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Across the apparel specialty retail sector this season, “Help Wanted” signs are almost as visible as point-of-sale markdowns, with an unprecedented number of top-level jobs up for grabs.
This is the time of year when retailers release their fourth-quarter and year-end results and, at those chains having tough times, also let go executives from their jobs, figuring fresh blood is needed to turn things around.
While there are standouts in the sector — such as J. Crew, Abercrombie & Fitch and American Eagle Outfitters — many well-known names are struggling with sluggish growth or sharply declining profits, like Gap Inc. These retailers have serious issues revolving around product, positioning and execution and are challenged by an aging population and a lack of management bench strength.
“I don’t think there is a common denominator, but there is an unusual number of vacancies. This is a very good time to be a candidate,” noted Hal Reiter, president and chief executive officer of Herbert Mines Associates search firm.
In most cases where big jobs must be filled, “companies are looking for the great creative talent who can enhance the brand through the product and the marketing,” observed Margaret Mager, retail analyst and managing director for Goldman Sachs & Co. “That type of commercial/creative talent is a scarce commodity. Truly creative geniuses you can count on one hand. Specialty chains also want people who can lead organizations, translate vision and get groups to execute on a vision. That’s rare, too. At the end of the day, you can’t institutionalize creativity. Technology is a wonderful thing for business, but it also has the ability to stifle creativity. Great merchants like Mickey Drexler and Michael Jeffries came of age when technology didn’t stymie creativity.”
The dearth of merchant talent is an issue across the entire retail industry, but analysts and headhunters agree the brain drain is acutely apparent in the fashion specialty sector, underscored by the situation at Gap Inc., which has several executive slots to fill. Gap will begin its hunt for a new ceo in earnest this quarter. A search firm is expected to be hired soon. “We’re not sitting idly,” said Robert Fisher, chairman, during a conference call last Thursday. He’s been the interim ceo since Paul Pressler was pushed out last January and said he has no intention of taking the ceo job permanently.
Other specialty chains seeking ceos or other top management include:
There are also some chief financial officer slots open or soon to open. At Chico’s, Charles Klemen is planning to step down; at Build-a-Bear Workshop, Barry Erdos, an Ann Taylor veteran, left earlier this year. Laura Weil, of American Eagle fame, is a free agent, after a more recent short stint at Ann Taylor. She has a strong reputation and could possibly run a chain.
“Gap needs a ceo and has all of those divisional openings. Kay Krill [ceo of Ann Taylor] terminated Donna Noce, the president of the Loft division. It’s been one after the other after the other,” said Bob Kenzer, ceo of Kenzer Corp. executive search. “These things all plopped into place. I just think it’s a matter of timing, but there is a real scarcity of powerful talent and how all those jobs will be filled is going to be very interesting.”
The pressure on specialty chains and their management also has intensified as department stores see a resurgence and are building up their private label and exclusive brand operations. While Federated continues to digest the May purchase, it is moving rapidly to turn Macy’s into a nationwide chain and pushing its brands Inc. and O Oscar. J.C. Penney and Kohl’s have signed a raft of deals for exclusive brands, ranging from Ambrielle in lingerie at Penney’s to Very Vera by Vera Wang at Kohl’s. The success of these stores make them natural reservoirs for headhunters to tap when looking to fill specialty store personnel voids.
“Department store chains might be a good place for specialty stores to tap” for talent, said Mark Montagna, analyst at CL King and Associates. “There must be some talent surfacing, considering all the mergers, such as the merger of May into Federated Department Stores and the breakup of Saks Inc. Historically, you started your career as a trainee in the department stores, became a buyer and a lot of times later joined a specialty apparel retailer, at the mid- or senior level.”
According to Elaine Hughes of E.A. Hughes & Co. executive search, the talent situation relates to problems plaguing many specialties that largely have to do with a failure to stay contemporary, being overly focused on growing to appease Wall Street and having flawed leadership that’s either “so self-infatuated” there is no strong succession or that has the wrong skill sets. “It is not that we don’t have young talent coming into our business,” Hughes said. “It’s that we are refusing to recognize and therefore implement the requirements for maintaining their commitment to remain engaged.”
“Christopher & Banks, Talbots, Ann Taylor, Chico’s — anything in that Baby Boomer space is being guided down. I think it’s a fashion miss at all these companies,” said Jennifer Black of Jennifer Black & Associates.
Mager characterized apparel specialty retailing overall as “a very healthy sector” often underleveraged by Wall Street standards and where some players don’t want to take too many risks. “They don’t train people to have good fashion judgement,” she added. “They’re training people to live by the numbers. The best performers are more precisely targeted to specific consumer groups, rather than broad targets. The more you can deep-dive into the mind-set of your specific consumers, the better you can serve the consumer.”
Mager said some specialities could learn from the higher-priced side of retail and the luxury sector. “You need to constantly surprise and delight the consumer by developing new products, finding new vendors and new labels, and the high-end is doing that better.”