Tuesday, July 14, 2009

From 2008: Story of Belk's Growth

An article I found from 2008 describes much of the Belk story today. Detailed are the acquisitions of Proffitt's, much beloved in East Tennessee and Parisian, Birmingham's own version of Nordstrom. There is no doubt about it that Atlanta got "Belked" since Rich's fell by the wayside 4 1/2 years ago. Amazingly, it is actually the largest market for the company considering that it is headquartered in Charlotte. Nevertheless, it is not the first time Belk has come to the market, nor is it the first time they've felt the nasty bite of the fickle Atlanta market. It's poorly planned North Point Mall store closing is sure proof that they still do not understand the market well enough, and they paid the price for not giving the store a more upscale offering. Perhaps if they had kept the more attractive and smaller Parisian they would have done much better, but that's hardly a criticism of the whole company, which is the last and most successful privately-owned department store in the history of the nation.


Photo from Atlanta Time Machine of the Belk Gallant store in Buckhead in 1954. It took over 30-40 years for Belk to return to Buckhead, and today it is the Georgia flagship located in Phipps Plaza.

When Belk was last in Atlanta, Belk was under a partnership known as Belk Gallant. Located across the city and extending as far south as LaGrange and as far north as Dalton, it was the dominant Belk merchant in the city up until the 1970's. The backlash back then against what was viewed then as shoddy merchandise led to the complete pulling out of the core Atlanta market, dissolution of the Belk Gallant company and the changeover of remaining stores to Belk corporate: perhaps the only corporate Belk stores prior to 1998. However, most of the outlying Belk stores remained. References can still be found in web archives of much legal trouble that Belk Gallant faced years ago.


Belk Rhodes logo taken from a 1975 ad in the Rome News-Tribune.

Outside of Atlanta, other families dominated the Belk market. In most of South Georgia, Belk Matthews dominated. In Americus, it was Belk Hagin. In Savannah, it was Belk Beery. In Rome, Cedartown and Carrollton it was Belk Rhodes. All but Belk Matthews disappeared after 1998. Belk Matthews was still very much in existance as late as 2005, and is rumored to remain today at the Houston County Galleria. Belk Rhodes, however is long gone.

Today, much larger and streamlined Belk is pretty much dominating department store retailing in Georgia and seems to be poised as being the dark horse that is slowly dominating the department store industry in the South. Macy's is groaning under the weight of trying to be the Wal-Mart of department stores with locations equivalent to Kmart by modern retail standards. Dillard's is ailing in its own attempts to be like Belk, but target a more upscale demographic. This leaves America's very last family-owned department store in a very good position if the economic situation does not wreck them all. If alive today, Mr. Rich would indeed be envious.

12 comments:

  1. I have some good memories of the Belk Rhodes store in Cedartown, GA that used to be on Main St. My mother went in that store fairly often and although the store wasn't that big, it had 2 stories and seemed huge to me when I was a kid. Belk used to sell Andhurst brand stuff and they used to make great nylon boxers for men and my mother bought me 3 pairs there in 1983 around the time I turned 15. The Jockey nylon ones available later were never as good as the Andhurst, but when I got old enough to drive and shop, the Andhurst ones were long gone and I never could find more.

    Toccoa, GA had an interesting old Belk store downtown, which later moved. I was there with my aunt and mother and my aunt bought me two pairs of swimming trunks there. This would have been early summer 1984.

    I think these old Belk stores in downtowns were much more interesting than the all-similar ones in malls and shopping centers these days. Each store used to be different.

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  2. I have to disagree that Belk is "dominating" anything. They still sell mostly inferior goods compared to Dillard's and Macy's, with the exception of a select few locations.

    Belk has a big problem, and that is that their stores are not and nice and do not sell the same upscale merchandise that the stores they bought out and replaced sold. It's killing them in several markets, including Atlanta, Nashville, and Knoxville.

