Belk Stores Services, Inc.

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Belk Stores Services, Inc.

2801 West Tyvola Road
Charlotte, North Carolina 28217
U.S.A.
(704) 357-1000
Fax: (704) 357-1876

Private Company
Incorporated: 1955
Employees: 35,000
Sales: $2.98 billion

Belk Stores Services, Inc. (BSS) dates back to a small bargain store opened in 1888 that grew to be the U.S.’s largest family-and management-owned department store organization. BSS provides centralized buying, data processing, market research, legal planning, training, and development for about 300 Belk and Leggett stores, which are primarily fashion department stores and are located in 14 states, largely in the southern United States. The stores are not a chain; various numbers of the stores are owned by several different corporations.

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. Seven months later, Belk’s books showed significant profits.

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 began to copy even their slogans.

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.

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% of the stores they opened, with Belk Brothers Company owning the remaining 20%. In the past, the Belks had always owned the majority of their stores.

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. While other companies’ stores closed, Belk acquired 22 stores in 1930 and 1931. In 1934 Belk opened 27 stores, the most it had ever opened in a single year. These included locations in Tennessee and Georgia. By 1938 Charlotte was again a booming southern city, and the Belks’s headquarters store there expanded. Through this store, consolidated purchasing services, assistance with taxes and merchandise distribution, and other services were offered to all stores. In 1938 Belk was doing business in 162 locations in seven states. The stores, however, faced competitive challenges from national chains such as J.C. Penney, Montgomery Ward, and Sears Roebuck, which were thriving in larger cities.

In response, 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. In 1946 the Belks opened 25 stores. Altogether they opened 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.

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, nononsense 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 law suits 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. In November 1955 BSS cut all ties with Henry’s company. John eventually become chairman of BSS, with Tom as president.

The Belks’ private-label business was thriving by 1954. 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 real competitor in the region, the Efird department stores.

During the 1960s, the company had to adjust to the changing South. Stores that were once 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% 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 as-suming 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.

Belk had had a buying office in New York since 1924, but it was not until 1983 that it had its first fashion buying show in the city. Four years later, representatives from the nation’s top fashion lines were competing for sites 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 1a Renta’s appearance at a grand reopening of a Belk store in 1986. The company celebrated its 100th birthday in 1988 while opening a huge new BSS office complex in Charlotte.

BSS stores succeeded in meeting the demand of styleconscious shoppers in the 1970s and 1980s, as opposed to the previous demand for thrift, durability, and value. Belk also succeeded in transplanting itself from downtown areas to outlying malls. The 1990s constellation of stores reflected variation; some stores retained the bargain-budget flavor of Belk’s founder’s vision. The consolidated planning, distribution, buying power, and administrative legal resources of BSS, however, rendered even the smallest Belk store competitive.