One of the most difficult items to find in retail right now is the manager.
A number of high-profile companies, including Gap, Diesel and North Face and Vans ⁇ 's parent company, operate without a permanent chief executive officer. Thanks to the narrowing of management education across the industry and the need for a rare combination of skills to navigate this turbulent period, these leadership roles are perhaps harder to fill than ever.
This is a problem, given the slowdown in consumer spending, pricing challenges and the difficult situation that retailers expect to face in the next few months due to a possible recession.
David Bassuk, general manager of AlixPartners consulting company, who has been working in the industry for 30 years, said ⁇ Leadership challenges in retail are now at an all-time high ⁇ . ⁇ There are many more questions about the right type of leader to guide the performance. ⁇
The past few years have required senior executives to adapt to a retail environment where they are not trained and learn a broader range of skills to help their organizations navigate the comprehensive list of disruptions caused by the pandemic. For decades, retail managers were expected to be expert sellers who knew what people wanted, how much they wanted, and how to convince them to buy. Now senior executives are expected to understand how much resources should be allocated to e-commerce operations compared to physical stores, how to address issues in global supply chains, and when to invest in emerging technologies such as metadatabases.
Experts say periods of economic uncertainty often lead to high upper-seat turnover, and recent executive departures point to a vulnerability, especially for private retailers.
According to the analysis of executive search company Heidrick & Struggles, 11 out of 91 retail companies on the Fortune 1000 list left senior executives in 2022. The analysis revealed that two of these positions were temporarily changed.
Since Sonia Syngal ⁇ in left in July after the company recorded falling sales and supply chain challenges, Gap is still looking for a general manager. Victoria's Secret lost its senior manager, Amy Hauk ⁇ u, in January, and announced that it had no plans to take over her role. Instead, Martin Waters, who oversees the parent company, will assume his responsibilities.
Following the departure of Sharon Leite ⁇ , chief of Vitamin Shoppe ⁇ , in January, Lee Wright, commercial director of the parent company, temporarily took over the post. Eraldo Poletto, managing director of Italian denim company Diesel ⁇ , left his post this month after working for less than a year. Steve Rendle, who runs VF Corp ⁇ , the owner of North Face and Vans ⁇ , retired in December just ahead of the critical holiday shopping season. The company did not have a succession plan in place and is currently running things temporarily.
This has led to the need for more executive training across the industry and even a shift in mindset regarding the source of the next generation of retail leaders.
We see a lot more people coming to us in the consumer space and saying: ⁇ Hey, can you help us train our employees with these skills and train not only entry-level people, but also people at all levels of leadership? ⁇ Kathy Gersch, commercial manager of Kotter International ⁇ , who helps large companies train potential leaders, said. ⁇ Attracting new talent who want to come to the industry and learn about the industry and really want to rise in the leadership chain is a different challenge than it was 10 years ago. ⁇
For decades, those who climbed the ladder in large retail organizations began executive training programs run by department stores or large chains. These programs provided companies with both a broad infrastructure and operational incentive to hire young, talented employees and allow them to delve deeply into every aspect of the business. Programs typically lasted from one year to 18 months, and participants alternated in store operations, purchasing, and product development.
Graduates from university merchandising and fashion programs would compete for space at Macy ⁇ s, Nordstrom and Saks Fifth Avenue ⁇ . Being selected was seen as a starting point for a career that had been going on and on the rise for decades in the retail industry. In 1983, for example, Jeff Gennette entered Macy's program. He's running the company now.
Beyond creative minds, these training programs also required participants to have strong math and communication skills. They focused on giving those who went through these experiences the experiences needed to eventually manage departments in physical store operations.
Shawn Grain Carter, a management professor at the Fashion Institute of Technology, who started his career in Bloomingdale, said, "Everyone knows that you have carefully selected your best talent from big store retail leadership development programs.
Over the years, these training programs were shortened as department stores such as Sears and Montgomery Ward closed and other stores such as Abraham & Straus merged.
When things get tough and belts get tight, most of them disappear over time, or at least become much smaller, Ms. Gersch said. The elimination of most of these damaged the attractiveness of new talents interested in the executive training program.
The remaining training programs are still highly competitive, but they have had to adapt. Ms Carter said, for example, that more participants are being placed in retailers' e-commerce and discount operations. Other organizations have also taken initiatives. The National Retail Federation, a leading industry lobbying group, runs programs that help recruit high school and university students and teach them specific skills such as specialization in supply chain logistics and the art of organizing stores.
You see ⁇ NRF and other organizations play a larger, larger role in hiring talent and introducing high school students to the concept of retail earlier than working at the local mall, Ms Carter said.
Some analysts say the rise of direct-to-consumer brands like Warby Parker and Rent the Runway has also led to potential leaders separating from traditional retailers. This was an opportunity for entrepreneurial professionals to start their own company or rise to the top, rather than playing the long game of climbing the corporate ladder of a giant retailer. After a generation, the effect is felt.
Simeon Siegel, retail analyst at BMO Capital Markets, said they never grew up in a business because they started their own. The people who run these businesses would probably be senior vice presidents who are now ready to take their place in much larger brands.
Retailers also started looking for managers from outside the industry. This month, John Koryl, who heads the digital division of Canadian Tire ⁇ , took the reins of digital luxury resale platform RealReal ⁇ , whose share price dropped more than 70 ⁇ percent last year. The company highlighted Mr. Koryl ⁇ 's experience in building a company's supply chain, e-commerce, and digital strategy.
Under Armour turned to hospitality when selecting the new general manager late last year: Stephanie Linnartz, president of Marriott International. He worked to build the hotel chain's website and app, which helped build stronger customer loyalty among guests.
The athletic brand saw this as a transferable skill as it focused on strengthening engagement among those aged 16 to 20. Kevin Plank, founder and former general manager of Under Armour, said Ms. Linnartz ⁇ would bring new eyes to the company.
A decade ago, traditional retail companies turned to hiring merchants to manage their companies. Natalie Kotlyar, who heads the retail and consumer products division of the BDO consulting firm, said that at the time, this skill was considered the most important skill to have. ⁇ Today the situation is not so critical because different problems are coming ⁇ he said.
Other companies have decided that the role of chief executive officer is too big for one person. Last month Pacsun appointed Brie Olson ⁇ u as co-chairman along with Mike Relich ⁇ . Ms. Olson reveals her expertise in merchandising, design and brand building; Mr. Relich ⁇ 's background is conducive to overseeing operations such as supply chain, distribution, finance and human resources.
This moment also exposes other vulnerabilities. Unlike large chains and department stores, private retailers that sell clothing or products in a specific category often don't have robust training programs. Many now have vacancies in the upper echelon and have been trying to find the right person for several months.
Ron Thurston, former store vice president of luxury fashion brand Intermix ⁇ and author of the book ⁇ Retail Pride ⁇ , said ⁇ It seems that the lack of investment in the last 20 years has been compensated ⁇ .
Money and time will be needed to improve the talent landscape because, in some cases, companies will need to install new systems. Mr Thurston, who began his career as assistant store manager at Gap Kids, said preparing more store employees for corporate positions could be a good start. Others said retailers should look to up-and-coming employees in their digital divisions when considering future leaders.
Whatever the company's path, retailers must find a way to identify and develop the next generation, experts say.
Ms. Gersch from Kotter International ⁇ said ⁇ This is absolutely urgent ⁇ . If they cannot rebuild it and attract some of these talents, it will be very difficult for them as a sector.
