Like other apparel executives in a similarly challenging role, Chuck Gilreath, vice president of sourcing for Bon- Ton Stores Inc., acknowledges the retail hurdles that are industry-wide.

 

He cites one example - the expiration of the U.S. safeguard limits with China at the end of this year - and anticipates that what will likely develop is more restrictive import measures, given the current mood in Washington.

 

"The bottom line is nobody knows what will happen after 2008," Gilreath says. "It's become very complicated and very political. All that has done is made it more challenging for business people."

 

Accordingly, he says, deciphering trade legislation, once a less-consuming undertaking involving tracking of year-end quota totals, has now become a year-round preoccupation.

 

FAST FACTS

Founded: 1898

Headquarters: York, PA.

Publicly-Traded Ticker: (NASDAQ: BONT)

Products: Clothing, footwear, bedding, furniture, jewelry, beauty products and housewares.

No. of Stores: More than 280 stores located in 23 states.

Nameplates: The Bon-Ton, Elder-Beerman, Carson Pirie Scott, Younkers, Herberger's, Bergner's, Boston Store and Parisian.

Web site: www.bonton.com 

 

Gilreath identifies other future dynamics to grapple with, including a tightening labor market in China accompanied by related cost pressures.

 

"It's hard to go inland there because you don't have the transportation and may not have the power [infrastructure]," he says. "There aren't many places to go next. As with any business, you reach a point where the labor is getting to be more expensive and you've got to start working on productivity.

 

"It's something I've talked about for years. Yet you have some Asian companies that don't know where to start in terms of modernizing. They're buying the equipment but missing the soft technology side. In the next 10 years it will be interesting to see if China and India will become more productive."

 

All the rapid changes and uncertainty notwithstanding, Gilreath suggests that publicly traded Bon-Ton, the venerable York, PA-headquartered U.S. regional chain (with more than 280 department stores in 23 states throughout the northern United States), has relied on traditionally sound business strategies and basic but established IT systems in supporting the considerable store and brand expansion recently executed.

 

A tried and true plan
Gilreath and his team joined the Bon- Ton organization last year. They worked under Saks Incorporated's Northern Department Store Group before the entire division was acquired by Bon-Ton in 2006. With the transaction, department stores Bergner's, Boston Store, Carson Pirie Scott, Herberger's and Younkers all joined Bon-Ton's umbrella while retaining their nameplates.

 

Gilreath says an obvious area of interest by Bon-Ton was the accompanying stable of private brands acquired with the transaction, including Ruff Hewn and Laura Ashley (Saks transferred licenses such as its exclusive Laura Ashley U.S. license to sell women's apparel to Bon-Ton under the deal).

 

As the retail industry consolidates, building private label brands can be as crucial as achieving private label operational efficiencies, Gilreath says.

 

"National brands are paid a real premium [by retailers]," he explains. "So it can be really beneficial to establish your own brand instead, put some time and effort into what the brand should be about, and then source it directly and deliver a compelling value for a customer. That's how you can differentiate yourself. We've developed balanced private brand creative teams and private brand sourcing operations. We have both operational and creative expertise as a result, and I think in our industry that is really unique."

 

With those established private brands in tow, Bon-Ton elected to retain sourcing systems; they were transitioned off their prior mainframe (under Saks) onto their new hosts. "There were some bumps in the road," Gilreath acknowledges, "which will happen any time you take a whole enterprise and pick it up ... but in terms of operating the stores and sourcing the product, my take is everything went very well. The Bon-Ton IT support behind the scenes was first rate."

 

Saks used parts of a global sourcing solution from Wayland, MA-based RockBlocks that Gilreath had familiarity with dating back to 1998, as an executive for Payless Shoe Source. "We made the decision to continue and expand the use of it here at Bon- Ton," Gilreath says.

 

The RockBlocks system supports sourcing processes from quotation through final delivery, providing workflow, exception and event management. According to Gilreath, the system is used to compute overseas delivery dates and store information such as harmonized tariff codes and detailed vendor information down to the factory level: "If you look at how we use RockBlocks, it really boils down to the internationalization of our orders and maintenance of a lot of information about our overseas sources."

 

For order management and tracking, Bon-Ton now utilizes a web-based system from Iselin, NJ-based ecVision to interact with more than 300 international factories and agents, including an online interface for manufacturers who log in for purchase order information.

 

Gilreath notes that the 10-year-old ecVision, which first specialized in electronic data interchange (EDI), provides further support in the form of on-the-ground developers and help-desk personnel located in south China who speak the native language.

 

"We've really defined ecVision's realm as that interface with the vendor factory," says Gilreath, "and RockBlocks as the core application where we house a lot of the information we use in conjunction with the main frame."

 

Simple approach for success
Gilreath says that, considering today's fast-paced sourcing climate, the focused IT approach adapted by Bon-Ton provides a prudent option that realizes "bite-sized efforts" in contrast to an enterprise-wide solution that requires substantial investment, long-term implementation and intensive customization before attaining results.

 

It also conforms to his philosophy of building a system that is alert and exception driven to focus on problems. (For example Gilreath eschews the use of spreadsheets for mission-critical work. He says they are difficult for all stakeholders to grasp and collaborate with. He prefers databases.)

 

Discussing the selection of RockBlocks, Gilreath says: "The application is narrower and deeper. It works really well in this one narrow area of the apparel, textile and footwear world, where you have characteristics of multiple widths, colors, sizes and styles and must move the merchandise from around the world into the U.S."

 

Additionally, Bon-Ton's use of ecVision eliminates much of the paper out of the process: "Our vendors use our systems to create packing lists, case labels and commercial invoices so their opportunity for key-in error is limited. Much of the data starts in our systems and stays there."

 

Having achieved such order visibility, Gilreath's team can focus on price considerations vs. those related to cost. "As buyers we live in the world of price, but it is easy to confuse the two," he explains. "You have to understand off the bat that achieving reasonable margin for the supplier is not your goal. No matter how much you try, you'll never understand all the factors that lead a supplier to quote a given price."

 

Ultimately, Bon-Ton's systems implementation has enabled the retailer to focus on that key goal of improving its privatebrand offerings so they are increasingly coherent and attractive to the customer.

 

"Our vendors used to be reactive, but we've got some pretty genuine product development partnerships going on with some of them," he says. "It's a different game these days."