NEW YORK — The worlds of mass and class just keep colliding — especially within the executive ranks.
Just look at the examples of Myron Ullman 3rd taking over at J.C. Penney Co. Inc. after a career at LVMH Moët Hennessy Louis Vuitton; Maureen Chiquet’s move to Chanel Inc. from Banana Republic; Robert Singer’s downshift from Gucci Group to Abercrombie & Fitch’s “casual luxury”; Robert Polet’s move to Gucci Group from selling ice cream bars at Unilever, and, most recently, Joshua Schulman’s move from Yves Saint Laurent to head international strategy at Gap Inc.
Top executives have been increasingly coming from different sectors, both in and out of fashion, to lead major brands. And it appears — whether intentional or not — that luxury brands are seeing the most significant executive migrations.
The reason is simple: companies have been trying to tap into a consumer mind-set that is increasingly shopping across channels, and they need executives who understand myriad price points. Considering the incredible staying power of high-end brands, it isn’t surprising that specialty retailers have chosen executives with luxury experience. Conversely, as specialty stores experience explosive growth — and the mass sector grows ever-more dominant — it only makes sense for luxury companies to pull in established executives from outside their rarefied spheres with an understanding of broader price points.
“It’s a necessity of our marketplace” to hire executives from the luxury realm, said Hal Reiter, chief executive officer of the New York-based executive search firm Herbert Mines Associates, because “the luxury brands have been more successful than many others.”
Experts, nonetheless, hesitate to call this loosely defined “class-to-mass” (or vice versa) movement a trend, in part because of the large amount of executive changes across the sector in the past six months. The most recent came Wednesday, when Gucci Group confirmed it had hired Vanessa Hermann as ceo of its Yves Saint Laurent division. But it stuck to the luxury world, luring her from Christian Dior and John Galliano.
One thing is for sure: Expect retail executive changes to heat up even more this year, recruiters predicted. Whether hunting for executives from the luxury, specialty or mass channels, 2005 is expected to be a strong year for executive recruitment.“We’re extremely busy, and I know that our competitors are extremely busy,” said Marnie McBryde, of the executive search firm Korn/Ferry International, noting that she is working with three luxury brands to replace their top executives — although she declined to name them.
“From what we can see already, it’s going to be hot in ’05,” said Reiter. “We have a bigger backlog than what we’ve had in a few years.”
But, despite expectations to the contrary, for executives who are used to building brands, moving from one retail sector to another — or from another consumer sector altogether — holds minimal surprises. The fundamentals of brand-building are the same no matter what sector an executive hails from, though they are best developed while leading a luxury company, according to McBryde.
That’s because many retailers who cater to the most affluent consumers own several brands — some without a large number of individual stores — so top executives are accustomed to dealing with many moving pieces to effectively market the brands. Gucci Group, LVMH or Compagnie Financière Richemont SA are examples. LVMH alone controls more than 50 brands in fashion, leather goods, perfume and cosmetics, watches, jewelry and retailing — not to mention numerous wine and spirit labels.
In-demand luxury executives have “demonstrated the ability to strategize and take a business forward,” said McBryde, senior client partner at Korn/Ferry’s offices in New York. She said key qualifications include: existing relations with key department stores; the ability to build a management team to significantly grow revenue, and an already high public appeal in order to be a “great ambassador of the brand.”
On the flip side, Michael Boroian, managing partner at Sterling, a Paris-based executive search firm, noted that fast-moving consumer goods is an attractive industry for major luxury players because it develops leaders who have “excellent knowledge and training in brand management; talent in building teams and projects with strong high-achievement targets, and know-how in managing.”
Gucci’s Polet is such a manager. “What I find fascinating and exciting is the speed with which we bring out new products under these brands,” he told WWD in a recent interview. “You get pulled into it instantly, this drive to stay ahead, this bubble of constant innovation. It attracts people that thrive on that. I call it a constant entrepreneurial spirit. I find it invigorating, this speed, this constant change.”While several retail executives downplayed a sense of culture shock upon arriving at their new companies, they said they still had a lot to learn. Polet joined Gucci as ceo in July from Unilever’s frozen foods division. For him, culture shock wasn’t a big issue, since “creating concepts and building brands” is what he’s been doing for 26 years.
Singer, who joined New Albany, Ohio-based Abercrombie & Fitch Co. in May as president and chief operating officer, had been chief financial officer at Gucci since 1995. He also said culture shock was essentially nonexistent, even though as an American, he’d lived in Italy for 23 years.
“It’s very similar to what I was doing before,” Singer said. Abercrombie is “brand-driven and the construction of the brand is around the creative vision,” he continued. “[Abercrombie] is very much like the company that you would normally think of as a luxury company. In that sense, I felt very comfortable.”
Lisa Schultz, chief creative officer at Kmart Holding Corp., joined the discounter in September 2003 from the Gap, where she had worked for 14 years. For her, the move to Kmart wasn’t a huge culture shock either, though she had to rearrange her thinking.
“I found lots of frustrations and lots of great surprises,” said Schultz.
Around the same time as Schultz’s departure, Gap also lost design executive John Goodman to Kmart. Goodman, now chief apparel and home officer, called his move — after 12 years with the Gap — “a true cultural shift.”
“It was all about changing the culture to [one that is] a very vendor-centric, vertical environment,” Goodman said. “Evaluating the talent and the speed of what we could and couldn’t do was a little bit of a challenge as we started out.”
For his part, Polet acknowledged a few key differences about the fashion business, including the crucial value of what he called “intuitive creativity,” which exists in “only a few highly skilled and creative people.”
Polet also said he has learned that luxury brands “need to be managed for their aspirational positioning and for their exclusivity,” a concept Singer echoed.Abercrombie “is very strongly driven by a passion to really excel, to be successful and create an aspirational impact that our customers can buy into,” said Singer.
Meanwhile, Gap has long been on the bandwagon of finding executives in different sectors, considering its ceo, Paul Pressler, joined the company in 2002 from The Walt Disney Co., where he was previously president of Disneyland.
Herbert Mines’ Reiter called Pressler “the poster child for going outside the industry,” adding that Pressler’s accomplishment “has awakened other retailers and wholesalers that this is possible. You can take somebody from outside of our industry and she or he can be successful.”
Gap said in early December it had hired Joshua Schulman, former executive vice president of worldwide merchandise at Yves Saint Laurent, to be senior vice president of international strategic alliances, a new position. Schulman joined YSL in 2000 from Gucci, where he had been worldwide director of women’s ready-to-wear.
Gap spokeswoman Kris Marubio said recently the company did not set out to hire someone specifically from the luxury sector. “We’re simply looking for the best talent that we can get…It wasn’t a conscious decision to hire from the higher end. It’s not part of a strategy.” (After all, the head of design at Gap’s Banana Republic division, Deborah Lloyd, came from Burberry, while Pina Ferlisi, executive vice president of Gap brand design, previously worked at Marc Jacobs.)
— With contributions from Miles Socha and Robert Murphy, Paris
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