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Posted Date: 7/26/2011

Belk Transformation Modernizes IT and Style

By Jessica Binns
In business since 1888, the Belk Inc. chain of department stores, headquartered in Charlotte, N.C., operates 305 locations in 16 southeastern states. Belk always has aimed to keep its finger on the pulse of Southern traditions, and when it embarked on a corporate facelift in late 2010, the company debuted a new logo and slogan: “Modern. Southern. Style.”

Indeed, the retailer is focusing heavily on updating its offerings with greater contemporary style and modern appeal for the more fashion-aware shopper — and shifting away from the “traditional” Southern consumer. Among Belk’s priorities is achieving differentiated assortments and offering high-level service in its stores with an eye toward earning and keeping customer loyalty. To accomplish that goal, the retailer is bringing in popular brands such as Jessica Simpson and also introducing more private-label wares into the mix.

So far, that approach seems to be working. Johnny Belk, the company’s COO, said at Oracle Retail’s CrossTalk conference in June that the chain — like many other retailers — is dealing with a 14 percent increase in product prices heading into the fall season. For example, the price of a pair of Levi’s jeans has jumped from $32.99 to $37.99. But Belk said that because the more expensive jeans are a better product with greater detail, thus far customers are responding favorably to the higher prices.

Belk also wants to makes its goods more accessible in stores and is expanding departments and reengineering store operations by establishing best practices and improving processes. The retailer has added 39 new merchandise planners and established merchant teams that use shared metrics to measure progress.

A SMART transformation
But the real action is happening behind the scenes. Belk’s SMART — Strategic Merchandising and Retail Technology — initiative is part of a $150 million investment in a sweeping IT transformation that added 75 new jobs to the department. When Belk CIO Mike Laurenti joined the company 18 months ago, senior-level executives took a holistic view of the retailer’s capabilities, evaluating what needed to be done to enable an omni-channel customer experience. “I’d like to use social media and mobility more than we’re using them today,” says Laurenti. His department partnered with the e-commerce division — which oversees social media activities — to design Belk’s Facebook page.

The retailer is working with third-party vendors to build a mobile application and to develop a mobile commerce website, both of which the company plans to launch this fall. “We understand the potential social media has and understand that that’s where the customer base is moving to,” he adds.

“Our point of view is that social commerce is going to dominate how we interact with our customers,” explains Laurenti. The traditional consumer thinks of the experience with Belk in terms of being at the store, but the industry is heading in a direction where the customer’s natural inclination is not to start with the store. “It starts online, on Facebook, where you engage with friends and family — you begin your purchase not by walking into a store but on a social network. How do you bring all of these technologies together and prepare yourself for a world where the consumer expects to engage with Belk the way they want to?”

For Belk, a significant piece of the SMART initiative involves overhauling its core merchandising system and replacing it with Oracle Retail’s software solution. The 30-month implementation will improve Belk’s core transaction, master data, replenishment and allocation systems. “The investment doesn’t really end, but we’re spending a significant amount of capital to get going,” says Laurenti.
 
“We also want to replatform our e-commerce capability and enable better integration with store technology,” Laurenti explains. “This will help to achieve a seamless experience from web to store, so you can see what friends are saying on social media about Belk.

“That’s our vision — we’re not there yet, but we’re building that foundation today,” Laurenti adds. The company’s e-commerce business experienced 70 percent growth over the past year — significantly higher than planned projections. Belk responded to skyrocketing demand by doubling the size of its Charlotte e-fulfillment center. “We’re investing in e-commerce from a technology and fulfillment perspective,” says Laurenti.

The leapfrog mentality
The next big piece of Belk’s initiative focuses on modernizing store systems and replacing its point of sale system and “whatever the customer interacts with,” says Laurenti. Belk plans to evaluate mobile checkout options, keeping in mind “what we think the future customer experience will look like in the store,” he adds.

Investing heavily in analytics, replacing its data warehouse, and becoming more scientific in demand forecasting will enable Belk to “leapfrog the capabilities that our competitors have,” Laurenti says. “By being more customer-centric and scientific in our ability to deliver a better assortment and reduce markdowns, we expect to see an increase in sales and experience a slight reduction in inventory because we can get the right product to the right store at the right time.

“By moving forward with world-class capabilities, we expect a significant improvement in execution,” he adds.

And as Belk said at CrossTalk, being first to market with new technology isn’t what’s important, but having a good foundation that enables innovation is. “We want to become fast followers and not be on the bleeding edge,” he said.

Jessica Binns is associate editor of Apparel and can be reached at jbinns@apparelmag.com.

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