New Retail Software Player Forms in GERS-Ecometry Merger

G00142788

Analyst(s):

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Summary

The merger of Ecometry and GERS into Escalate Retail combines both companies' strengths and sets Escalate up to pursue new retail clients. Vigorous marketing for Escalate will be critical to its success.

News Analysis

Event

On 21 August 2006, Ecometry, a retail, "e-tail" and direct-marketing software provider, and GERS Retail Systems, a provider of planning, merchandising and supplier collaboration software, announced a merger to form Escalate Retail. The transaction was funded by the private equity firm Golden Gate Capital.

Analysis

This merger combines Ecometry’s front-office strengths in e-commerce, point of sale (POS), business intelligence and clienteling with GERS’s back-office and supply chain capability. Escalate plans to add customer insights and intelligence to traditional retail planning and execution processes. The combined revenue of the companies will approach $100 million in 2006.

Escalate will target Tier 2 retailers that have annual revenue of between $100 million and $1 billion. Approximately 40 of Escalate’s customers are Tier 1 today, with revenue of over $1 billion, mainly from Ecometry's acquisition of Blue Martini’s e-commerce and GERS’s order management software.

Escalate likely will continue the alliance relationships that GERS and Ecometry established with IBM. Both companies used the IBM stack as their standard development environments and had a history of marketing collaboration. Given the size of this new organization and its focus on customer intelligence, Gartner believes other IT service providers will be interested in alliances with Escalate.

Challenges Escalate likely will encounter include:

  • Direct competition: GERS, Ecometry and Blue Martini used to work around larger competitors, such as SAP, Oracle and JDA Software Group, because they were not a direct threat. The merged company is a more credible threat to large competitors.

  • Name recognition: Ecometry and GERS had long track records in retail. Transferring that good will into a new name will take a significant marketing budget and time. Escalate likely will expand its marketing presence around the retail industry to develop name recognition. Marketing will be very important to Escalate's success.

  • Integration road map: Acquisitions usually bring integration challenges and delay timelines. Both are problematic for Escalate, since Oracle, SAP and JDA have head starts in developing front- and back-office retail software.

Recommendation for IT Service Providers

Look for opportunities in business consulting, process design and strategy as a result of this merger, because of Escalate Retail's focus on driving insights out of customer profiling and into other business processes.

Analytical Source: Jeff Roster, Gartner

Recommended Reading

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© 2006 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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