Evan Schuman's StorefrontBacktalk

Demand intelligence software is fast becoming one of the “foundational” technologies at major retailers, joining other must-haves such as supply chain applications, according to a report issued Monday (Aug. 3) by IDC Retail Insights. The research indicates that many recession-weary retailers consider retail demand intelligence (RDI) to be their most important IT investment issue.

The IDC report, which analyzed and compared the offerings by top RDI vendors, says Western European retailers are particularly enthused about RDI with about 35 percent of the companies surveyed in 2008 reporting that they planned to invest in the technology in the near future. “Considering the economic downturn, planned investments by 35 percent of respondents is remarkable,” the report said.

IDC said that U.S. retailers are breathing somewhat less heavily over RDI, probably because they’re ahead of the Europeans in RDI implementation. “U.S.-based retailers have a head start on their European competitors in demand forecasting and optimization and this explains why U.S. retailers are planning to invest less in 2009,” the report said. IDC found the top application investment, cited by 31 percent of U.S. retailers, were POS wares while RDI was named as the top planned investment by 17 percent of them.

Driving this desire for RDI is growing consumer sophistication and insistence on personalization, according to IDC. “Current consumers are increasingly exacting,” the report said. “Gone are the days of mass-selling, one-size-fits-all products. Customers require customization, targeted promotions carrying personalized benefits and incentives, highly automated and easy-to-use multichannel technology and rapid response times to their changing preferences. The retailer needs to be transparent, with accessible product information, clear communications, brand appropriate service levels, and consumer-centric multichannel support — all without being intrusive.”

IDC predicted that spending for RDI and analytics applications, pegged at $234 million in 2007, will grow nearly 13 percent globally yearly through 2011.