Merchants are as puzzled as bankers about how to confront rapid technological changes, according to speakers at a National Retail Federation convention this week.

The technology-oriented meeting, Riscon '97, drew hundreds of retailers and the system suppliers they rely on to Philadelphia. The hottest topics were the Internet, data warehousing, and the omnipresent year-2000 problem.

Retailing is "a technology and information-driven business, like banking and financial services," said Joseph A. Smialowski, senior vice president and chief information officer of Sears, Roebuck and Co., Hoffman Estates, Ill.

Donald E. Norman, senior vice president and chief information officer at Kmart Corp., Troy, Mich., said technology can move business ahead or hold it back. He said the need to adapt software to handle the calendar complications after Dec. 31, 1999, creates an opportunity to deliver better systems.

During a panel discussion on the future of electronic commerce, Graham Clark, retail industry business manager at Microsoft Corp., Redmond, Wash., said U.S. businesses are slow to change. He said only 5% use electronic data interchange, which holds great promise for automating documentation and payments.

Mr. Clark said business-to-business electronic commerce is a bigger short-term opportunity than its consumer equivalent. Consumers have been slow to embrace on-line services in part because of security concerns, although there is a sound environment for credit card transactions on the Internet, he said.

Mr. Clark said retailers must be involved in solving the bandwidth problem, which makes the Internet seem inefficient and frustrates many attempts to buy items on-line.

Conference speakers pointed out that retailers, like bankers, are looking to technology to retain their most valuable customers. But most are not making good use of the data warehouse technology available for marketing and cross-selling.

Just as banks are developing comprehensive warehouses of customer information, so should retailers strive to track people over the course of their lifetimes, said Robert C. Blattberg, director for retail management at the Kellogg Graduate School of Management at Northwestern University.

"Credit card companies are the most sophisticated in this area," Mr. Blattberg said. "Retailers could learn from them."

Another area where retailers could use a technology lesson is in year- 2000 software.

A survey by Keane Inc. of Boston, commissioned by the National Retail Federation, showed 87% of midsize retailers-those doing between $300 million and $2 billion in sales a year-are using back-office software that is not year-2000 compliant. At the point of sale, 65% have noncompliant software.

"We could lose a lot of members if this is not addressed," said Donald Gilbert, senior vice president, information technology at the National Retail Federation. "The supply chain is at risk."

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