Q-and-A with Bealls Inc. Chairman R.M. "Bob" Beall II

BRADENTON -- R.M. "Bob" Beall II is helping lead the family-led Bealls Inc. into its 100th year. For the occasion, Beall agreed to sit down with the Bradenton Herald for a lengthy interview.

Beall, 72, served as chief executive officer from 1980 to 2006 and has served as chairman of the board since 1994, taking over for his father E.R. Beall in both roles. He joined the company in 1970, marking 45 years of company involvement.

The interview has been edited for clarity; a complete version is online.

Q: What does it mean to your family for Bealls to turn 100?

A: In the beginning, Charles, I was less than enthusiastic. I wasn't overly enthusiastic about the whole thing. I thought who cares other than a few of us that it's 100 years old. But I was persuaded that it wasn't the right way to think. I've come around and I'm getting excited about it now.

The family -- my sister Beverly and son-in-law Bill Webster -- they've done a lot of this work. Webster, Bealls director of public and government affairs, has been going through publications and old issues and ads from the '20s and '30s.

It's been a revisiting of history of before my time and during my time. It's turned out to be a good event. I think the whole family agrees that it's nice that somebody takes an interest other than us.

Things are changing as you know in retailing, just like it has in the newspaper business. We've got to run just to stay even, basically, with e-commerce and new concepts.

Q: What were some lessons that your father E.R. Beall or grandfather R.M. Beall instilled in you?

A: My dad, I think I'm somewhat that way, was not much of a talker. He didn't really lecture me or tell me what to do. He let me make my mistakes.

If I got too far off the reservation, he'd corral me.

The lessons that I learned from my dad were really to not get out of our skis basically. And to feed the business, to nurture the business and not take money out of the business, but keep money in the business and keep the business growing.

It's pretty basic but not everybody does that. It's worked well. I think that was the main thing.

My grandfather, in the old days, he would have the downtown store. My grandfather would take merchandise at the end of the season upstairs in the attic up there. It was his downfall. It was as big as his store area down below. Then when that season rolled around again, he wouldn't bring it back down, he would buy more and fill up the store again.

I remember going on buying trips with him and I was pretty young. He bought the dresses at the time and we just went to market, and he sat and wrote an order and we went to the next place and he sat there and wrote the order. He really had no idea what he was spending but it somehow seemed to work out. Maybe he knew more than I thought he did about what he was doing.

He was very different from my dad, who was much more inclined to look at it mathematically and logically from a buying standpoint.

Q: What would have happened to Bealls if the family decided to enjoy the bulk of profits instead of reinvesting in the business?

A: It probably would have been a one-store company until it finally wasn't anymore.

Q: In the early 2000s, Bealls contemplated opening department stores outside of Florida. Can you take me back to what happened and what changed the company's mind?

A: We were thinking we would do really well along water, along the Gulf or Atlantic. That was our plan, just to move beyond Florida a bit and edge up the coasts. But with the recession that we're just getting over now as a company, and with the success of the outlet stores, it became more. The return on investment became much better on the outlet stores. We could really roll them out. The leases were shorter, the store decor was cheaper and we got a quicker return on the investment without the risk of a long, 10- to 15-year lease.

With e-commerce exponentially bigger each year, we weren't as eager to sign a 15-year lease for a large store.

Q: Are you contemplating now opening department stores outside of Florida?

A: We're not actively looking at it right now, but neither have we ruled it out. I think we'll probably end up doing it.

I think department stores are going to be smaller than we had been opening for a while. We've been opening 100,000-square-foot stores and I don't think there's any need in the longer range for 100,000-square-foot stores.

Q: Coming up through the company, did you think retail would have changed as dramatically as it has recently?

A: My dad after the war worked with my grandfather in the downtown store. My grandfather and he got along well. But Publix Supermarkets came along and said we're going to open a new shopping center that's called Westgate and we'd like to put a store in there for you.

My granddad said no, downtown is where it's going to be. And my dad said no I think we ought to do it. So they amicably split up. My granddad stayed downtown and my dad went to run the Westgate store.

It was a struggle at first. There wasn't much out there. Manatee Avenue was a two-lane road and it was mostly woods out there, but it grew over time. My dad was able to make enough money that over time he could invest in additional stores -- not all of Publix stores and shopping center by any means -- but he picked and chose.

I realized the shopping center phenomenon was coming and it was going to be very, very dramatic as it was over time. I guess that was my first lesson in things changing.

I had no idea about e-commerce. That's the second great change. Thanks to former Bealls Department Stores president Conrad Szymanski to a large degree, we jumped into that early eight or nine years ago. E-commerce is a very small base but it has grown and grown and grown. It's significant now.

Q: Bealls was an early adopter with allowing shoppers to buy merchandise from its websites in 1997. Is technology something that you are passionate about and keep up with or do you empower other people in your company to keep up with the latest?

A: I remember a retreat we had and we all discussed this as something we had to do when it was coming. I was certainly in agreement that we needed to do it. We made the decision to fulfill the merchandise orders out of the stores instead of a simple warehouse. I think that served us well. It meant we didn't have double inventories and the stores had a way to get rid of it, mark it down if it didn't sell.

It's an endless, endless investment. You can never keep up with it. It changes so quickly and there's so many nuances to it.

For example, where does your name appear when somebody goes on a search to search for such and such? There are companies out there that specialize in making your name appear at the top or near the top. There are all kinds of software to buy. There are all kinds of investments to be made.

I'm not too interested in making a profit yet. Depending on how you look at it, we may be making a small profit. It just doesn't matter. The thing that matters is to build it into something significant.

I think in a few years we could be in a few hundred million dollars in sales in that area if we can keep it growing.

