Belk Stores Services, Inc. Business Information, Profile, and History

Company Perspectives:

"The mission of Belk corporations and their stores is to be the leader in their markets in selling merchandise that meets customers' needs for fashion, quality, value and selection; to offer superior customer service; and to make a reasonable profit. Reflecting the beliefs of the founders of the various Belk corporations, Belk stores want their customers to have a feeling of confidence that they will receive honest and fair treatment, that they will get full value for every dollar, and that they will be satisfied in every respect so that they will want to shop with Belk stores again. Belk stores have a responsibility to the people who make their growth and success possible. They are committed to maintaining relationships of integrity, honesty, and fairness with customers, associates, vendors, other business partners, stockholders, and with all people in every community they serve."

History of Belk Stores Services, Inc.

Still operated by descendants of the founding Belk brothers, Belk Stores Services, Inc. (BSS) is one of the few large family-owned retail entities remaining in the United States. Over its more than one hundred years in business, BSS has evolved from a budget-minded variety store into one of the nation's leading department stores. BSS provides merchandising, centralized buying, data processing, market research, legal planning, training, importing and private label procurement services to Belk Corp., a $2 billion confederation of 14 department store partnerships controlled by the Belk family. Stores in this unorthodox retail conglomeration are located in 14 largely southern states. Though many of the affiliated stores are wholly or partially owned by members of the Belk clan, they are not considered a chain. Thomas Belk Sr., who led the company from 1980 until his death early in 1997, cited this corporate strategy as one of the organization's strengths, noting in a September 1995 interview for WWD that "Unlike J.C. Penney or Sears, which tend to be the same everywhere, all of our stores are different, by catering to the community and the personality of the people there."

Late 19th-Century Origins

In 1888 William Henry Belk opened a small bargain store in Monroe, North Carolina. The store, New York Racket, was financed with a loan from a local widow, Belk's savings, and goods on consignment. The goods' prices were clearly marked and not negotiated with customers, an idea that was just becoming accepted in retailing. Within seven months, Belk had gone from being over $4,000 in debt to earning a $3,300 profit.

The founder approached his brother, John Belk, in 1891, to become a partner in the prospering store. Thus the Belk Brothers Company was formed. A second store was opened in 1893 in Chester, South Carolina. A third opened in Union, South Carolina, in 1894, and the following year, William Belk moved to Charlotte, North Carolina, to open the company's fourth store. His brother John remained to manage the Monroe store until his death in 1928. The brothers' stores were doing so well by 1895 that other merchants even began to copy its straight-talking slogans like "Cheap Goods Sell Themselves" and "The Cheapest Store on Earth."

William Belk's success resulted from some retailing ideas that were innovative for the time. In 1897 he combined the purchasing power of the four stores, plus two others in which the brothers had no financial interest, and formed a loose cooperative buying network. This allowed them to purchase goods in bulk quantity at favorable prices. All purchases and sales were cash. Belk also made extensive use of advertising. The brothers opened a store in Greensboro, North Carolina, in 1899.

Rapid Expansion After Turn of the Century

In the early 1900s, Charlotte was a boom town, expanding along with the textile industry and was the state's largest city by 1910. That year, Belk sales approached $1 million, and a new five-story building was unveiled to house the Charlotte store. The company's greatest expansion followed World War I, as the southern economy received a boost. Cotton prices went up, and soldiers came home. Between 1918 and 1920, Belk stores' total sales more than doubled to $12 million a year. In 1920 Will Leggett--John Belk's nephew by marriage--opened a store with the Belks in Burlington, North Carolina. His brother, Fred Leggett, opened a store in Danville, Virginia, that same year--the Belk-Leggett. The Belk brothers often added managers' names to their own on new stores.

Boom days and postwar prosperity gave way to recession, however, and the Belks retrenched, not opening any stores between 1922 and 1925. In 1925, however, they opened three more stores and three again in 1926. In 1927 the Belks and the Leggett brothers agreed that the Leggetts would own 80 percent of the stores they opened, with Belk Brothers Company owning the remaining 20 percent. In the past, the Belks had always owned the majority of their stores. This arrangement formed the foundation of Belk's unusual organizational scheme.

Opportunistic Growth During the Great Depression

The years between 1910 and 1930 were prosperous for retailing. Competition, however, began to creep up on the Belks. Then the stock market crash of 1929 slowed Belk's sales growth, but stores stayed open. Belk took advantage of other companies' misfortune by acquiring defunct stores, netting 22 stores in 1930 and 1931. In 1934 Belk opened a record 27 stores, expanding geographically into Tennessee and Georgia in the process. By 1938 Charlotte was again a booming southern city and the Belks's headquarters store there expanded. This location evolved into the organization's operational headquarters, consolidating purchasing, assistance with taxes and merchandise distribution, and other services for all affiliated stores. By 1938 Belk was doing business in 162 locations in seven states.

In response to growing competition from such national chains as J.C. Penney, Montgomery Ward, and Sears Roebuck, which were thriving in larger cities, Belk stores were remodeled and expanded. Belk Stores Association had formed in the 1920s, gathering the new store managers for quarterly meetings. By the late 1930s, the group was too large feasibly organize meetings four times a year, so it gathered at annual conventions. Belk Buying Service was formally set up in 1940. World War II defense spending enhanced the economy, and by the war's end, sales were two-and-one-half times what they had been in 1941. This helped pay off Depression debts and feed expansion. The Belks opened 25 stores in 1945 alone and achieved a net increase of more than 60 stores between the end of World War II and the close of the decade. In 1952 founder William Belk died at the age of 89. He had worked as the head of the company right up to his death.

