Retail has been inundated with both immediate and pending CEO changes throughout 2016. Between January and June 2016, 23 chief executives have departed their posts, outpacing the 15 that either retired or stepped down during the same six-month span last year, according to a report from global outplacement consultancy Challenger, Gray & Christmas.
While Macy’s framed Terry Lundgren’s awaited stepdown as part of a succession plan that was already in place, the departure of Ron Sargent at Staples appeared to be more a response to the company’s growing weaknesses both online and in the store.
The CEO changes at department store Belk and grocery chains Publix and Roundy’s are due to retirements, but CEO shifts at merchants such as Burberry, Canadian Tire, Finish Line, hhgregg, Sobeys, Stuart Weitzman, Victoria’s Secret, Walmart Canada and most recently GNC illustrate that there is a changing of the guard within retail. When it comes down to it, retailers are seeking out new leadership that is more equipped to handle an industry where the consumer now has much more control of the shopper journey.
While each company’s needs are distinct, in general this new breed of CEOs needs to:
Have a data-driven mindset and background;
Exhibit clear vision as to how strategy is delivered and successfully execute the plan;
Understand how to build compelling store experiences in the omnichannel age; and
Remain people-first, regardless of the introduction of new technologies and sales channels.
Data Drives Retail Success Into 2020 And Beyond
As many as 71% of the next generation of retail CEOs will rely on data to make decisions, according to a study of 58 aspiring CEOs by interim and executive search firm Green Park. With 75% of these candidates already having extensive digital knowledge, a reliance on data should start to become second nature.
“Data has always been a factor for retailers, but more in a customer relationship or marketing perspective,” said Bobbie Lenga, Leader of the Global Retail Practice at executive search firm Russell Reynolds Associates. “Today, retailers have to have a strong grasp of tastes and preferences, but you have to know how to leverage trends that impact the business, then take actionable insights from a vast amount of data made available through business tools.”
Envisioning And Executing Change
There are three major personality traits that modern CEOs should express in order to be successful in their role, according to a report titled The DNA of the Future Retail CEO based on a panel of 100+ global retail CEOs and Chairs. The traits most requested by these execs include:
Clear vision/change agent (48%);
Customer-led approach (20%); and
Collaborative approach to leadership (17%).
“Amazon came in and changed the pace of everything,” Lenga said in an interview with Retail TouchPoints. “Great CEOs need to keep up with that pace of change and understand where they can make a difference, particularly in how many initiatives a company can take at one time and where they’re going to get the best ROI with what they do.”
Although mileage may vary when it comes to effectively adapting to the constant change within retail, most chief executives are at least aware that it’s an issue. As many as 77% of retail CEOs say they are concerned about the impact of shifts in consumer spending and behavior, according to the 19th Annual Global CEO Survey from PwC.
Prioritizing People To Differentiate The Store
A major point of change these CEOs must consider is their plan of attack when it comes to where their customers are spending. In an era where brick-and-mortar stores are closing more often as store space has lesser value, the bankruptcy stories of longtime brands such as Aéropostale and Sports Authority tell a cautionary tale. Future CEOs must not only handle the interaction with the consumer, but determine how they can provide differentiation points that convince the consumer to come into the store in the first place.
“Yes, they have to understand omnichannel, and there’s no two ways about it, but they have to understand that retail is still fundamentally a people business,” said Bob Phibbs, CEO at retail consultancy The Retail Doctor. “I look for any new CEO to have the mindset that it’s still about people connecting with other people. The widgets change, but the people shouldn’t. Let’s face it, there’s too many places to buy too much of the same thing. What’s your differentiator? The only way any retailer is going to differentiate is through people.”
Phibbs specifically noted that CEOs need to foster positive relationships internally, to customers and to vendors, in order to avoid poor store performance, which could ultimately affect the brand as a whole.
“If you want to be in business in 2020, you better be transparent, inspirational and practical,” Phibbs stated. “Until they can do all of that, it’s going to be a rare set of talents, and if they’re hamstrung by the bean counters who only enable them to have one employee for three departments, then they aren’t willing to be competitive. So admit it, downsize, open some pilot stores where you can do those experimental things and learn from that, but don’t just change names and be the same company.”