Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, September 12, 1993 TAG: 9309100028
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: MICHAEL STOWE STAFF WRITER
DATELINE: SOUTH HILL LENGTH: Long
That's because for more than a century small communities such as South Hill have been the lifeblood of the department store company, which has grown from a farm mercantile to a 49-store chain in eight states.
Peebles markets itself as "a store for middle America." Most of its stores are in rural communities with populations of less than 50,000 people: places such as Emporia, Blackstone and Onley in Virginia; Hopkinsville, Ky.; Aberdeen, N.C.; Dyesburg, Tenn.
"Those are our kind of towns," said Peebles Chairman Michael Moorman.
On Thursday, the company will move deeper into Western Virginia, opening a store in Christiansburg's New River Valley Mall. Peebles will occupy space vacated in May by Hess's Inc., which is abandoning all of its Virginia markets as part of a companywide retrenchment.
For Peebles, the Christiansburg store will be its 50th location and, at 65,000 square feet, its largest.
Peebles, which already has a store in Lexington, also recently announced plans to open a store in downtown Rocky Mount in November, taking over downtown space Leggett vacated in the spring. The company also plans to open this fall in Waynesboro and Statesville, N.C.
"We think a move further into that area is a natural extension of the way we do business today," Moorman said.
It may be a natural move for Peebles, but moving into rural communities - especially downtowns - is a growth strategy that's directly counter to some other department stores in the region.
Leggett, for instance, left both Rocky Mount and Covington in recent months, part of its trend of closing small downtown stores and focusing on suburban malls in large metropolitan areas.
Moorman said Peebles' plan for expansion is a simple one.
"We look for markets that are underserved," he said. "We go where we are needed."
It's a strategy that seems to be working, said retail analyst Kenneth Gassman of Davenport & Co. in Richmond.
"They understand the merchandise that the consumer in the small market buys," he said. "So many other stores cater to the big-city slickers that they don't know how to operate there."
"You have to know and understand your customer base to operate in the smaller markets, and I think Peebles does," said William DeRusha, one of Peebles' four board members and chairman of Heilig-Meyers Co., a Richmond-based home furnishings retailer with stores in some of the same markets as Peebles.
But not all of Peebles' stores are in small communities.
A store was opened in Fairfield Commons Mall in Henrico County near Richmond last year. Peebles also has a store in Charlotte, N.C.
Those stores are, however, on the outskirts of their metropolitan areas and are in shopping centers with little direct competition, pointed out Stephen Hannah, vice president for marketing and advertising.
"It's not like we jumped into the middle of the fire," he said.
The Henrico County store, for instance, is the only department store on the eastern end of the county. It was a Thalhimer's location until the May Co. closed the store two years ago.
Peebles had nearly $141 million in sales last year and hopes to add $5 million from the Christiansburg store.
Peebles is the dominant department store in about 38 of the 49 communities it has stores, Hannah said.
The New River Valley store will be one of the handful with direct competition. Leggett; J.C. Penney Co.; and Sears, Roebuck & Co. are the mall's other anchor stores.
"I'm a little surprised Peebles would move into the same mall as a Leggett's," Gassman said. "But Peebles has a very good reputation, so it will be interesting to see how they do."
The two stores carry many of the same brands, but Peebles store manager Michael Blankenship said he doesn't think Peebles will need to lure customers away from Leggett to be successful in the New River Valley.
"I don't think we're coming in here with the idea that we are going to take a lot of customers from them," he said. "I think there's a niche there for us."
"Our customer is in the mid-range," Moorman said. "We kind of sell to the Ford and Chevrolet folks."
Dick Workman, manager of the Leggett store in New River Valley Mall, said his store may lose a few customers during Peebles' first few weeks, but doesn't think it will have any long-term detrimental effects.
"We've gone though this before," he said. "When a new store comes in there is a lot of hoopla . . . but we always get our customers back.
"Peebles is a welcome addition to the mall and we think there are enough customers for both of us."
National brands that Peebles will offer include: Levi Strauss, Hanes, Arrow, Bugle Boy, Haggar, Reebok, Esprit, Elizabeth Arden and Liz Claiborne.