    In Knoxville, it was bad enough when they replaced Proffitt's with lower quality brands, but then they took Parisian, which was quite upscale here, and just turned it into another middle-tier Belk.

    And that's their problem, even in stores that they do stock nicer merchandise, their reputation is that its a mid-to-low tier store that sells mostly their own, low quality private labels. In most of their locations, you can't buy a suit. In the locations that you can, their selection is very limited and it mostly their Meeting Street and WH Belk separates. Some of their locations sell Polo, but most do not.

    When people (well, people outside of Charlotte and Raleigh) see the Belk name, they have one impression of what that store is, and that it's not a first-class place to shop.

    If Belk wanted an upper-level store to compete with Dillard's and the nicer Macy's locations, then they should have kept and expanded the Parisian name or re-branded their upper-tier stores as "Belk Premier" or "Belk Select" as some of their upper-level vendors suggested they do.

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  3. To Brian: I am not personally not a fan of Belk except from mostly a historical perspective. There was a time in the 70's and 80's that Belk DID have quality merchandise and name brands, but their quality went down pretty much after that time. I am also fascinated by their historical local merchant agreements such as Parks-Belk, etc. I remember when my mom was shopping at the Belk Rhodes store in the late 1980's it was a much nicer store than today, and she quit shopping there in the early 1990's when she said the quality hit the toilet. I personally think it is stupid how they try to maintain one name with three different classes of stores. How in the hell do you know what you're actually shopping at? Most people wouldn't expect JCPenney to be Neiman Marcus just because it's located in a nicer neighborhood. You KNOW what JCPenney has to sell, regardless.

    What I mean by Belk "dominating" is that they pretty much took over the market and have done well enough to survive it despite a glut of stores. I wasn't making any comment of what I thought of their quality. However, I cringe when I think about them in first tier malls in Atlanta, Knoxville and Birmingham. It seeths on me much in the way it does seeing a tacky Macy's sign on a Rich's legacy store. Birmingham was FURIOUS over them buying out Parisian, and even if they'd kept the Parisian name I am betting they wouldn't know how to run it regardless. The problem with Parisian was Atlanta wasn't as receptive to them with more to choose from. Their intentions were in the right place, though, and the stores held on nicely. The perception of them, however, was a store that was more overpriced than it was elegant although I remember well how much nicer the Parisian at Town Center looked prior to the changeover and how hard it was for the sale staff to adjust to the junk they were suddenly having to sell. Knoxville, Chattanooga and Birmingham, however, were quite appreciative in having a decent upmarket department store since Miller's, Pizitz and all the Nashville greats went away.

    As to North Point, I am terrified that they along with the possible bankruptcy of Dillard's, will cause that mall to die. That was a very bad decision on their part across the board to try to force a mainstream Belk store into one of the wealthiest markets in the country. I think if they'd just kept the damn Parisian, name and all, that probably Nordstrom, Saks or Neiman Marcus might have found the old Lord & Taylor appealing.

    My advice is the same to both Macy's and Belk: they are doing the WRONG thing trying to market it all as one store. At least Macy's has the Bloomingdale's store for higher end merchandise, but Belk has...nothing...and that article detailed their stupid decision to can Parisian. Macy's should have kept the dominant regional name in every market and Belk should have kept some of the names they bought out. Belk had particular hostility to Proffitt's, unfortunately, because Proffitt's kept trying to edge out their home base. Personally, I found Proffitt's interesting, because it wasn't that old of a store chain but its humble beginnings in Maryville seemed to really cause the people of East Tennessee to bond with it. I also miss their beautiful green logo: one of my very favorites.

    I guess what I can say is that I was trying to keep the article positive even though I don't agree with the corporate atmosphere these days. I mainly wrote this because I found the article interesting and wanted to incorporate the history of Belk in Georgia...notice I didn't mention Parks-Belk.

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  4. It is interesting to see people comparing the quality of merchanside in Belk vs. Parisian and Proffitts's. I've been in all these stores many times.