Second Generation of Managers in the Postwar Era

After Belk's death, his son Henry took his place. The founder's other sons, John and Tom, were also active in the company. Six months after his father's death, Henry opened the company's first shopping center store in Florida. This store marked a dramatic break from Belk traditions: a New York design firm created a fancy interior, music was played, and merchandise was displayed for self-service. This contrasted sharply with the Belk stores' trademark features of spare, no-nonsense decor, and an army of well-trained sales clerks. Henry opened several more stores afterward without consulting his family, and by 1955 legal disputes were brewing among family members and other shareholders. Although lawsuits were filed, they eventually were dropped. Later that year, Belk Stores Services, Inc., was established to make a formal organization out of what had long been an operating entity. The BSS board then elected John Belk as president, leaving Henry to his Florida pursuit, the Belk-Lindsey Company. Though BSS cut all ties with Henry's chain of department stores in November 1955, family feuding would continue throughout the next four decades. John would later advance to chairman of BSS, with Tom as president.

By this time, the Belks' private-label business was thriving. By 1959 it accounted for a major share of the buying office's inventory. In the late 1950s, the Belks department stores had nearly peaked in the South, with 325 stores in 16 states. In 1956 Belk acquired its only viable competitor in the region, the Efird department stores.

Modernization Program Begins in 1960s

During the 1960s, the company had to adjust to a changing retail environment in the South. Stores that could once count on their reputations as local institutions found themselves in the midst of a highly mobile population that was attracted to the offerings of big-city stores. The largely autonomous and divergent stores making up the Belk group were not prepared to compete. A more mobile society, newly popular shopping centers, and the South's expanding economy presented BSS with the task of uniting its network of stores.

In 1958 there were 380 stores in 17 states. By 1963 the stores were, for the first time, presented to the public as a unit, instead of the string of independent operations they had been. Change was still slow, however. At a time when more buyers were using credit, 87 percent of Belk's sales were still cash. In 1967 extensive meetings were held by BSS and its long-range planning committees to chart the company's future.

Meanwhile, more stores were added to the fold: 14 opened in 1969 and 16 in 1970. The new stores were larger and used modern management techniques, such as computerized payrolls and centralized personnel departments. As planning and coordination gained in importance, so did BSS's role. By assuming more leadership, it accelerated the changes as the stores moved from budget to fashion merchandise. Expansion continued--between 1972 and 1975, more than 50 stores were opened. Several of the company's signature downtown stores were closed in favor of stores in the prospering outlying malls. Credit and data processing systems were centralized and upgraded. Another change was Belk's pursuit of upscale brand names. Estee Lauder, a brand of cosmetics, was aggressively wooed until it was added to product lines in 1975. Even Belk stores in smaller towns upgraded their look and merchandise. This served to add new customers to an already loyal clientele.

Under the direction of President and CEO Thomas Belk beginning in 1980, the company succeeded in making the transition to meeting the demand of style-conscious shoppers of the 1970s and 1980s, as opposed to the previous demand for thrift, durability, and value. For example, Belk hosted its first fashion buying show in New York in 1983, and within four years, representatives from the nation's top fashion lines were competing for representation in the show. This further consolidated buying and proved Belk's place in the fashion retail market. Marking the change from bargain chain to fashion stores was top designer Oscar de la Renta's appearance at a grand reopening of a Belk store in 1986. Though some stores retained the small-town, bargain-budget flavor of Belk's founder's vision, others moved to suburban malls and shopping centers. The company celebrated its 100th birthday in 1988 while opening a huge new BSS office complex in Charlotte. The company would later close its New York office and consolidate buying operations at the new facility.

The 1990s and Beyond

Though the retail industry in general and the department store segment in particular were disrupted by recession, competition from mega-discounters, mergers, and multi-billion-dollar bankruptcies in the early 1990s, one observer characterized Belk Stores as "a rock of stability." The company achieved this constancy through a series of well-considered divestments and acquisitions. In an effort to focus on its strongest markets, the company sold a few stores in marginal markets, maintaining its strongholds in North and South Carolina. Hot on the heels of rumors that longtime affiliate Leggett Stores Inc. was negotiating a merger with Dillard Department Stores Inc., Belk's parent company purchased a controlling interest in the Virginia-based chain in the fall of 1996. The addition of Leggett's more than 40 stores increased Belk Corp.'s amalgamation of stores by nearly 20 percent and, perhaps more importantly, ensured the continuation of Leggett's long-running affiliation with Belk Stores Services.

Belk Stores withstood an unplanned management transition in January 1997, when 71-year-old Thomas Belk died following gall bladder surgery. His three sons, Thomas M. "Tim" Belk Jr., H.W. McKay Belk, and John R. Belk shared the title of president and divided merchandising and operating responsibilities among themselves. Strategies for the future included cost reduction, consolidation of operations with a special focus on inventory management, and a continuing emphasis on the customer.