It has been a tough year for specialty retailers. For much of 2004, the war, rising gas prices, and job insecurities have caused consumers to rein in spending. But the squeeze has inspired IT-savvy companies in this industry to pursue tech initiatives that boost customer service, cut internal costs, and increase profitability.

Known for its E-commerce expertise, Lands' End Inc., a Sears, Roebuck & Co. subsidiary, leverages IT to run a tightly integrated multichannel business that provides customers with top service regardless of whether they shop online, in the catalog, or at a brick-and-mortar store. "The important thing is to know our customers across all the channels and provide a consistent experience," says Andree Frederick, IS director at Lands' End.

The company handles as many as 50,000 customer calls each day and receives about 230,000 E-mails a year--each of which is personally answered. Despite the volume, Lands' End insists on providing personalized shopping experiences and uses key technologies that support one-to-one marketing such as data warehousing, data mining, data marting, business intelligence, and a system for customer reps that graphically displays information about each customer's past purchases and preferences.

Collecting and leveraging sales information and other data continues to be a pain point for retailers, says Chris Boone, program manager of vertical-industry research for the retail and utilities markets at research firm IDC. That's why companies continue to invest in point-of-sale systems that are integrated with replenishment and other software. "That helps with inventory management and making sure the right products are in stores at the right time," Boone says.

To ensure that the right jewelry is in the right place at the right time, Tiffany & Co. has implemented a replenishment system that makes it easier to track and analyze sales to improve demand forecasting. The automated system has been used to support a marketing initiative for diamond jewelry such as engagement rings, and it has cut the time and effort necessary to replenish engagement and individually registered merchandise from the jeweler's warehouse to its stores around the world. The new system appears to be working. At the close of the 2003 holiday season, during which sales jumped 18% compared with the previous year, Tiffany chairman and CEO Michael Kowalski said in a statement: "We were delighted to see strong sales growth of diamond jewelry in each of our major markets."

Other major IT initiatives among specialty retailers include real-time systems that allow for vendor-managed inventory initiatives--Sherwin-Williams Co. uses such a system--and improvements to E-commerce sites--such as those at tech distributor CDW Corp., which helped boost its online sales to more than $1 billion in 2003.

INDUSTRY LEADERS
Company	Revenue in millions	Income (loss) in millions
Home Depot USA Inc.	$64,816	$4,304
Lowe's	$30,838	$1,877
Best Buy Co. Inc.	$24,547	$705
Office Depot Inc.	$12,359	$276
Nordstrom Inc.	$6,492	$243
The Sherwin-Williams Co.	$5,408	$332
CDW Corp.	$4,665	$175
Bed Bath & Beyond Inc.	$4,478	$400
Borders Group Inc	$3,731	$120
Ace Hardware Corp.	$3,159	$101
Do it Best Corp.	$2,819	--
Tiffany & Co.	$2,000	$216
Petsmart Inc.	$1,996	$140
The Talbots Inc.	$1,624	$105
American Eagle Outfitters Inc.	$1,520	$60
1800Flowers.com Inc.	$604	$41
Footstar Corp.	--	--
Lands' End Inc.	--	--
Financial data is from public sources and company supplied. Revenue is for latest fiscal year. Dashes indicate companies requesting financial information not be disclosed.

SNAPSHOT INSIDE COMPANIES Average portion of revenue spent on IT 2% Companies using radio-frequency identification 11% Companies globally sourcing products and supplies 89% HOW COMPANIES DIVIDE THEIR I.T. BUDGETS Hardware purchases 23% IT Services or outsourcing 11% Research and development 3% Salaries and benefits 30% Applications 23% Everything else 10% INDUSTRY FINANCIALS Average year-over-year revenue change 12% Average year-over-year net income change 31% DATA: INFORMATIONWEEK RESEARCH See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.

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