The key question for many retailers is, what are the best IT investments in a competitive environment? Ace Hardware Corp. says the answer lies in improving its supply chain. "When Ace can deliver a product at a value price, the consumer wins," says Greg Lenard, Ace's director of inventory control. "There's no question that the supply chain is where that starts."

The challenge for tech vendors introducing products at this week's National Retail Federation Annual Convention & Expo is convincing retailers that their products deliver a rapid return on investment. Retail-industry IT spending this year is expected to match 2002, at an average of just 2% of company revenue, according to AMR Research. Although chain-store sales across the board were up slightly year over year during the important holiday season, many retailers say sales fell short of forecasts.

Ace is investing in collaboration software from JDA Software Group that provides its suppliers with a view of Ace's order forecasts, which should result in less inventory and lower freight costs, Lenard says. JDA Software this week will preview its newly integrated product line, Portfolio 2003.5, culled from various acquisitions, which will ship next month. JDA in April plans to introduce a Java-based point-of-sale system designed to cut IT maintenance and labor costs.

Another big player in retail technology, Retek Inc., also is showcasing new Java point-of-sale systems, plus software to improve product-replenishment planning. SAP is upgrading its Staffworks software for labor scheduling and is developing a Web-based workforce-management product for delivery later this year that will offer centralized management of workers throughout a retail chain.

NCR Corp. is pushing its electronic shelf labels. Using price-optimization software, retailers can change shelf prices on the fly via radio technology. Retailers investing in or piloting electronic labels include Sam's Club, Sears, and Wal-Mart.