In Citi’s View, Costco Is The Least Sophisticated Retail IT Shop, CVS The Most

Written by Evan Schuman
January 21st, 2010

One of the most respected retail technology trackers on Wall Street, Citi, has put out a list of major retail IT leaders, ranking them from the most sophisticated and advanced to the least sophisticated. The most worldly ones include, in order, CVS, Walgreens, JC Penney, Target and Kohl’s, while the more hick-like chains are Costco, BJ’s, Family Dollar, SuperValu and Safeway.

“We consider CVS and (Walgreens) to be the most advanced, as they have already implemented chain-wide computer synchronization, advanced inventory management and pharmacy workflow optimization systems,” said Deborah Weinswig, from the Citi investment research and analysis group. “The warehouse clubs are considered to be the least sophisticated of the group. However, BJ and (Costco) have fewer inventory management needs as a result of their unique business model.”

The full list, presented at the RetailROI event in New York this month, from least sophisticated to most sophisticated is as follows: Costco, BJ’s, Family Dollar, SuperValu, Safeway, HomeDepot, Saks, Macy’s, Wal-Mart, Nordstrom, Kroger, Lowe’s, Dollar General, Kohl’s, Target, JC Penney, Walgreens and CVS.

One of Weinswig’s favorite groupings is the pharmacy segment and she attributes their strong tech performance to their use of “RFID, barcoding and high-speed picking devices to monitor and communicate inventory information to stores, distribution centers and suppliers, which are interconnected to improve communication and visibility throughout the supply chain.”

The grocery chains, which typically are less technologically aggressive, “still lag their European counterparts in terms of sophistication and supply chain efficiencies,” Weinswig said. “We believe that U.S. food retailers have many opportunities to invest in IT; however, they may be limited by unions.”

In the warehouse club segment, Lowe’s “is one of the most innovative retailers in our coverage universe with respect to technology, while (The Home Depot) has a significant amount of opportunities and has recently made technology a priority,” she said.


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