Belk's Omnichannel Journey

One of the buzzwords that emerged in the retail industry in 2012 was omnichannel. In essence, it refers to being able to provide consumers a seamless shopping experience no matter which channel (brick-and-mortar, online, mobile) they choose to engage a brand in. For department store chain Belk, becoming an omnichannel organization is an ongoing process, but one in which the retailer is making significant strides.

In his keynote presentation yesterday at the National Retail Federation's Big Show in New York City, Tim Belk, chairman and CEO of Belk, spoke of the company's transition from a department store chain in the Southeast into an omnichannel business that's growing beyond its 16-state store footprint.

Belk identified three characteristics of its customers before embarking on this omnichannel mission: they prefer modern brands over traditional ones; they're looking for a more compelling in-store shopping experience; and they want the ability to engage with the brand in multiple channels.

To address these wants, Belk allocated $600 million to help it become an omnichannel organization. Forty-two million was budgeted for branding, $14 million for customer service excellence, $270 million for store expansion and remodels, and $263 million for technology investments.

Belk cited three phases of the company's digital journey, all of which are ongoing:
Phase 1: Accelerate e-commerce sales. With its roots as a brick-and-mortar store, Belk has been a late bloomer when it comes to e-commerce. Last year, e-commerce accounted for 3.3 percent of the company's overall sales; the goal is for that number to be 10 percent by 2015. To help it reach that goal, Belk has optimized its website for mobile devices, launched mobile apps, implemented a drop-ship program with select product suppliers and increased the size of its e-commerce fulfillment center. These moves have not only helped Belk grow its online sales, but its comparable store sales have seen a boost as well.

Phase 2: Replace IT infrastructure, merchandising platform. Belk's previous e-commerce and merchandising platforms were legacy systems that weren't scalable. The company has budgeted $80 million and 27 months to upgrade these platforms; it's 17 months into this process, Belk said.

Phase 3: Become omnichannel. Belk has invested $230 million to make this goal a reality. It's a four-year process and the company has dedicated 250 employees (at its peak) to the project, Belk said. The company has identified five distinct stages of the project: replace e-commerce platform; replace point-of-sale system; expand mobile offerings; integrate customer data; and establish enterprise inventory.

To help grow its brand awareness, Belk has become the sponsor of the Belk Bowl — college football is a way of life in the South, Belk noted. The company tweets about the game as well as posts messages promoting it on Facebook. The result has been a significant growth in sales coming from outside the company's 16-state footprint.

5 Takeaways
Belk wrapped up his presentation with the following five tips, which he said his company has learned in its process of becoming an omnichannel organization:

1. There isn't a clear path or any industry norms around being omnichannel. You need to test and learn.
2. Innovation is a skill one must learn.
3. Partner with thought leaders and technology providers in your space.
4. Top management must have ownership of the project, from capital allocation to timelines.
5. Operations are changing, including shifts in supply chains, sales attribution and real estate.