Fashion has become a place rife not just with impossible people, but impossible situations.
Big personality is something the industry self-selects, even thrives on. But the intoxicating mixture of executive charm and corporate jargon that many chief executive officers relied on to give near-sighted business plans their punch, seems to be finally wearing off as business turns south.
The same goes for the enthusiasm for business models that were good enough to churn out some money when things were good, but are now barely limping along or failing outright.
The rise of e-commerce, fast-fashion, off-price, social media and a generation that’s simply less interested in filling their closets has amplified the industry’s every weakness. And ceo’s are finally paying the price — some for screwing up, some for successfully getting a job they were wrong for and some for simply being there when things went bad.
There is always churn in fashion and retail’s executive ranks, but something different is happening now. And it’s happening faster than ever.
Ceo’s are falling right and left as the industry feels its way forward. Boards are getting antsier, sensing that something different, something more needs to be done.
Frederic Cumenal is out at Tiffany & Co. having failed to make it to the three-year mark amid disappointing financials. Stefan Larsson’s departure from Ralph Lauren Corp. was revealed just 16 months after his arrival as he disagreed with the company’s namesake. Also caught up in the ceo churn were Paolo Riva at Diane von Furstenberg, Sharen Turney at Victoria’s Secret, Dawn Robertson at Stein Mart Inc., Federica Marchionni at Lands’ End Inc., Lorenzo Delpani at Revlon Inc., Brian Lee at Honest Co., Gianluca Flore at Brioni and more.
Each departure characterized the circumstances of the individual company, but the pressure that’s being felt in the market is almost universal.
“Business is extremely difficult. Maybe patience is getting shorter with some companies,” said Michael Gould, the former chairman and ceo of Bloomingdale’s. “Unfortunately, we are not a business for the most part that has a long view of life, and therefore we do things that are counterproductive, like bang the heck out of promotions. It’s tough and it’s getting tougher.”
J. Michael Stanley, managing director of factoring firm Rosenthal & Rosenthal Inc., said: “The problem is companies look at whoever is involved, and they blame the boss because he’s driving the bus. If the marriage is not working out, you get rid of him. It always looks better on the other side.”
The ceo switch-ups recall changes atop the creative pillar of many businesses and reflect many of the same pressures. Brands across every sector are simply looking for something more, especially a better way to connect with consumers.
Calvin Klein tapped Raf Simons as chief creative officer, a role not filled since Calvin Klein himself stepped away in 2003. Donna Karan departed her house after 32 years and her replacements, Public School’s Dao-Yi Chow and Maxwell Osborne, who served as DKNY co-creative directors, didn’t survive the business’ sale to G-III Apparel Group. Additionally, Reed Krakoff picked up the Tiffany & Co. creative responsibilities from Francesca Amfitheatrof, Chloé appointed Natacha Ramsay-Levi creative director for ready-to-wear and Givenchy tapped Clare Waight Keller as its next artistic director.
Many businesses are simply at a crossroads, creatively and otherwise.
“Companies are focused on revenue, and they’re taking a hard look at the product to see whether they’re really offering the consumer the most complete assortment,” said Christa Hart, who leads the retail and consumer products practice at FTI Consulting. “Nearly all of the focus is on the top categories that can help drive revenue.”
There’s been some c-suite experimentation as companies seek to connect with consumers, particularly in Europe.
When Angela Ahrendts left Burberry for Apple, creative chief Christopher Bailey picked up her duties as ceo in 2014 in an ambitious test of his right brain-left brain abilities. It proved to be too much multitasking and the company will welcome Marco Gobbetti as ceo in July.
And Johann Rupert, Compagnie Financière Richemont’s chairman and shareholder of reference, whittled down the management structure at the luxury parent of Cartier, wiping out the role of ceo entirely as the group grows accustomed to the “new normal” of slower growth in the luxury watch industry, one of Richemont’s main profit engines.
