3 Lessons from the Bankruptcy of Belk
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In 1888, William Henry Belk opened a modest store called The New York Racket in Monroe, North Carolina. Three years later, his brother John Belk became a partner and renamed the store Belk Brothers Company. By 1923 they operated 20 stores that generated $10 million in annual sales. In 1955, the sons of William Henry Belk transformed Belk from downtown bargain stores to modern fashion destinations in shopping centers and malls throughout the South. In 1988, a new generation of Belk family members merged all 112 stores into one company. By the time it was sold in 2015 for $3 billion, it had grown to nearly 300 locations in 16 states.
This month Belk filed for bankruptcy.
Yes, there was a debt-laden buyout. Yes, there was a $135 million payout to its private-equity owner. Yes, there was a thing called a pandemic. But in an analysis of its seemingly swift and sudden decline, The Charlotte Observer detailed three other critically important dynamics that explain how the largest privately owned chain of department stores collapsed.
And there is much the church can learn from all three.
First, shoppers were going elsewhere. Department stores have been in decline for some time, but nothing matched the nosedive reflected in the “retail apocalypse” in the final half of the past decade. This from The Charlotte Observer report:
“‘Before COVID, the shoppers were going elsewhere. They were going to Amazon or going online, but it’s not just that,’ said Barbara Kahn, marketing professor at the University of Pennsylvania’s Wharton School. ‘It was also that they were going to the T.J. Maxxes of the world.’
“Department stores weren’t innovating their shopping experience, Kahn said. Lululemon and Sephora, offering similar products to a department store, were. And malls weren’t drawing people in as they once did.
“Belk revenue peaked in 2016 at $4.2 billion, according to Moody’s. It has fallen every year since.”
Translation: There was a lack of innovation exacerbated by a late digital push. It’s not that people stopped shopping, they simply stopped shopping at department stores in malls that followed the same consumer-attraction model from previous years. Shoppers had moved on; the stores hadn’t.
Then a second reason for the fall was noted:
“The growing middle-class of the South buying mid-priced clothing was what helped grow Belk, but the modern retail environment doesn’t reward the middle ground anymore, according to Katrijn Gielens, a marketing professor at UNC Chapel Hill.
“‘The way it came across is that there was too much stuck in the middle in terms of what Belk was selling,’ Gielens said.
“Retail has been dividing itself in two recently. In one direction, there are more high-end stores with a diverse selection, and in the other direction, simple, no-fuss discount stores. Belk was stuck in the middle, a no man’s land.”
A third reason for Belk’s demise was that they were not able to be very nimble in response to the pandemic. As one analyst phrased it: “Belk is a very fragmented brand. My sense of Belk is that it just doesn’t have that unified approach. The big problem with Belk is that it has 300 stores, but not 300 unified stores.”
Too many churches are vulnerable to the trio of dynamics that put Belk into bankruptcy, and the fallout can happen as quickly as it did for the venerable department store chain. Particularly in light of the effect of the pandemic.
First, a failure to innovate – specifically in terms of the digital revolution – in relation to who we are trying to both reach and serve. Do we not realize that people want to check a church out online before attending, therefore making it the new front door? Do we not realize they may attend online for months before an in-person visit? Do we not realize that they want to learn, grow and even interact increasingly online? Do we not know that they are now accustomed to being served digitally in almost every way?
No, we do not cater to the consumer desires of the wider world in terms of mission, vision, values or beliefs. But we must cater to the consumer desires of the wider world in terms of how they are wanting and willing to explore the Christian faith (not to mention your church), preferred systems of delivery (how they want to receive what we have to offer), the new nature of community created by social media, and the “phygital” experience they expect.
So, lesson one? Innovate in light of the changing sensibilities of who you are trying to reach, and frame that innovation through the lens of the digital revolution.
But a second lesson is equally clear: Avoid “no man’s land.” Too many churches think the “middle” is the best, safest, most enduring place to position themselves. Neither fully contemporary nor traditional; neither fully oriented toward reaching the unchurched nor seeking out the already convinced; neither fully online nor fully in person.
There is a reason they call it “no man’s land.” It is not a land that any man (or woman) particularly wants to inhabit. It has little to no identity, and it is attractive only to those who themselves want little to no identity. It’s akin to so-called “blended” services that attempt to be both contemporary and traditional. They end up being neither, and unattractive to those who desire one or the other. In trying to please everyone you please no one, just as in trying to reach everyone you reach no one.
The third lesson is that you simply cannot have a hodge-podge of ministries that are not unified under a singular vision, mission and values. Otherwise, you simply have a bunch of tactics, but no strategy. Having dozens of disconnected, uncoordinated ministries is not as effective as having three that are.
Just as the pandemic hastened the trajectory Belk was on, my fear is that it will do the same to many, many churches. If you entered this season unhealthy, bloated with debt, resistant to innovation, indifferent to the digital revolution, in no-man’s land in terms of identity with ministries in disunity, you may be in for a rude awakening. Because the ending of the pandemic we hope and pray for with vaccinations and herd immunity will not be what revives your church.
It will only be what reveals your church.
James Emery White
Sources
Austin Weinstein and Catherine Muccigrosso, “How Belk Went Bankrupt: Inside the Financial Collapse of an NC Department Store Icon,” The Charlotte Observer, February 9, 2021, read online.
Wikipedia on “Belk,” read online.