By  on May 10, 2011

The morning after killer tornadoes swept through the South last week, Tim Belk, chairman and chief executive officer of the Charlotte, N.C.-based Belk Inc., was on a plane to Tuscaloosa, Cullman and Jasper, Ala.

“We had one fatality and over 20 associates that lost their homes. It rocked all of us. There were some unbelievable stories,” Belk said, recounting one scary moment when employees at the Cullman store saw a “funnel” descending on the parking lot, then dived under tables and hid in stockrooms, though the fatality occurred at a residence.

His mission was to determine the condition of Belk’s associates from 10 stores impacted and to help provide resources and support, even water, to the area. “From there, you try to get back in business,” he said.

With the stores operating again and employees accounted for, Tim and his brother John, president and chief operating officer of Belk, will be in the right mindset for the Fashion Institute of Technology’s annual benefit gala at Cipriani 42nd Street in Manhattan on Wednesday. They’re the honorees, and their 305-unit, $3.5 billion retail company will be recognized as one of the few surviving regional department stores in an ever-consolidating industry, even gaining market share while battling big nationals like Macy’s, Kohl’s and Penney’s.

For Belk, the key to its long success has been fostering community ties, from tailoring the assortments to meet the needs of the small, medium and large communities served (a kind of localization practiced long before Macy’s and other retailers became surgical in allocating products) to being on the spot with providing disaster relief.

The community orientation dates back to 1888, when the company was founded by William Henry Belk, grandfather of Tim and John. Each time he opened a store, William Henry Belk formed a corporation giving the Belk family around 80 percent of the business and the local manager 20 percent. That motivated the manager to work hard to protect his stake and to build loyalty to the store. At one time, there were more than 300 corporations established, with names like Belk-Brown and Belk-Simpson.

Although the structure kept Belk independent and family-controlled, by the late Nineties it was deemed cumbersome. There was no centralized way to deploy assets or borrow. So in 1998, all the Belk businesses merged into a single company, whereby the local managers exchanged their stakes in their Belk businesses for stakes in the new, larger Belk business. To this day, Belk is considered the nation’s largest privately owned department store chain. Though it has shareholders other than the Belk family, it’s not publicly traded.

From 2002 to 2007, Belk was in acquisition mode, purchasing Proffitt’s, McRae’s and Parisian, which were converted to Belks, and boosting revenues by $1 billion. Now, according to Tim Belk, the focus is on organic growth and boosting productivity by investing in infrastructure, technology, remodels and building up certain categories, particularly shoes, jewelry and denim. Cosmetics has long been a top category for the chain.

“We are taking some calculated risks,” said Tim Belk. “We came out of the recession in a good position and felt the climate was right to invest in the business. Not everybody is doing that. As a private company, we are able to take a long-term view. We have been able to look a little further out and have the ability to change. My Uncle John [the late ceo of Belk who was also once mayor of Charlotte] said, ‘You’ve got to be willing to change before you need to.’ That was very good advice. We are changing from a position of strength.”

“They’re clearly investing in their business, in technology, the overall infrastructure, in people, and they have identified key merchandise classifications they think can drive the business and position them as the leader in those businesses,” said Abbey Doneger, of the merchandising and consulting firm bearing his name. “They are trying to move the business forward.”

Equally important, “There’s an understanding of the communities they’re involved in, and an understanding of the brands and designers that work for them,” Doneger added. “They really have a good sense of who they are and where they’re going. They operate nice, clean stores. I don’t think it’s about being safe. It’s about knowing their business and knowing their customers.”

“Belk is local-centric and they have [recently] upped the ante with scientific management and allocation of inventories,” said Arnold Aronson, managing director of retail strategies for Kurt Salmon. “They bring the best of moderate and better brands, well-known credible brands to communities of small and midsized populations where they are the destination store.”

According to designer Joseph Abboud, who has long supplied Belk, “They want to move to more modern product that is appropriate for their customer base. They are not trying to be the hippest, coolest or fastest. They trying to just do the right thing for their customer. I don’t want to sound too corny, but Belk is a slice of Americana. They’re great American merchants with a very straightforward approach to retail and honesty to their customers. In a funny way, there’s something refreshing about that.”

Since last October, Belk has been rebranding with an updated logo, “Modern. Southern. Style.” There is also new image advertising this year to make “a more emotional connection” with customers, and draw greater numbers of younger shoppers seeking some trendier, more modern styles, while not walking away from traditional customers or Belk’s Southern-style flair.

Tim Belk also said there will be 35 shoe department expansions in the summer and fall, and that denim departments continue to be upgraded, with 200 completed and the remaining 100 seen by back-to-school.

In addition, Belk is piloting a men’s suits separates department in two stores, emphasizing modern sport coats and pants with slimmer fits and thinner lapels that can be bought alone or together to create a suit. They’ll occupy about a third of the clothing department and sit next to the modern suiting area.

“We are not going after new brands,” Tim Belk said. “Our focus is on growing the pillar brands within our business, and growing the modern component of the assortments faster than the rest.”

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