It’s tough being a retail CEO
As an occasional commenter to RetailWire likes to point out, "Retailing isn’t for sissies." That sentiment is certainly appropriate for those leading retail organizations where CEO exits are on the rise despite an improving economy.
For the first nine months of the year, 38 retail CEOs left their jobs, according to the outplacement firm of Challenger, Gray & Christmas. That compares to 29 during the same period in 2013.
The news this week that Mike Jeffries, longtime leader at Abercrombie & Fitch, had resigned his position is just one of several high profile departures this year. Others, according to a Fortune report, include Bill Simon from Walmart U.S. and Gregg Steinhafel at Target.
Yesterday, Walgreens announced that its CEO, Greg Wasson, would resign his position once shareholders voted on the drugstore giant’s acquisition of the remaining part of Alliance Boots it does not currently own. The vote is schedule for Dec. 29.
- 2014 September CEO Report: 124 Out Including eBay, Oracle – Challenger, Gray & Christmas
- Retail CEO exits on the rise in 2014: 10 notable departures – Fortune
- Walgreens President and CEO Greg Wasson Announces He Will Retire Following Completion of Merger with Alliance Boots – Walgreens
- Controversial CEO leaves Abercrombie & Fitch – RetailWire
Discussion Questions
Is it tougher being a CEO of large retailer today than it was 10 or 20 years ago? What traits are required to be a successful retail CEO today?
Yes it is tougher. A CEO has two sides of his or her job. First, running the day-to-day operation of the company and second, dealing with both the board of directors and Wall Street. Anyone who cannot balance both should stay away from the job. I am speaking of public companies since that appears to be where all the job changing has been happening. Private companies are a lot easier to manage. I do think the CEO must first run the company and have the right team in place. If that is working well then the Wall Street types will fall in line. A CEO must be a passionate retailer, good communicator, leader and the best listener.
Not wise to answer this question unless one has walked in those shoes. That applies particularly to me.
What I do know is that every once in a while someone comes along to reinvent an industry. Bezos with book sales. Musk with cars. Jobs with technology. In retail it seems like the only strategy is the lowest price one which hardly reflects an innovative mindset. Who will reinvent retail?
To a large extent retail has been institutionalized, meaning it defies reinvention or transformation. This is especially true for large retail. Look at the church, education and government for parallel examples of things impossible to change. For the most part a store is a store is a store. Since large retail is hard to reinvent, the only other option is to let it die its inevitable death. Something new may come out of the ashes. That may be a sad prospect but, in my distant opinion, too often too true.
CEOs certainly seem to be under more scrutiny today than ever before. Stakeholders, pundits and bystanders all get to weigh in on an executive’s performance, and their comments reverberate around the web for months.
This makes the role more externally political than it has been in the past, when the focus was largely internal. These pressures may take the bloom off the rose a bit quicker than in years past.
On the other hand, it could be that after a few short years, a CEO has a diminishing economic incentive to remain. After all, he has gotten a significant treasure chest and can look forward to retiring comfortably and on an uptick.
It is definitely tougher than years ago. Look at how the landscape of retail has changed. The malls and strip plazas that once dominated are now being replaced by huge Walmart Supercenters and the wholesale clubs, plus the dollar store craze. Let us not forget the ever-expanding giant called Amazon, along with many, many online companies, and you have a perfect storm for CEO exits. There are only so many dollars out there, and they are spread very thin, which makes growth extremely difficult, and bottom lines are being hit hard.
Much of the growth of some retailers is through mergers and same-store sales are not good. This is only going to get worse, as online will continue to grow, and more malls will suffer since consumers no longer have to leave their houses to get almost anything they need. Omni-channel shopping for the large retailers must improve, and some already have done a good job. There will be more CEOs leaving as the retail landscape changes, and only the strong profitable chains will be able to maintain their bottom lines and keep their shareholders happy. Lots of fun, isn’t it?
Yes, it’s more difficult, because the sheer mass of the companies they are managing makes the job far more complex.
But most of the examples above are somewhat idiosyncratic and would have caused the CEOs to be shown the door in any era.
I don’t think Wasson or Frank Blake fall into those categories. They did their jobs and felt it was time to go. In my opinion, they both did great jobs reinvigorating their companies.
