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Retail Trends

Redefining Modern Southern Retailing

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Tim Belk
Chairman and CEO
John Belk
President and COO
Charlotte, N.C.

Tim and John Belk describe their grandfather, Belk founder William Henry Belk, as “an entrepreneur, an innovator and a bit of a wild man.” Apparently, the apples didn’t fall far from the tree. The brothers have plenty of that entrepreneurial and innovative spirit coursing through their veins, judging from some of the bold moves they have made over the last few years — including rebranding Belk and overhauling the department store chain’s IT infrastructure. This spring, as Belk celebrates 125 years in business with 125 days of activities and events, the two executives are committed to honoring the core values of community involvement and innovation that the company was founded on — even as they plunge headlong into the future of retail. The celebration includes a $2 million partnership with the Points of Light Institute culminating in Belk associates working in local schools to bring the retailer’s “Modern. Southern. Style.” credo to life through makeover projects. Today, privately held Belk is a nearly $4 billion retailer operating 301 stores in 16 states, on track to become a $6 billion company over the next five years.

STORES editor Susan Reda recently spoke with the namesake executives about where they’ve been and where they’re headed. What are some of the plans in place to commemorate the 125th anniversary? Tim Belk: One of our values is being involved in the community, so representatives from each store will get involved with the schools. ... We have vendors making exclusive products for us, and plans to debut two private brands including one from [Carolina Panthers quarterback] Cam Newton. We’ll also be rolling out our Southern Designer Showcase, the culmination of a contest we ran last year where we invited folks to come up with fashions that epitomize modern Southern style. In all, we had 175 compete and ... designs [by the 15 winners] will be showcased in about 40 stores.

How does Belk’s past juxtapose against the vision you have for the company today? John Belk: Many of the things that resonated with our grandfather, our uncle and our father still keep us ... excited about the work. Being involved in our communities is part of our DNA. So is making sure that we deliver value to our customers. It was important at the beginning and still is today. That said, a lot has changed. Way back when, the store manager purchased all the goods; it was a very local effort. At one point our grandfather gave a lot of the management team equity in the business and he put their names up on the buildings. At the time, the stores were small and they were located in downtown communities. By the time our Dad and our uncle’s generation was running the business, they began moving into the suburbs, opening larger mall-based stores and upgrading the merchandise.

What’s your earliest memory of growing up as part of a department story dynasty? John Belk: One of my earliest memories is of family vacations that included stopping at every town on the way to the beach to visit every store. Still, it’s not like our Dad pushed us into the family business. He made it available as an opportunity. All of us ... worked somewhere else for a period of time before getting involved in the company. But we all worked summers at Belk and understood retail. And there were always conversations going on around the dinner table about business.

Clearly you were paying attention. Tell me about the investments you’re making today. Tim Belk: We’re investing pretty heavily in the company in a number of ways. It started with rebranding a little over two years ago. We’ve updated our image to be more reflective of the assortments in the stores. As a part of that we’ve also invested in the stores — remodeling and expanding to make them more compelling shopping environments that are more in line with modern Southern style. We also realized that our customer was changing significantly in terms of how she was getting her information and shopping with us. As her use of technology became more advanced, we needed to invest in technology to support that ... That pushed us into the phase we’re in now — namely, replacing our IT infrastructure and merchandise systems, a project we call Project SMART. We’re planning to spend $80 million in 27 months and we have 80 people dedicated full-time to that initiative. We’re 17 months in ... and we’re feeling cautiously optimistic that we’re putting in place a foundation on which we can make other investments.

I understand that’s just the beginning. Tim Belk: That’s true. As big as the Project SMART phase is, it’s just table stakes for the omni-channel strategy. The foundation needed to support omni-channel is even bigger — three to four years in scope, with over $200 million in capital required and close to 200 people assigned to support this effort. We’re committed to being a true omni-channel retailer, but right now the customer is ahead of us. We have customer data in eight different locations in our company right now; we need to put it in one location, and we need to be able to work with it and move it to where that customer is, and be able to track her and personalize her experience. It’s hard work to knock down those silos and re-engineer the data so that we can ... put it in the hands of the sales associates. Right now they don’t have that data. The customer has the data on their smartphone, but the sales associate doesn’t have anything — they just have the relationship. That’s changing quickly.

You seem to have a solid read on your customer. How do you stay close to her? Tim Belk: One of the many things we do is work with ForeSee to gather feedback from our website. It provides us with good data about how shoppers rate our selection, our navigation, checkout … That data, combined with direct customer feedback and web traffic patterns, tells us where we need to invest to improve functionality. Another source of information is looking at data. So how do we know the customer is changing? On Black Friday, 22 percent of our customers accessed remotely compared to 13 percent a year earlier. So we look at that and realize that mobile is an area that we have to invest in.

How do you think your predecessors would react to the strategies you’re putting in place now and the emphasis you’re placing on technology? John Belk: One thing our Uncle John used to say was, “Make changes before you need to.” I think that applies to mobile and omni-channel. ... He also used to say, “You’ve got to be willing to take a hit, pick yourself back up and keep going; you’ve got to be willing to try things that don’t work. You learn more from those situations than you do when things are going well.” Tim Belk: William Henry Belk was very entrepreneurial and he brought a lot of new concepts to bear. He would recognize how technology is changing retail and I think he’d be supportive of the investments we’re making.