Happy New Year! After spending a week with hundreds of retailers and technology vendors in New York during the NRF Annual Convention and the Shop.org Members Forum, I can assure you that despite the brutally cold weather that week, the crowd was in a pretty good mood. No wonder. Holiday retail sales were up 5.2% over last year, online sales were up 38% for the full year, and retail IT budgets appear to be steady or increasing for 2004.

But will 2004 be rosy, too? We think so, despite continuous pressure from "The Walls" -- Wal-Mart and Wall Street. Hundreds of retailers will capitalize on their 2003 momentum and invest in technology this year to accelerate their plans for differentiation. You can read "Ten Retail Technology Predictions For 2004" to get the full monty, but here's a quick take on a few of the most powerful trends that will shape this year.

Data will dominate. This will be a busy year for business and IT folks as more retailers get data religion. We predict that by year-end, thousands of merchants, marketers, and operations personnel will start their days by firing up active dashboards and managing their businesses by exceptions. To learn more about predictive analytics and the shift toward data-driven decision-making, read "Making Dashboards Actionable."

Retailers will squeeze more from their stores in '04. Retailers can do many things to improve store productivity, and in fact our 2004 research agenda will examine several of these. For example, I just kicked off a POS research project. Why? Dozens of major retailers are in the midst of, or about to begin, POS upgrades. This is not an insignificant undertaking, but by moving to Web-enabled POS systems and implementing distributed points of service, retailers can provide connected multichannel experiences for their shoppers and execute on new -- and potentially very profitable -- applications like save-the-sale inventory lookup, stored value cards, and clienteling programs.

Tech rookies will attract a lot of attention. For example, wireless LANs -- coming soon to a big box near you -- allow retailers to get more productivity out of their store associates. Web-based eCommerce will keep hogging the spotlight as it generates more than 5% of total US retail sales in '04. (Can you believe that 2004 will be the 10th Web Christmas for Amazon.com, eBay, Lands' End, 1-800-FLOWERS.COM, and more?) And there's always RFID -- well, if you think you can't stand hearing any more about this new technology, you might want to spend the next decade on Mars. Metro AG announced its RFID plans at NRF -- trumping Wal-Mart by a few months -- and you can bet that by year-end, tens of thousands of RFID-tagged pallets and cases of goods are going to be flowing into DCs in Germany and Texas.

As I said, the crowd was in a pretty good mood -- and understandably so. Never before have so many interesting, challenging, and sometimes downright cool technologies landed in the retail industry's lap at the same time. It's going to be an invigorating year!




Kate Delhagen
Vice President, Retail Research

P.S. I almost forgot! Forrester offers clients unlimited access to analysts to get quick answers to their questions. Get more info if you have not yet taken advantage of what I call our "analyst on call" service.

Research Referenced In This Issue If you printed this email, get links to the research featured in this week's issue by going to www.forrester.com/go and entering the five-digit number of the report you'd like to read. 2003 eCommerce: The Year In Review (33744) Analysis Of Wal-Mart CEO's NRF Remarks (33841) Best Practices In Travel CRM (32781)    CPG Technology Predictions For 2004 (33576) Making Dashboards Actionable (33398) Making Store Kiosks Work (33581) Online Retail Europe January 2004 Data Overview: Covers Retail And Online Buying Behavior (32299) Portals Will Introduce Comparison-Shopping To The Masses (33621) Retail Industry IT Spending Profile For 2004 (33300) Ten Retail Technology Predictions For 2004 (33709) The Anatomy Of A Great Banking Web Site (33723) The Web Analytics To-Do List For 2004 (33662) Unlike Smart Cards, Contactless Cards Will Succeed (33626) US Mobile Marketing Is Still Two Years Away (33617) What You Need To Know About RFID In 2004 (33298)

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