Q: What's your philosophy on where to invest in technology for customers?

A: That's part of the ever-growing expense of doing it. There are more and more companies that are popping up. We're always looking at them or testing them or buying them.

I think we're still in the very early days in terms of making it an interesting experience for the customer. What I'm really looking for is a step beyond going on the Internet and plug in a brand or something you are looking for and 20 or 30 items pop up on the screen and you're scrolling through the items. There has to be a more dynamic way of responding to the customer.

I don't know if it's some form of animation or some form of clips of live models rather than pictures of things hanging on a hanger. It's early yet. It's going to be more expensive but we're going to do it.

Q: Bealls has had about nine concept stores in its history. What do you make of the different Bealls experiments and concept stores through the years?

A: I think it's necessary that we don't know which ones are going to be the winners and which ones the losers and how they can morph into something different. Just Labels became the outlet. We went from very bad to very good.

Who knows what the next one is going to do. Bunulu might be perfect the way it is, it might need to evolve. We're going to let the customer lead us.

Q: What were the conversations like when Bealls wanted to start Bunulu?

A: We feel crowded in the space in what traditionally has been the middle class market, which in this country has traditionally been the largest market.

It seems to be to some degree it's either overserved, or it's not as dynamic or it's not as large as what it has been in the past. There's not as much room for more Bealls department stores or Kohls department stores or Penny's stores. The choice is to either move downmarket or upmarket. Downmarket is the outlet and upmarket is going to be Bunulu.

There's a lot more discretionary income at that level. If we can evolve into something that's different, that's unique, that's fashion-forward, casual, Florida-oriented. I think we have a good opportunity.

Q: What kind of encouragement were you giving your leadership to develop Bunulu? And what did you want to see to convince you to open stores?

A: I want to see the numbers. We've got a couple of stores that you may know are opening in the fall. They'll give us some direction. We'll see what the customers like and don't like and we'll evolve from there.

Maybe they'll initially produce enough sales that we can see the profits will be adequate to justify more stores immediately. I hope so. If not, we'll make changes and adjustments to make course corrections to see what the customers really want.

Q: Was there any hesitation creating a new store without the Bealls name on it or was it exciting?

A: I think it was exciting, and I think it was appropriate. I think the connotation of Bealls is the middle range of retailing. This is not aimed at the customer, or not directly aimed. It needs to have a new identity, a different identity.

Q: Now that you've solely been in the role of chairman of the board since 2006, what do you spend your time doing in terms of leadership and mentorship?

A: I interact a lot with our CEO and also with Lorna (Nagler) and Dave Alves at the outlet. I just keep up with what's going on, what's good what's bad and what should change.

I certainly don't, with rare exceptions, say that we should do this or we should do that. It's more we talk and we come to a logical conclusion. That's the kind of person I am.

Q: What has Steve Knopik done for the company since he's been CEO starting in 2006?

A: He has been a great CEO. He lets people, he gives people room to maneuver, do what people think is right. He steps in when he needs to but he doesn't constrict them.

He's not all over them in terms of looking over their shoulders, breathing down their necks, however you want to put it.

So, we're fortunate as we've grown to be able to pay larger salaries and have more competent people in the organization.

Steve, he's very conceptual but he's numbers-based because he's a CPA by training. He writes well and speaks well. He's been really a great advantage to this company.

Q: Do you think Bealls and Burkes Outlets could have taken that extra step without hiring Dave Alves as outlets president in 2012?

A: He's done well in a fairly short amount of time, he made a great deal of changes and they've all worked out well.

I don't know of anyone else who could have done it. I couldn't have done it. He cut inventories very dramatically, which was a little scary but it worked out very well.

With his T.J. Maxx background he had seen what can be done. He's gotten his whole team behind him and aligned in what needs to be done. He's had a major breakthrough with the non-Florida stores in terms of getting the right goods in there at the right times.

I think we couldn't have found a better person. Steve found him.

Q: What has Lorna Nagler contributed to Bealls in her short time here as department stores president?

A: She has done a couple of really great things. She has moved us more in a fashion-oriented direction, a more up-to-date direction that is taking us out of the Kohl's, Penneys' competition and moving us a little above that, but with still very affordable pricing.

She has a tremendous fashion sense. A really terrific fashion sense. She's really familiar with e-commerce from her past work and she's really guided that very well.

She is enthusiastic as you would gather. She's moving us in the right direction in the department stores for sure.

Q: Has there ever been a serious consideration from a competitor to acquire Bealls? Why has it been important to keep Bealls in the family?

A: The first part of the question, there are offers from time to time. If we looked back at any point in history and said, 'What if we had sold at that point? Would we better off today or worse?' I think we would be worse.

I think that continues to be true, and I just see no point in selling it. And I'm worried about what might happen to the employees. They're putting their lives into this, too.

Q: Were any of the offers serious, would they be debated or were the offers a 'thank you, but no thank you?'

A: There were letters, there were calls. There always are, but I was never intrigued. I would never follow it up.

Q: On the other side, what about acquiring other companies?

A: We would not be averse to that if a good opportunity came along, but we have yet to see what I would consider a good opportunity.

Q: What's your definition of a good opportunity?

A: Something that probably was made more profitable and had a better return on their investment than we did.

Q: What's the importance of philanthropy in the family and the importance of giving back?

A: My granddad, he probably provided our guidance there when he started what would become the world's largest trailer park.

My idea was when we sold the downtown store to take that money and start the foundation. It's grown from there. My sister Beverly, she was on the Manatee Community College board, she worked with them and we sent a lot of kids there.

It just worked out very well.

This story was originally published March 8, 2015 at 12:00 AM with the headline "Q-and-A with Bealls Inc. Chairman R.M. "Bob" Beall II ."