At the same time, however, nearly 90 percent of retailers surveyed predict flat or declining margins over last year, largely due to rising energy costs. These findings indicate that retailers plan to continue absorbing increased transportation costs instead of passing them along to consumers, ultimately impacting the bottom line.

The study also finds that retail organizations are investing in technology solutions to improve operational efficiency and enhance the customer experience to ensure a successful holiday season and ongoing profitability. Rising energy costs, it appears, are forcing retailers to move strategies for success closer to the customer.

"Retailers are focusing more than ever on the objectives of increasing operational efficiency in order to enhance the customer experience," said Oracle Retail Global Business Unit General Manager Duncan Angove. "As they attempt to minimize the impact of rising costs, retailers seek tools that help them transform operations, understand and predict customer demand and improve performance at every customer touch point - key factors in building and maintaining customer loyalty."

Strong Sales, Weak Margins
Fifty-one percent of retailers surveyed project solid comparable-store sales growth (between 5 percent and 9 percent) for the 2006 holiday season over last year, and 5 percent anticipate an exceptional year (more than 10 percent growth). Not all retailers are bullish, however, with 39 percent predicting flat sales, and 5 percent projecting declining sales. Retailers targeting a robust season cite continued strength of the economy and the introduction of new merchandising strategies as key factors; those more pessimistic point the finger at rising gas prices as a consumer spending inhibitor.

Despite optimism about sales, retailers project a margin squeeze for the 2006 holiday season, driven by higher transportation costs and pressure for deep and early markdowns. Sixty-one percent of respondents predict flat margins, and 27 percent project lower margins this holiday season. Executive management and IT management are more pessimistic about margins than senior management (merchandising, planning, marketing managers, etc.) and store operations respondents.

"Getting squeezed on margins is nothing new to retailers," said Angove. "In recent years, retailers have fought for every point of margin as real estate and workforce costs skyrocketed. Retailers want choices in the tools they use to create new efficiencies in operational costs they can control. As a result, we see the introduction of better merchandising and pricing strategies, tighter store and inventory management, as well close collaboration with manufacturers and partners to transform the supply chain."

Sold on Technology
Retailers look to technology to help them increase operational efficiency, counteract rising costs and enhance the customer experience - driving increased sales and greater customer loyalty.

Respondents cite the ability to project product demand, markdown optimization and staffing issues as their greatest challenges for the upcoming holiday season.
* 45 percent of retailers indicate the ability to project product demand will be among their greatest challenges this holiday season.
* 38 percent cite both optimizing the timing and level of markdowns and staffing issues as significant challenges.

The industry is putting IT solutions into place to address these challenges during the holidays and throughout the year.
* More than half (52 percent) of all respondents implemented some type of inventory management system to help ensure a successful holiday season.
* 41 percent installed merchandising planning and optimization systems.
* 40 percent deployed workforce management systems.
* 38 percent implemented advanced inventory planning systems.
Moving forward, 35 percent of respondents plan to implement inventory planning and management systems in the next 12 months, by far the most popular response.

Making an Impact on the Customer and the Bottom Line
Retailers cite staff training as the single investment that yields the greatest return on investment (ROI) for their organizations, followed by inventory planning and management solutions.
* 34 percent of respondents say staff training delivers the most ROI.
* 25 percent of respondents point to inventory planning and management systems as delivering the greatest return. * 12 percent point to advertising/marketing initiatives.
* 10 percent indicate pricing optimization solutions as delivering the greatest ROI.

Survey respondents recognized the importance of IT in enhancing the customer experience.
* 37 percent of respondents found that IT makes its greatest impact by helping retailers ensure sufficient inventory to meet demand.
* 32 percent of respondents indicate that IT is most effective in helping them provide faster service and reduce checkout waiting time.
* 27 percent of respondents pointed to IT's ability to help retailers tailor the product mix to customer demographics at the store level as its greatest benefit.

Methodology
Oracle's study of the retail market is based on an online survey of retailers nationwide. The sample size (186 respondents) spans the entire retail sector, encompassing national general- and specialty- retail chains, regional chains, independent retailers and franchises. Respondents indicate professional titles ranging from C-level executive management to store operations, as well as IT management. The study has a +/-7.15 percent margin of error. To download the full findings of the Oracle Retail study, please visit http://www.oracle.com/pls/wocprod/docs/page/ocom/industries/retail/survey.pdf.

About Oracle Retail
Oracle partners with the world's leading retail companies to transform the economics of their business. From supply chain, operations, merchandising, store systems, optimization and information technology solutions, Oracle Retail is the single source for innovative and comprehensive industry solutions - enabling organizations to serve their customers better by applying insight into daily business decisions for more profitable results.

About Oracle
Oracle (NASDAQ: ORCL) is the world's largest enterprise software company. For more information about Oracle, visit our Web site at http://www.oracle.com.

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