    I guess I'm one who looks for good buys rather than high-priced brand names, and tend to wait for name brand things to be on sale rather than paying full price for them.

    I never cared much for McRaes and Proffitt's because it seemed they didn't carry much of what I liked, and their prices were high without very good markdowns, and actually liked it when Belk replaced McRaes at Madison Square Mall.

    As for Parisian, they did have nice things in their stores in upscale markets, but the Parisian at Madison Square in Huntsville did not have the same quality selection as their Parkway Place store. Since Belk took over both stores, the Parkway Place Belk has mostly the same higher-end selection as far as I can tell, and the Madison Square store actually seems higher end than since it was Parisian because the "thug clothing section" seems to have shrunk some.

    I remember when Belk seemed to be disappearing except in Georgia. I was in The Mall At Barnes Crossing in Tupelo, MS the night that Belk started closing and marked everything 40 percent off. This was probably around 1994, but I could be wrong. Here in Huntsville, the only Belk we had for years was one at Haysland Square, a strip mall in south Huntsville. I rarely went in it and always wanted them to move to a mall.

    Decatur, AL has Beltline Mall and their Parisian turned into one of the darkest, most depressing Belk stores I've ever seen. Everything looks brown and dull in there.

    Belk locations vary very widely in appearance and merchandise selection.

    The original Belk store at Mount Berry Square in Rome, GA (on the south end) looked to be in not so well-maintained shape, with many lights burned out last time I was in there months ago.

    Belk-Hudson once had a store in Gadsden Mall which later became JCPenney after Belk built a new store in the mall around 1993. JCPenney later closed and became a new movie theatre. Then the fruit basket turnover happened with McRaes (originally Pizitz) and Parisian and Belk. Now Belk is in the old Pizitz and the Belk is now a new JCPenney.

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  5. Your comment of a "possible Dillard's bankruptcy" leaves me quite confused. Dillard's is not in any danger of bankruptcy, nor have there been any articles to suggest that other than a wide-ranging article on retail in BusinessWeek last October.

    I'm a Dillard's shareholder, and got in on the bottom level last December. The price has tripled since then, and is still paying a healthy quarterly dividend. The annual report looked strong. The company turned a profit in the first quarter of $0.09/share, which beat the estimate of a $0.18 loss.

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  6. Brian, I hope you're right about Dillard's, but I have been getting wind of them having problems for awhile. I didn't say that without looking into it a bit. They have been closing a lot of stores, including ones not exactly in the ghetto. Also, from what I understand, the North Point Mall store stays pretty deserted. While they may not go under (and I sure hope they don't), I do have to wonder if their presence will diminish in many markets. Nevertheless, I will edit that statement to less of a blanket statement.

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  7. Interesting background. It sounds like Belk started out as a cross between AMC (Federated's buying group that included non-Federated-owned chains) and the classic large or medium market chains like mercantile, Federated, & Associated Dry Goods, with agreements rather than outright ownership in the past. The mephsis on store brands seems like an effort to insulate themselves from the heavy markdowns done by big chains, but it winds up making them look like a variation on JC Penney and uncompetitive with Kohl's. There have been chains that have tried to do this in large markets over time--Mervyn's, and Federals, among others and it hasn't really been successful. The now gone Goody's and Uptons seemed to try this approach with limited success in small or medium markets.

    Many early urban department stores had roots in small markets, as in the cases of May, but they established themselves in big cities far from their origins. Penney's tended toward small markets in their early days, but not exclusively. They skillfully used suburban shopping centers as a bridge to major markets. For many years, Penney's did have distinctly different selections and circulars for their small and large market stores.

    Big market stores often have not done well in small markets--people who want a big city store go to the big city and the small town branches often aimed too high or too low in their selections. irtonically, Macy's midwestern chains did quite well in small markets up until the 80s when buying became more centralized.

