Retalix Ltd. (RTLX)

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Retalix sees bright future in Asia
12.12.05 | 12:21 By Yoram Gavison
The probability that Retalix (Nasdaq: RTLX) will sustain its rapid growth in 2006 is high, going by Barry Shaked, the software company's chairman and CEO.

Retalix, founded in 1982, develops software to run retail chains, from mighty supermarkets to gas stations and convenience stores.
Its growth is based on global software trends and its own business strategy, says Shaked. He noted a report from AMR, which noted that chains are shifting from designated software made by hardware vendors such as IBM and NCR, to open software programs that do not depend on the hardware that runs them.

Retalix wins 80% of the software contracts for stores, Shaked claims, and is well positioned to take the lead in its market.

Citing figures from IBM and Retalix's own estimates, Shaked projected that the market share of open software among food retailers would grow from 20% in 2003, to 75% in 2008.

Retalix, which controls 45% of that market (open software systems for food retailers), should grow prettily if that projection proves true, Shaked suggested.

Installed at 15 of the 50 biggest retailers

The Israeli company has installed its software systems in 15 of the world's 50 biggest food retail chains. Also, 63% of the world's marketing chains are planning to replace legacy systems with point of sale based programs in the coming two years.

Retalix's contract win rate among chain and supply management is lower, about 30%, but here too Retalix projects growth to come. Some 57% of the retailers are expected to replace their management software in the coming two years.

He noted that Retalix won the Publix tender, wresting away the southern U.S. company's custom away from IBM.

Another factor playing in Retalix's favor is the war of the marketing chains against the goliath, Wal-Mart, which has annual turnover of $290 billion. The world's second-biggest retail chain is Carrefour of France, which has annual turnover of $90 billion.

The retailers concluded that one way to erode Wal-Mart's domination is to improve their computerization. Shaked believes Retalix's offerings are better than what Wal-Mart developed in-house, and that they can save a company as much as 1% to 4% of its turnover. When the company's turnover is $60 billion a year, that adds up to more than a chunk of change.

Retalix is presently the only company that provides retailers with comprehensive systems capable of handling all aspects of the business, from inventory management to predicting demand to pricing, even management of customer clubs, special deals, and cash registers.
That is the Israeli company's main power against the competition. Other companies sell software systems that can handle specific areas of business, but not the whole enchilada.

Retalix recently launched the Insync product, a comprehensive system for retail chains. It has already scored five contracts for Insync, one from a tier-1 company that translates into $2.5 million to $7 million income a year, through seven years.

Some 80% of Retalix's revenue derives from existing customers, Shaked says. He foresees big contracts in India, China, Japan and France, including one with an Indian chain of gas stations.

http://www.haaretz.com/hasen/spages/656883.html

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