You Need to Get C-suite Succession Right in Retail—Here’s How

In this challenging time for retailers, getting succession right is paramount.

The retail sector has been hit particularly hard by recent trends, most recently forecasting, inventory management , and supply chain challenges driven by the pandemic , along with decreased demand due to inflationary pressures . As of this writing the S&P Retail index is down 36% on the year, a precipitous drop.

In this context, C-suite turnover in retail is being influenced by the dual challenge of tackling immediate issues amidst strong headwinds while setting strategy and tactics for future growth. As evidence, Heidrick & Struggle’s volume of retail executive searches has increased 50% since 2020.

Despite the current ambiguity and volatility, many of the factors that drive retail success remain the same as before the pandemic:

·??????offering a differentiated product that is interesting and sparks social-media engagement represented by posts, short-form video, and other content

·??????focusing on experiential interaction with consumers, on- and offline

·??????building and maintaining a brand that speaks to consumers’ evolving values

Post-pandemic, the importance of having physical retail stores has heightened. For example, DTC brands like Wayfair and Casper are further investing in the offline channel as a way to cost-effectively reach a broader audience and enhance their brands through immersive experiences.??

All of these factors underscore the importance of finding retail leaders with the agility to navigate and deploy these success factors while having the insight and creativity to anticipate how the sector may continue to evolve.?It’s important for leaders to be able to work with shifting business models across various strategic and economic scenarios to drive sustainable advantage and growth. Indeed, we see this time as a real opportunity to step back and get succession right, for your business’s short- and long-term benefit.

Heightening the need to for effective succession is the relative diminished focus on retail leadership training and development that we have observed over the years. This is part of a broader cross-industry trend . Retail companies are simply investing less in this domain than some years ago, for several related reasons: consolidation, bankruptcies and shrinking margins, focus on cost-cutting versus investment, and fewer companies feeding the ecosystem of rising leaders. Today, Macy’s and Target are two of the few companies that still have robust development programs. Still, in many cases major retailers are competing for the same talent pool - which is small and shrinking, as retirements happen. ??Meanwhile, those focused on in-house development must ensure they avoid myopia and maintain external perspective.

All of it suggests the need to take proactive, thoughtful steps to leadership succession. Here are our practical tips for getting it right.

·??????Find future-ready leaders: Leadership skills and capabilities needed may overlap with what worked historically, as suggested earlier, but avoid a focus on the rear view while driving forward. The most effective retail leaders will have broad skills sets enabling them to develop strategy and a roadmap that leads with differentiated products and puts people front and center, inspiring them to get behind the business’s mission and offerings. This requires humility, authenticity, and listening skills. Good leaders will inspire the confidence to secure capital from Wall Street or private investors, or through effective execution be able to self-fund initiatives. ???And don’t forget the growing importance of tech savviness in an increasingly digital world. In short, you need future-ready leaders—as we’ve written about elsewhere —who can grow with your company using skills across strategy, execution, people, and culture. This may sound like a tall order, because it is. To find such leaders, be open-minded to searching in outside industries with strong consumer focus, such as hospitality, consumer services, consumer financial services, and consumer products/technology. It’s also about considering top leaders coming through different functions: chief commercial officers, chief customer officers, and others with enterprise mindsets coming out of supply chain and technology. In general, be willing to place bets on potential versus prior experience, given the constraints noted earlier.

·??????Create a structured approach to talent development: As suggested above, many retailers no longer offer executive talent development programs. Today’s retailers tend to focus planning and development more around roles than people. So it’s worth thinking about how to structure development in some form, such as through a combination of formal development programs, mentorship, and others, to shape the right development path for proven and promising talents in your organization. As you think about development, emphasize fostering of broad, flexible skills, so that rising leaders can evolve to meet shifting internal and external needs, in line with the future leader concept above.

·??????Celebrate merchants, balancing creative with analytics: Strong merchant capabilities used to be the soul of retail success, yielding product mixes that drove high revenue/profits, especially in apparel. Today’s retail merchants must deliver an equal mix of art and science, as customers are largely in the driver’s seat now, communicating what they want to buy versus being told what products they should want. Balancing creative skills with data analytics and financials is critical, and these skills sets may not reside naturally in the same person. So companies must either provide robust training and support for merchant capabilities, or fill gaps with enabling technologies or strong business partners in planning, inventory management, and financial analysis.??

·??????Don’t fear risk: We observe that the retail sector has become increasingly risk-averse, especially in this challenging business environment, with focus on short-term, even daily, sales. With regard to succession, then, the tendency is to seek known quantities, rather than taking a chance. Resist that by using the ideas here to take a creative approach to hiring and shifting focus to ability over experience. For example, there are current retail roles like chief commercial officer and chief customer officer that didn’t exist in the past; these lend themselves to an open-minded recruiting approach supported by structured talent development, to find and nurture the best-possible candidates.

There’s a reason the word “success” is part of succession—you have to take a thoughtful approach to recruiting top talent, especially in today’s challenging retail market. Follow the ideas here to make executive hiring a powerful value-creation engine in your business, one that powers your strategy while providing flexibility and a future-oriented approach.