    Dillard's potential failure has been mentioned periodically in the press over the last couple years. Their same store sales were falling more than other mid- and upper-tier chains for quite some time. They have a large debt burden and they have been closing stores, particularly in Northern markets where they have failed miserably. Dillard grew as a classic "buyout" operation--trimming staffs and centralizing buying, while investing little in the stores. The result has been a lot of messy, outdated stores with non-existent service and selections that don't really fit the clientele, although this approach was profitable for many years, esp. when competitors were dealing with buyouts and other problems. In contrast, Macy does a much better job of using centralized buying but tailoring of selections to local stores. They haven't done so well with some of the May chains, esp. Marshall Field's but they've been smart with some like the former Hecht's & Kaufmann's. Dillard is attempting to do a better job with its most upscale locations, but I have to wonder whether someone who wants upscale merchandise would bother going there when they can always wait for one of Nordstrom's semi-annual sales or the like.

    Parisian never did very well in Atlanta. They didn't seem to have a niche and overlapped too much with Rich's. They needed a buyer who could better distinguish them from the competition and Belk seems like a poor choice. Atlanta seems to go for a funny combination of conservativism and glitz, which Nieman Marcus seems to fit perfectly. I don't know who else could be that clever.

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  8. "When people (well, people outside of Charlotte and Raleigh) see the Belk name, they have one impression of what that store is, and that it's not a first-class place to shop."

    Yep, that's the biggest part of the problem. I'm lucky in that my first true Belk exposure was in Greenville, SC, where the Belk-Simpson store was pretty much on par with the Rich's across center court (which, I will admit, was a couple of rungs lower than my Town Center "home" store). And then I move up here to Charlotte, and we all know how SouthPark is. Pretty much everyone in this town has a pretty high opinion of Belk.


    Chris, you also hit on another excellent point in the perception of even Parisian. My mother grew up in Decatur, and I remember going to the old store on 6th Avenue a looooong time ago. :) But when they came to Atlanta, my mother wasn't overly impressed. It was nice to see the name, but she still remembered Parisian as the store in Decatur -- why should they be so much more fancy and charge so much more just because they're now in Atlanta?

    Of course, I have been to the Gaffney store, which reminds me of an old Upton's or even a Kohl's. Which leads into the issue JT raised, that "I personally think it is stupid how they try to maintain one name with three different classes of stores." Yep, I agree. I think Parisian provided a great launching pad for Belk to move some things around and create that higher tier of stores...but we all know what happened. I'll even go so far as saying that the Parisian acquisition will be in the top 3 biggest blunders ever made by Belk; I just don't see what it really brought to the table after the Proffitt's acquisition, other than Atlanta. (I think Belk could have easily expanded into rural Alabama and Mississippi on their own.)



    Now, I will say that I am pleased with my Belk experience and don't hesitate to shop there. Actually, since we're all friends here, I'll let you in on a little of my geekiness and share that in 10th grade I checked out and read every word in the "Belk book," and even went so far as to design my own Belk store, with, of course, my name after the hyphen! ;)

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  9. Belk was at a crossroads in the 60's and 70's and could have gone the discount store route, launching Belkway.

    Instead, they kept the company fragmented and continued to serve rural markets, which would be unique among department stores.

    The merchandise mix was always a mix of ordinary and relative decent quality brands, which often could only be gotten at Belk.

    In the men's department it wasn't unusual to have Oshkosh B'gosh overalls and Wrangler/Lee jeans next to Levi's and Sergio. Converse sneakers and Hush Puppy slippers were commonplace in footwear.

    The mall stores that opened in the 70's and 80's were more upmarket than the typical downtown stores, by then the rural markets were being served by Rose's, Kmart, TG&Y, Sky City and other discounters and Belk no longer needed to carry the low end merchandise that had made the stores successful. Prior to the 70's, a town without Belk meant for many Southerners a trip to a larger city or if lucky, JCPenney or Sears offered a catalog store in town.

