Tech companies hold own in tough times
Some retailers capitalizing on downtime to expand, upgrade business software
By Gary Evans -- Furniture Today, February 2, 2009
In this story:
2009 may be better
Time to retool
Hopeful signs
HIGH POINT — HIGH POINT — Have retailers been delaying purchases of software or do they feel like they need software more during these times of economy uncertainty?
“That question is very interesting, because the answer is 'yes' to both,” said Roy Martin, product manager for Escalate Retail, a major supplier of software to the furniture industry.
“Some retailers have delayed,” he said, “while others have seen the opportunity to capitalize on the downtime and get programs implemented that will position them much better for the recovery when it occurs.”
Terry Nelson, vice president of sales and marketing for Profitsystems, another leading technology vendor to the industry, agrees.
“Without a doubt, some retailers are finding it necessary to delay making the changes that they recognize are essential to making their businesses more efficient and profitable,” said Nelson. “But, at the same time, our remotely hosted option, 'Profit-on-demand,' allows a minimal cost of entry which removes a significant barrier.
“For the past 12 months, we have seen a marked increase in the choice of the 'Profit-on-demand solution for this reason,” he added.
2009 may be better
Nelson expects 2009 to be a better year for software than 2008.
“We are already experiencing an increase in system purchases as many retailers are seeing the current situation as an excellent opportunity to make the investment in their future,” he said.
With business quiet, retailers have time to implement a new system, Nelson said. “Many retailers are using this time to prepare to meet the pent-up demand that is sure to come. With 'Profit-on-demand,' cash flow restriction is no longer an obstacle to improving their ability to serve their customers or bring in new customers.”
Manoj Nigam, president and CEO of MicroD Inc., expects his company's 2009 business to be level with 2008 “or actually increase a bit. We feel that many retailers and businesses have already gone out of business but the ones remaining are going to be able to weather the economic climate and come out stronger after 2009.”
As for whether customers are seeing the need to invest in new technology or postponing it until business improves, it's a “mixed bag,” according to Nigam.
“Some are delaying purchases of software and some feel they need to increase their marketing and advertising activities in these tough times to gain larger market share and are going forward with making the purchasing decisions on software that can reduce costs and increase sales,” he said.
“Since MicroD's Web products offer substantial cost savings over traditional advertising and other Web alternatives, we are seeing increased interest from many retailers in our products.”
Steve Street, president of space planning software provider Icovia, anticipates an increase in business this year over both 2008 and '07.
“The core Icovia customer base has been surviving better than the industry as a whole,” said Street. “We are planning for the first half of 2009 to continue to be a challenge, and are hoping to see some slight recovery in the second half.”
He added that he expects to see more software order cancellations in 2009 as some retailers will be forced to close their doors. “However, the gains we are making with the companies who see the downturn as an opportunity to gain more market share should more than offset the losses to attrition.”
Mark Van Winkle, director of sales for Storis, said “business should be about the same, consisting of larger-sized clients. However, there will probably be less in total number of deals.
Time to retool
“Those larger-sized retailers understand this is the ideal time to retool, and closely analyze their business to determine how they can become more efficient,” he added. “Additionally, they realize this is the moment to identify the areas of their business which require improvement.
“On the other hand, small-sized retailers are delaying purchasing software as they are closely watching costs.”
Doug Culmone, Storis' COO, expects that many retailers will look to cut costs and be more reluctant to invest in technology than they normally would be. “Our challenge (will be) to do an even better job of communicating the importance of utilizing technology to create a competitive edge and control costs by improving operational efficiencies,” he said.
“As with any challenge, this one represents an opportunity for us to demonstrate to retailers in the home furnishings industry that our software system is part of the solution.”
Profitsystems' Nelson is optimistic about the coming year. It's “definitely a year of opportunity for everyone,” he said. “Without a doubt, we will continue to struggle with tough economic conditions but opportunity is everywhere.
“With some weaker retailers going out of business in many markets, new, perhaps more agile and forward-thinking retailers will take advantage of the voids to capture market share.”
Nelson said e-commerce “of big-ticket home goods continues to gain traction among GenX and GenY consumers and many predict this is a major growth area. Pent-up demand for furniture purchases will inevitably make an impact on retailers and we see this as a sooner rather than later scenario.”
Since the furniture industry was among the first to experience the downturn, Nelson expects it will be one of the first to rebound as consumer confidence improves.
Hopeful signs
“We are optimistic that especially in the latter half of 2009, we should see significant improvement for retailers. Some of our retailers are already reporting to us that they are experiencing excellent business. Their use of effective technology solutions has been a significant key to their profitability.”
Asked about challenges and opportunities for 2009, Escalate's Martin said, “A smaller marketplace as businesses continue to consolidate makes for a challenge and an opportunity. We can focus on our customers even more. Helping out each other now is probably the best thing we can do for a partner.”
MicroD's Nigam's advice to retailers is to hang in there — and use technology as a key tool.
“In tough economic times like these, all businesses need to save costs wherever possible. However, we think that it will be a mistake to discontinue use of the Web and other technology projects that are marketing focused and can help bring traffic.
“Only with the right technology tools can furniture retailers compete with other retail segments that will try to attract limited consumer dollars. If retailers can survive through 2009, we think they will enjoy better market shares in 2010 forward.”
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