and field operations, supply chain, customer relationship management, merchandising, advertising and marketing, human capital, information technology, and online.
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