Taking southern style national

Mar 01, 2013 (The Charlotte Observer - McClatchy-Tribune Information Services via COMTEX) -- Charlotte-based Belk Inc. is marking its 125th anniversary year in a big way: The nation's largest privately held department store company is in the midst of $600 million in investments -- from building new stores and renovating others, to investing heavily in e-commerce.

It's all with an eye toward becoming a $6 billion company over the next five years -- a long way from 1888, when William Henry Belk opened the first store in Monroe. His grandsons, CEO Tim Belk, and John R. Belk, president and chief operating officer, run the company, which has 301 stores in 16 states.

But as larger retailers push their own blend of online and brick-and-mortar-store shopping, how will Belk compete nationally for customers CEO Tim Belk, who turns 58 this month, and John R. Belk, 54, president and chief operating officer, talked about that in an interview with the Observer this week. The conversation also touched on how to find employees with the right technology skills, and what other retailers might learn from the troubles facing J.C. Penney. Following are excerpts from the interview, edited for space and clarity: Q: How do you balance your push toward technology and e-commerce sales with still being a traditional company with brick and mortar stores Tim Belk: Many retailers are wrestling with that question today. Some folks are worried that their digital sales might cannibalize their bricks-and-mortar sales. Many of our customers want to shop online and buy in-store. That's largely what's happening today. There are an increasing percentage that are shopping online and buying online, but most are shopping on line and buying in-store. And we see that from our online coupons.

John Belk: They go together well because that's the way the customer wants to shop. Unfortunately a lot of our legacy systems and processes treat them differently, so we've got a lot of work to do to better integrate all that customer information, and have a seamless experience for the customer. If you buy something online, we need to know about it when you shop online. And if you're shopping in-store, you may go home and want to make another purchase (online). Making sure that we understand what you bought from us, and what your needs are across those channels really needs to be unified.

T.B.: Our total company is growing about five percent a year for the last three years. Our digital business is explosive. Three years ago it was $35 million, two years ago it was $72 million, and this year it was $135 million.

Q: Is there anything about the growth in e-commerce that's surprising to you T.B.: Before we started the Belk Bowl (the annual football tournament at Bank of America Stadium, televised on ESPN), we were doing 9 percent of our digital business outside of our 16-state footprint. Now, that business outside of our 16-state footprint is providing 20 percent of our e-commerce business. And so we're very excited about that. We know that national TV around the Belk Bowl helped. We know that paid search like Google helps.

One of the challenges is hiring the people with skill sets. We're adding 150 corporate positions this year. One hundred of those (jobs) are in IT, e-commerce, and "omni-channel" (the retail strategy of using stores and multiple digital platforms to reach customers, including desktops, mobile phones and tablets.) A lot of companies are adding labor, with background in the digital side. There's a lot of competition for people with those skill sets.

Q: Talk about your philanthropic efforts (which include Belk's $2 million partnership with Points of Light Institute to help schools in the southeast, and giving UNC Charlotte $5 million over five years to boost the school's efforts to teach business innovation and the use of data analysis in marketing.) How might Belk influence what students in UNCC's Belk College of Business learn about retail J.B.: We're dedicating 2 1/2 percent (pretax) to charitable endeavors. Education is a big focus. So the whole opportunity to go back and help out at-risk elementary schools, we think can be really positive. We also know that our employees really want to do that.

UNCC is a bull's eye to retail and where we're going with innovation, managing lots of data and the analytics around it, and supporting an educational institution that's a big part of the success of the Charlotte region. UNCC had already been working on data analytics, and we know that's in our path. We thought we could learn together, and it would be win-win.

Q: There's been talk about missteps at J.C. Penney's, which lost revenues after announcing it would not have any more sales and coupons in favor of everyday low prices. (Penney's shares have lost 60 percent of their value in the year since the announcement.) What do you make of that strategy What lessons does that experience offer to the retailing world J.B.: We don't want to be known as the low-price leader. We want to have a very fair price, and a price that represents value. When we went through our brand transition to "Modern. Southern. Style.", we did not want traditional customers to go shop somewhere else. We wanted them to feel like they were finding the fashion assortments that they're looking for.

We're excited to be building that business. We do think we're getting some business from Penney's.

As we look at the future, it's all coming together. A lot of the pure-play Internet retailers do a great job -- you hear a lot of talk about the Amazons of the world. But we think having the store is a real asset because a lot of the time the customer does want to come in, see the merchandise, touch it, have some interaction with an associate. Other times they don't: We have a great offering for them to shop online, at home, or in the carpool.

Smith: 704-358-5087 ___ (c)2013 The Charlotte Observer (Charlotte, N.C.) Visit The Charlotte Observer (Charlotte, N.C.) at www.charlotteobserver.com Distributed by MCT Information Services

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