Dominic Citino of Microsoft has an refreshing blog called Retail Rumblings on Retail Technology topics. In his latest blog post he deconstructs PIM needs in the context of multi-channel strategy of Retailers. He writes (emphasis mine),

We need to deconstruct PIM a bit to understand why retailers are finding it so critical to their multi-channel capabilities.  PIM, as a concept, seeks to extract item management from the application environment.  Go back in time to the era of the merchandising system/ERP boom.  Retailers were buying or building big merchandising applications and/or ERPs focused on providing 'foundation data' to run their enterprises.  These enterprises were almost always focused on the store and warehouse environment.  Every merchandising application has some form of an 'item master'.  This data store typically comes with a big list of fields and in some cases some basic hierarchies.  Retailers typically use some basic editor screens to manage and manipulate this data along with any automated data feeds that they have.  The data in the item master is the core of a retailer's foundation data. 

As application environments became more complex, retailers needed to disseminate this item data to many other systems and tools.  Worse yet, the functional needs of each system often varied greatly.  For example, a supply chain execution system, like a WMS, needs a vast array of handling rules and dimensions that merchandising applications are often blind to.  So the retailer had to decide to build these new fields into the merchandising application (and the ability to maintenance them) or build application-specific item attributes that sit in the application that needed them.  Multiply this scenario exponentially across application environments and functional areas and retailers ended up with a mess. 

The final nail in the coffin of the application-centric item data store was the emergence of multi-channel retailing.  The ability of retailers to syndicate item information in a channel-specific manner was very low with core merchandising applications.  Each channel may require different versions of item information.  For example, the Web may require rich product descriptions and images, while the logistics applications require dimensions and other physical data.  A shopping affiliate partner may require an XML feed, limited to certain fields that they support. 

While Dominic nailed the PIM + Multi-channeling, PIM also needs to be looked upon as an enabler to data synchronization and to improving supply chain collaboration.

According to a recent report from AMR Research, A Sell-Side Product Information Management Vendor Landscape (Robert Bois, Eric Newmark and Jim Murphy, 3/16/05), "Companies that react now and build a pragmatic PIM system will dramatically increase their agility for deploying future product-related initiatives such as dynamic catalog generation, multichannel product syndication, or more effective print catalog creation. . . As e-commerce standards continue to evolve, and the balance of power between buyers and sellers oscillates, the agile company with a sound PIM strategy will enjoy a significant competitive advantage."

Pasted from <http://www.internetretailer.com/internet/marketing-conference/99882-webmethods-extends-webmethods-fabric-product-information-management.html>