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Pacific Crest says mobile is key for retailers

The Associated Press

Pacific Crest Securities analysts say that the U.S. retail market has grown crowded and that those that want to get ahead will need to be focused on new technology.

THE OPINION: The analysts James Faucette and Brad Erickson said in a research note Friday that online sales account for nearly 6 percent of total U.S. sales and they expect those to grow quickly in coming years.

Faucette and Erickson said that economic growth is likely to remain in the low single digits in the near future. As a result, retailers will likely see sales plateau or fall. So those that want to grow will have to harness online sales growth, including mobile technology.

The analysts pointed to four well-known retailers as leaders in technology: Macy's, Nordstrom, Starbucks and Target.

Macy's is ahead of many of its peers in pushing a multichannel strategy, according to the analysts. They pointed to better targeting sales to customers online and through its loyalty program. They said that Nordstrom may be more advanced, calling high-end retailer the technology leader among department stores. Nordstrom has made a number of technological advances in its business, including moving away from traditional registers and toward mobile devices to ring up sales.

While the analysts said Target is not as far along as Macy's and Nordstrom in some respects, they said the company is making good progress on pushing its online and in person sales, such as getting its complete in-store selection online while adding online-only products.

Starbucks, the analysts said, has been aggressive in its use of new technology, such as its mobile payment app which now makes up nearly 10 percent of its transactions. They say this opens the door for further enhancements of the company's loyalty program and could potentially strengthen its brand.

THE STOCK: Starbucks Corp. shares fell 13 cents to $77.05, in line with a broader market dip by midday. The analysts have an "Outperform" rating on the coffee company's shares with an $88 price target.

Meanwhile, Target Corp. shares added 73 cents to $64.10. The analysts have an "Outperform" rating on the stock with an $80 price target.

Nordstrom Inc. shares slipped 11 cents to $56.47, also following broader market activity. The analysts have an "Outperform" rating on the stock with a $67 price target.

Macy's Inc. shares added 42 cents to reach $43.74. The analysts have an "Outperform" rating on Macy's with a $54 price target.