Economic headwinds rock retail’s C-suite
Much like the retail landscape, leadership positions in the retail industry are undergoing widespread upheaval.
In June, CEO Mark Trittondirector of merchandising Joe Hartsig and director of accounting John Barresi resigned from their roles at Bed Bath & Beyond, after the company’s turnaround strategy failed to deliver the expected results. That same month, four executives from the C suite of dollar tree has left the company, and its chief financial officer is also set to leave, following the overhaul of its board by activist investors. And last week, GameStop fired CFO Mike Recupero as part of his turnaround plan was allegedly because he was “too indifferent” and “wasn’t the right culture,” a person familiar with the matter told CNBC.
These leadership changes come as the retail sector faces an onslaught of macroeconomic headwinds, including inflation, supply chain issues and shifting consumer buying preferences. While C-suite shakeups during an economic downturn are relatively common, experts said these shakeups signal the evolution of the retail industry and the skills needed to succeed in the category.
“CEOs and other C-suite leaders have moments of accountability when their earnings and stock prices move in the wrong direction,” said Andrew Lipsman, senior analyst for retail and e-commerce at Insider Intelligence. “What we’re seeing right now, generally speaking, is that there’s going to be an increase in liability moments due to market conditions.”
The macroeconomic headwinds — which have led to missed revenue, lower profits and excess inventory — have exposed some of the strengths and weaknesses of retail executives, said Rebekah Kondrat, founder of consultancy Kondrat Retail. For example, Nancy Green, CEO of Old Navy, left the company in April, citing the macroeconomic environment and “execution challenges.” On Monday, Old Navy parent company Gap announced that its CEO, Sonia Syngal, would step down after supply chain issues have rocked the company’s turnaround strategy in recent months.
For Kohl’s, these economic pressures have exacerbated existing internal issues, such as declining revenues and activist investors pushing the company to sell some or all of its business. Two of its C-level executives – chief marketing officer Greg Revelle and director of merchandising Doug Howe – both quit days before its operating profit plummeted by around 70% in the first trimester.
In 2020, when the coronavirus first hit, a number of retailers also made management changes as their sales dropped drastically due to store closures. Lex Wexner stepped down as CEO of L Brands that year. Traci Inglis resigned just a month after she was asked to take over as CEO of RTW Retailwinds (formerly known as New York & Co.) and four directors have also left the company’s board.
But this C-suite revamp isn’t quite like those of the past.
“None of us have experienced a moment like this. Consumer behavior has undergone major changes over the past two years and will likely continue to evolve over the next two,” Kondrat said. What remains to be seen is whether the turmoil these changes create within a company at an already ambiguous time will set these brands up for greater long-term success.”
Find the correct C sequence
With no end in sight for some of the issues facing the industry, retailers could consider new qualities and skills that in the past were not heavily considered.
“In the past, the winners in this space have been retailers,” said Natalie Kotlyar, national practice leader for BDO’s Retail & Consumer Products industry group. “Over the past three to four years, this whole dynamic has changed dramatically with the onset of the pandemic. So now you have CEOs or CFOs or C-suite people who are now facing a whole new set of problems that they’ve never dealt with before.
At Bed Bath & Beyond, Tritton, who was previously director of merchandising at Target, has crafted a turnaround plan in 2019 that includes launching at least eight private label brands. Experts told Modern Retail that the strategy sounded good in theory, but on the day the company announced Tritton’s departure, the company said its assortment of house brands had partly caused its inventory issues. Private label products, especially newly developed ones, often have longer lead times than national brands.
That said, some companies are looking for executives with more experience in operations and logistics because deadlines have become unpredictable. The canned water company Liquid Death in May, for example, hired a former Fiji Water with supply chain experience at different consumer packaged goods companies to be its new chief operating officer. GameStop hired former Belk CEO tapped Nir Patel to be the new COO in May, and that same month the mattress brand Purple also hired a new COO, Eric Haynor, who previously led Ecolab’s North American supply chain operations.
Sucharita Kodali, vice president and principal analyst at Forrester, said in this environment, some retailers may be looking for a framework that can be nimble and drive near-term results. For Bed Bath & Beyond Acting CEO Sue Gove, delivering immediate results is now one of the company’s priorities.
“If they don’t deliver value to their shareholders, they will be fired,” Kodali said. “You have to do the impossible and if you can’t do the impossible, either don’t take the job or prepare to potentially get fired.”
Create a job that fits your time
New problems may require new solutions. As new shopping channels emerge and consumer behavior continues to change, BDO’s Kotlyar said new roles may begin to emerge.
Already, retailers are beginning to chart new positions to guide their strategic directions. Last week, SVC has appointed Tilak Mandadi as Chief Data, Digital and Technology Officer, a new executive position tasked with overseeing the company’s technology leaders. Mandadi’s role allows CVS to have a more unified approach to technology and break down silos.
Nordstrom announced the creation of two new positions in April, Chief Customer Officer and Chief Stores Officer, to provide better operational oversight. Its new Chief Customer Officer, Ken Worzel, will oversee the company’s customer strategy across various touchpoints and oversee the company’s digital platforms. Meanwhile, new director of stores, Jamie Nordstrom, is responsible for strategy and execution of Nordstrom Rack’s operations.
“As times change, customers evolve. The way the customer shopped in the past was mostly brick and mortar. Then we had the invention of e-commerce, now we have social commerce, and now customers are buying things in the metaverse,” Kotlyar said. “I think as technology continues to evolve and become a bigger part of the customer experience, the C suite needs to understand that and incorporate it into their strategy.”