Laying it online

How the top private companies in the state are opening up commerce on the internet.
By Greg Lacour
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Jessica Kirk emerges from SouthPark mall in Charlotte on a rainy Saturday in August with a plastic bag of loungewear from Belk in her hand. Kirk, 33, is expecting her first child. She still gets around OK, but seven months pregnant is seven months pregnant.

She has shopped at Belk since she was a teenager. She lives nearby and decided to pop in after picking up items from other stores  in the mall. She can always find a bargain at Belk. Of course, she could have stayed home and clicked over to Belk.com, lynchpin of the Charlotte-based department-store chain’s multimillion-dollar expansion into e-commerce. But she doesn’t care for it. Fact is, she hasn’t visited the site in awhile. “I don’t shop for clothes on Belk’s website. I don’t know why — I just find it difficult to navigate for some reason. And I’m a huge online shopper. I shop Nordstrom all the time online. The design is really clean, it’s easy to navigate, has lots of pictures. With Belk, I don’t know — it just doesn’t capture your attention.” The company is working on it. From the dawn of e-commerce in the early 1990s until 2010, Belk Inc. lagged in marketing itself and selling its wares online. Even after it launched a website that offered some of its collections in September 2008, they were minimal compared with national competitors’ such as Cincinnati-based Macy’s Inc. and Seattle-based Nordstrom Inc. (Before then, Belk.com had been for bridal registries.) Graphics were primitive, product information scant. The site was slow and crashed often. “When I came on board, we didn’t even have a Facebook fan page,” says Ivy Chin, the senior vice president Belk hired in late 2009 to oversee e-commerce and digital sales. “They realized they were behind and needed some help.”

Since her arrival, the nation’s largest privately owned department-store chain has beefed up and streamlined its website and created a social-media team to keep its name bouncing around Facebook, Twitter, Pinterest and other social networks. Online sales have skyrocketed from $20 million in 2009 to $133 million in 2012. They’re projected to reach $230 million this year, on their way to an ultimate goal of 10% of total sales, which were just short of $4 billion in 2012.

So its online expansion has succeeded, helping Belk retain the title as the state’s largest private company, according to Grant Thornton LLP’s North Carolina 100, an annual ranking of closely held Tar Heel companies based on previous-year revenue. (It’s claimed the top spot every year since 2010, the first time it participated in the voluntary survey.) Company officials emphasize that e-commerce growth doesn’t herald a cutback of traditional stores, many of which are centerpieces of small-town retail in the South. 

Still, it’s a juggling act, and Belk is trying to find its way in a market that seems to change by the hour. It’s a challenge each company on the list faces. “A private company’s online strategy depends on where they see themselves in the supply chain,” says Ray Greer, a managing director of Grant Thornton in Charlotte. For instance, a manufacturer might be more interested in electronic data interchange, which facilitates communications such as order tracking and bills of lading between it and retailers. Retailers can use the Internet to boost their brands without boosting their brick-and-mortar presence. “My wife watches Project Runway, and there’s a fashion wall they have supported by a retailer,” Greer says. “Guess who the retailer is: Belk. She asked, ‘Why would Belk, a regional company, be on Project Runway?’” Because Belk.com makes it a nationwide retailer.

“We’re in our moment, and since we’re authentically a Southern store, it’s the new South of 2010 we’re positioned as,” says Kathryn Bufano, Belk’s president and
chief merchandising officer. “As retail has changed, as the South has changed, so Belk has changed.”

Belk’s push into e-commerce coincided with a 2010 rebranding, which introduced a new logo and tagline — “Modern. Southern. Style.” — and a plan to reach $6 billion of sales by 2017. It announced it was investing $270 million in store improvements and $210 million in information technology atop a $53 million commitment to e-commerce. “They’re a traditional department store, but they’ve become very open-minded in terms of innovating, and it seems to be a pretty well-run company,” says David Moin, a senior editor for Women’s Wear Daily who has covered retail for three decades. “They know their market.”

It took a few years after Tim Belk’s ascendance to chairman and CEO in 2004 for Belk to decide where it needed to go. The company has been a family affair since William Henry Belk founded it in Monroe in 1888. His sons, Tom and John, succeeded him; Tim is one of Tom’s kids. It became a retail giant — now with 301 stores in 16 Southern states, including 70 in North Carolina — but by the middle of the last decade, it was in danger of being left behind.

The rebranding was partly a response to research showing customers were rapidly increasing their online shopping and those who shopped both online and in-store spent three times as much as store-only shoppers. The chain also was feeling pressure from online-only retailers such as Seattle-based Amazon.com Inc. and department stores with extensive Internet offerings. It needed someone from outside the family to lead its e-commerce expansion.