In addition, the company offers several private labels made just for Peebles stores that usually are priced lower than the national brands.
While the company has a central distribution center, Moorman pointed out that merchandise for each location is selected individually.
Some the chain's larger stores may carry higher-priced labels like Polo, while smaller stores will have smaller selections and could carry more lower-priced private labels.
Blankenship has high hopes for the New River Valley Peebles.
"For the time being, this will be a showcase store," he said.
Construction crews have been spent several months renovating the store.
Several walls have been knocked down to improve the store's lighting, all of the remaining walls have been painted and new carpet has been laid.
The store will employ about 70 workers, many of them part time.
Many of the new employees were busy last week hanging the dozens of racks of clothing that had arrived from Peebles' distribution center in South Hill.
"It's crunch time now," said Blankenship, who managed Peebles' Warrenton store before moving to New River last month.
The store will feature a customer lounge, beauty salon and a children's play area equipped with a television and VCR.
Blankenship said he's also excited because the store will have a fine-jewelry department that will be leased and operated by Barbee Jewelers of Rockingham, N.C.
"We've typically carried costume jewelry, but this is a new thing for Peebles," he said. Peebles' Richmond location is the company's only other store to offer fine jewelry.
The company's merchandising mix has changed drastically since 1891, when William S. Peebles built the first store in Lawrenceville - just a short drive 18 miles east on U.S. 58 from Peebles' current headquarters. But, Moorman said, the level of personal service is still the same.
"It won't take people long to realize Peebles is special," he said.
W.S. Peebles picked the Southside Virginia location for his first store because it was a central point on the then new Atlantic and Danville Railroad.
That initial store's merchandise included men's and women's clothes, farm supplies, produce, wagons, harnesses, groceries and even coffins.
"The Big Store. Sells the Best Values that can be had for Hard Cash in everything to Wear and to Eat for Man and Beast," read a 1907 advertisement for Peebles.
Peebles' second store was built in South Hill in 1927; and two years later a store was opened in nearby Emporia, starting a growth spurt that shows little sign of letting up even today.
The company remained family owned until 1986, when W.S. Peebles and Co. was sold for $85 million to two New York investment banking firms and to Peebles' senior management.
It was then that management moved Peebles' headquarters to South Hill and built a new distribution center where merchandise for every Peebles location is sorted and then shipped to individual stores.
Peebles was sold again in 1989 - this time for $160 million.
A corporation created by affiliates of PaineWebber Inc., McKinley Allsopp Capital Holdings Inc. and Peebles' management was the purchaser.
Moorman said the central distribution center allows Peebles to have tighter controls over its spending and, in turn, offer lower prices.
"We have a very cost-efficient operation," he said. "We're not going to be item-for-item less, but we offer very sharp pricing."
Peebles has roughly 300 people in South Hill and is the town's second-largest employer, after the hospital.
Mayor Earl Horne said Peebles has been a fixture in South Hill for decades, so the town was pleased when the department store decided to relocate its headquarters there.
"It has been a very big economic boon to South Hill," he said.
As in many communities where it has stores, in South Hill, Peebles is the only department store.
There was a Leggett store in downtown South Hill for years, but the company closed shop and left town last year.
"We ran them out," Hannah said jokingly.
Major growth has occurred in the past 15 years through acquisition of smaller companies, Hannah said.
In 1978, the company acquired eight stores from Southern Department Stores of Petersburg. In 1981, it purchased 10 stores from the Collins Co. of Charlotte. Peebles moved into Tennessee and Kentucky when it acquired the 10-store Harvey Co. chain in 1989.
Moorman said he would like to continue buying five or six stores a year, expanding Peebles about 15 percent annually. Plans are under way to open in Georgetown, S.C.
The company produced its first annual report this year. Moorman said a public stock offering may be in the company's future.
"It would be sort of a natural chain of events," he said.
How big is too big? Moorman's not sure right now.
"We'll go as far as the opportunities and our good fortune allow us," the CEO said. "We're not hung up on growth per se; we don't have any grandiose design to take over the world."
by CNB