Despite current economic conditions, retail IT spending remains robust and continues to outpace overall applications spending a new survey has found.

Leading retail executives canvassed by SoundView Technology Group Inc, a technology focused investment banking firm, indicated that IT budgets would be flat or increased for 2002, compared to the previous year. Supply and demand planning technologies are likely to receive the largest share of investment, while revenue enhancement and cost containment are driving current spending.

"We remain bullish on the retail IT vertical," said Peter Coleman, senior analyst at SoundView Technology Group, the survey's author. "Retail historically has under-invested in IT. However, as the industry matures and competition grows, efficiency has become a leading driver for success. Investing in IT is no longer optional for many retailers."

The survey found that half of those surveyed expect their IT budgets to increase during the current fiscal year, with only 11 per cent indicating that spending may decrease. Many retailers also said they continue to rely on homegrown solutions, although almost two thirds of survey participants expect to spend more on packaged solutions over the next 12 to 24 months.

Merchandise planning is now the main area of focus, and during the next 12 to 24 months, software investments will be focused most heavily on supply planning (58 percent), demand planning (53 percent) and warehouse management systems (53 percent), according to the retailers surveyed.