Chin grew up in Taiwan and moved to the U.S. at 13. After graduating from Drexel University in Philadelphia in 1992 with a computer-science degree and working three years as a software developer, she took a job with West Chester, Pa.-based QVC Inc., the giant cable-TV and Internet retailer. By 2009, when Belk’s recruiting director, Jeff O’Hanlon, contacted her via LinkedIn.com, she had risen to vice president of strategic and multimedia operations, overseeing a digital operation that generated more than $1 billion of sales every year. She had never worked for a department store, so she wondered why one was interested in her. Belk wanted someone different — someone competitive, progressive and steeped in e-commerce experience. “Ivy really fit that bill,” Bufano says.

Chin, now 44, was intrigued by what Belk wanted to do. “As I was listening, I went, ‘Wow, they really have no idea of what kind of potential they really have.’” It had a longstanding and well-respected brand, loyal customers and access to top-of-the-line products. But she wasn’t entirely sold on the job. “One of the things I shared with the company was, ‘Look, if you’re looking for someone to just magically do everything and fix everything, I’m not your person. You need to go find somebody else. What I do know is how to build a team to deliver the business value and objective.’”

You can use the Wayback Machine, an online archive of websites past, to explore pre-Chin Belk.com. It’s not pretty. Take, for example, a snapshot from April 28, 2009. It takes almost 10 seconds to load. You encounter a couple of basic menus — links to “Women,” “Men,” “Sales and Clearance” and other options along the top rail — plus some photos. There’s no video, animation or social-media share buttons. It’s bare-bones. Clearly, there were plenty of problems for Chin to tackle. But there was no sense in doing anything without increasing the website’s capacity for content and upgrades. Belk was learning e-commerce’s first lesson: Profound digital improvements are typically less a case of building on what’s already there and more a matter of starting over.

So that’s what Chin and her team did. When she started, the e-commerce department had about 20 people. It has swelled to more than 100 from diverse backgrounds: customer service, copywriting, technology, business analysis and code development. They spent much of her first year shoring up and adding capacity to Belk.com, the online equivalent of laying a new foundation to handle increased functionality such as images, information and internal links. That encouraged the “stickiness” — visitor retention — that makes sales more likely.

It’s tough to sell a purse or pair of shoes online because shoppers want to feel them, hold them, look inside. Each item now has detailed information and multiple images. Users can zoom in and peek at purses’ interiors. Each item has social-media share buttons so you can shoot your girlfriend a Facebook note or tweet about an Anne Klein leather tote that’s on sale. None of these functions are revolutionary. They’re just new for Belk. The advances have allowed it to add to its online offerings. Some top-of-the-line fashion brands such as Coach and Michael Kors that Belk had sold in its stores for years were reluctant to allow the chain to sell their goods on Belk.com because of its shaky performance. That’s changed. “That first year,” Chin says, “they couldn’t believe what we were able to do.” When it hired Chin, Belk was No. 359 on Internet Retailer’s Top 500 Guide, which ranks North American retailers based on Internet sales. In 2011, it was No. 221. 

Belk plunged into e-commerce just in time. Retailers can no longer concentrate on online at the expense of bricks and mortar or vice versa. So executives are focusing on improving “omni-channel” experiences. Shoppers want the same array of merchandise, level of customer service and payment options whether in a store, on a website, on social media or using a mobile app.

All of the CEOs who took part in a PricewaterhouseCoopers survey last year said such retailing was the industry’s dominant trend and would be for years. The report noted that “control [has] started to shift from the brands to the consumer, who now has the ability to research, browse, tweet, comparison shop and transact and pay online while in the store and are now in the always-connected paradigm, as opposed to when we want them to shop.” Tim Belk, in this year’s annual letter to shareholders, named as one of the company’s four key strategies “providing a compelling omni-channel experience to customers that will enable us to serve them seamlessly and efficiently however they choose to shop.” Efforts to date have yielded an iPad app in November 2012 and one for the iPhone in July.

Even with the apps and social media, a strong website is key. Chin says Belk.com’s capacity has to increase further for more video, animation and other features, as well as guarantee short loading times. A five-second delay can mean thousands of lost sales. “So many components go into the creation of that site. We have to widen the channels, speed up the process. As we improve our website, which is our No. 1 marketing mechanism to showcase who Belk is and what our brand stands for, we need to make sure whatever we do on the website is very much in line with our brand message.” That means being relevant and fashionable while retaining enough tradition to be recognizably Belk.

Fortunately, its website is getting better. After her rainy-day purchase, Kirk felt compelled to give Belk.com another try. “It has improved greatly!” she wrote in an email. “Much easier to navigate and much more visually appealing.” Maybe so, Chin says. But they’re still working on it.

For a complete list of the North Carolina 100 Private Companies click here.