I think the primary trait required of a retail CEO today is the ability to build a strong team around himself or herself, and LISTEN to what they say. Listening might be, in general, the most important trait:
Of course you’ve got to be good at understanding data, but there’s another aspect that cannot be ignored.
It’s tougher in some ways, it’s unchanged in others. The leaders of the company need to be creative, as business models are changing more rapidly than ever before. They need to be strategic to navigate and grow the company, operationally execute consistently and be responsible for a broader range of governance, ethics and information security then was imaginable even five years ago. They need to be motivational and inspirational. These pressures are newer and more urgent than 10 to 20 years ago. On the other hand, no CEO directly manages all this, the executive team does. So in an unchanging role, the CEO has to build, lead, motivate and manage the team.
It certainly is harder to be a CEO today. Not only is there greater public scrutiny and influence than ever before, there are also constantly changing demands for a large retailer to be successful. Few can manage the huge amount of data that is now available and even fewer have grasped a strong approach to managing omni-channel shopping. To be a successful retail CEO today you must be diplomatic to the public and to investors, as well as agile and inventive enough to cope with the rapidly-shifting needs of the consumer.
Although I’ve never worn the shoes, I don’t think this job has ever been easy.
One of the challenges facing today’s CEOs is that the pace of business has dramatically accelerated. I believe it’s no longer acceptable to manage the status quo, winners must look around the corner and position their organization to be ready for the future.
If this hypothesis is true, then I suggest essential traits should include: Curiosity, courage, creativity, confidence, collaboration, consistency, character and customer-centricity.
If a sissy is defined as someone deficient in the skills, training and management prowess needed to build a company then I guess retail isn’t for them. And if these same people, or others for that matter, are fooled into building a business plan for an emerging economy then they are sadly mistaking and will surely fail.
A look into the companies that replaced their top executives will show the reasons for their demise, the sissies that is. A look at the number of companies in operation for more than five years that have failed these past eight or more years is very telling for the health of the economy. Add to that the actual sales volume and dollars for product and services and you will see a steady decrease over the past decade in a majority of retail categories.
Facing these conditions with a response of disbelief or contempt, as in “I can’t believe this is happening!” is a vast wast of time, and time has run out for these examples of leadership with more to follow for sure. Looking for the reasons companies fail will show us their problems at a time we need to be looking out for our own errors and limitations.
It’s tougher being a CEO of any business these days because every move made is in the public eye. There is no such thing as behind closed doors. Someone is going to tweet, blog, Instagram, and/or Facebook it and then everybody gets to comment.
To Paula’s point, social media also gives said CEOs access to hear what everyone thinks as well. A good CEO will be “listening” to every channel and through social media will be able to respond and strengthen the brand. Some just add fuel to the fire.
A key trait for today’s CEO is knowing how to work with all the world watching.
And that’s my 2 cents….
OMG, so much harder now. Reminds me of the thought of being President of the US: are you kidding? Who’d want that job?
The money’s one thing, sure, but retailing today is in such an amazing state of flux that it’s almost suicidal to take a CEO gig. No one’s going to stores but you have a million of them, the customer is smarter than you are, BIC employees are near impossible to find, there’s a new competitor every 5 minutes, there’s a new technology you don’t understand every 5 minutes…I mean, the list goes on.
First rule of thumb when meeting with any CEO today is to ask this simple question, “how can I help you?” because they certainly need that more than anything else!
You can argue that being a CEO is tough in general. The stress/difficulty of the job may not be the reason for the exits. This conclusion seems premature without more study into why it’s happening. “Exits” on the rise is a very broad statement. Exits can be for many reasons (forced, fired, sick, voluntary, retirement etc).
A good metric to see would be if the CEO leaving a retailer is also leaving the industry or just hopping onto another ship.
It’s gotta be tough! Too much information, not enough time and everyone’s a critic and knows better—until they are in the driver’s seat.
Different, yes. Tougher, no.
This is one of those discussions that could go on forever, like the question of if the 1986 Lakers could beat the 2013 Spurs.
Merchandising, supply chain and operations have gotten easier, multi-channel and technology gaffes have gotten harder.
The pool has gotten bigger and the quality of leadership has been watered down. Personal focus vs. retail passion, unfortunately, has diverted many current retail leaders’ time.
Traits required? No change: Passion, attention to detail, ability to build a quality team, a merchant’s vision to see the near future, integrity and willingness to take a calculated risk are still key.