    The move to the malls served their purpose, and actually helped meld the company into one of the survivors of department store consolidation, and eventually a major player in the consoidation once Saks sold Proffit's, McRae's and Parisian to Belk.

    Where I give Belk and Dillards some points over Macy's is a better selection of Big&Tall men's clothing than Macy's. But Belk hasn't replicated the panache of Parisian, Proffit's/Loveman's, McRae's and many long gone rivals that have been swallowed up by Dillard's and Macy's.

    Gottschalk's in the West was similar to Belk, and has been liquidated. Boscov's, a similar chain in the northeast is in bankruptcy with an uncertain future, so Belk occupies a niche that is very tenuous at best.

    Once the economy begins improving, don't be surprised if Belk doesn't begin a new wave of growth by absorbing its northern counterpart, Bon-Ton, hopefully allowing the familiar banners to remain in markets unfamiliar to Belk and retain Bon-Ton's experience in its markets.

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  10. Sky City was an unfortunate loss thanks to the late 1980's market scams. The only reason I do not have a post on that is because I have failed to locate a photo or ad of the store. I remember Sky City, and I loved their logo. Unfortunately, I was 11 years old at the time they liquidated and photography wasn't so easy back then...why old photos remain so hard to come by.

    As to Belk, I do have to wonder about a store that tends to anchor malls with JCPenney and Sears as the other anchor. That would seem not to offer much differentiation, but to rural markets they seem to have the "appearance" of being a mid-market store when in reality they're just JCPenney with a really pretty logo and a deep rooted Southern tradition. Just look at the "Belk Rhodes" logo. If you were in 1982 and had no idea what it was, wouldn't you think it was the nicer store in town?

    I love the "Belkway" concept. I don't know why they didn't try it then and especially why they don't try it now to complicate things for Wal-Mart and Target in the South. Of course, this day in age it would be called something weird like "Belk Lifestyles". Of course, not many stores are going to take those risks until they see if Sears can make one work for them. Sears has been the most daring with these concepts, and how well they weather them will be the standard the others follow. Just keep in mind of all the department store-based discounters, only one remains: Target. Meanwhile, Fred's & Dollar General have a very real shot at eventually taking on Wal-Mart.

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  11. Boscov operates true full-line stores (lots of non-apparel) and isn't a great analogy. Their entry into large markets also has been fragmentary. Von Maur has done the same in the Midwest, but with much more upscale stores.

    Gottschalk's and Bon-Ton are probably better analogies in terms of their markets and the range of what they sell. Gottschalk got itself into trouble by going into markets it didn't know. they also bought a lot of stores that they didn't do much to remodel or thoughtfully merchandise. They're in a mix of rather conservative markets away from the Coast and exurbs of LA which tend to be more responsive to fashion fads and my understanding is that they couldn't reconcile the needs of different customers. Bon-Ton has been struggling with its Elder-Beerman acquisition, which is a ciompany that had been bankrupt. Bon-Ton had a fairly well-defined niche in small, mostly Northeastern markets, whereas Elder-Beerman had been all over the place and had a poor track record taking over major chains' stores like the LaSalle/Macy's in Toledo. Belk looks like it may be falling into the kinds of traps that these chains have.

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  12. Ken made a very interesting observation about Belk being in the rural areas. Here in Upstate Area of South Carolina, I find it very interesting to see Belk stores in your typical shopping centers (i.e. grocery store, drug store, mom-pop stores, etc.). As a matter of fact, there's one in Greer, Simpsonville, and Easley, not including the major two located at Westgate Mall (Spartanburg) and Haywood Mall (Greenville). Also I have noticed that their concept extended out into North Carolina. There's a Belk store located off of Interstate 85 past Kannapolis, NC of all places! Strange. But this marketing has created a sense of shopping loyality to those in VA, NC, and SC. I feel weird if I don't go to a Belk store. It's the last of the local department store era.

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