“It’s not possible for one individual to be ceo and this was highlighted to me by poor Mr. Lepeu, who ended up with 35 direct reports,” said Rupert, pointing to Richard Lepeu, who will retire as ceo next month. Rupert said he wants the board to run the company, although ultimately everyone will answer to him. “We need to look at having a structure that allows managers more time to really address their responsibilities.”
Slower growth has gone hand-in-hand with executive turnover in the European luxury market, whether it be from business pressure or openings at other companies looking to push forward or just executives surveying the landscape and finding themselves with itchy feet.
Executive change-ups have accelerated notably at Kering Group, kicked off by the ouster of the top creative and business roles at Gucci to make room for ceo Marco Bizzarri and creative director Alessandro Michele in early 2015. Kering’s other holdings in Italy such as Bottega Veneta and Pomellato have since changed ceo’s as well. Other Italian houses to see a new ceo in 2016 include Salvatore Ferragamo, Versace, Roberto Cavalli and LVMH’s Loro Piana.
“The luxury industry is not used to a low-growth environment — they don’t know how to deal with it,” said Marco Pozzi, a senior adviser at Contact Lab.
The strategy for top luxury brands had previously been more straightforward, with store openings in China being the key to big gains. But as growth in China’s luxury spending slowed, brands found they needed a more nuanced approach to keep their edge. Those nuances remain vital even though the Chinese market has begun to show a bit of a rebound in recent months.
“The major skill for the ceo now is complexity management — because complexity is booming,” Pozzi said. “You have many countries that are important — China, [South] Korea, and Russia which is starting again — many product lines and multiple channels, including e-commerce.”
Faced with rising complexity, arrangements like Burberry’s experiment with Bailey are unlikely to thrive, according to Pozzi, and the days of a brand’s founder continuing to run the business her- or himself could also be numbered.
“You need a strong designer and a strong ceo,” he said. “A lot of these houses have problems that are more strategic. It’s not just design, it’s positioning and strategy. The company has to decide where they want to compete, and the designers don’t really have the skill to reposition.”
The wave of executive changes over the past few months hasn’t only been remarkable for its scope and speed, but for the changing profiles of the people being tapped for top roles. Whereas strength in finance and distribution used to be the most common path to the top job, a number of rising ceo’s have come from marketing, retail and product development.
Kering’s pick for ceo of Balenciaga, Cédric Charbit, served as head of product and marketing at Saint Laurent during a period of double-digit growth under creative director Hedi Slimane, while Ferragamo’s Eraldo Poletto was previously head of merchandising at Brooks Brothers.
At most companies, it’s the board that’s responsible for deciding what skills a new leader should have and when they should be held accountable for a poor performance. (That check doesn’t always exist, as some boards are stacked with directors who are too buddy-buddy with their charges).
And even with all the turnover in the c-suite, more could, or should, come.
“This guy Cumenal at Tiffany’s, he’s not going to be the last one to go,” predicted Craig Johnson, president of forecasting firm Customer Growth Partners. “At the ceo and at the board level, there’s the lack of a sense of urgency. The board [in some cases] is like a hand-picked board, picked by the ceo, it’s like a captive board.”
Johnson said fashion needs to move faster.
“It’s not reacting quickly enough to Amazon,” he said. “It’s not reacting quick enough to the fact that people entering the peak consumption years, they are not buying as much, or are not as interested in buying as many material goods as their parents were.”
Part of the challenge is that apparel companies — even the powerhouses who shaped fashion for a generation or more — find themselves changing on many fronts, from their store bases to their supply chains to their marketing.
Add in personality and turbulence is almost the guarantee. Take Larsson, who was stepping into some pretty big shoes and a tricky situation, taking the reins as ceo directly from Ralph Lauren.
While ushering Larsson to the door, Lauren said: “We have found that we have different views on how to evolve the creative and consumer-facing parts of the business. After many conversations with one another, and our board of directors, we have agreed to part ways. I am grateful for what Stefan has contributed during his time with us, setting us in the right direction with the Way Forward Plan.”
So Larsson’s plan to shorten the company’s supply chain and deliver goods quicker resonated, but he couldn’t sync up with Lauren, who can be expected to remain in control no matter who carries the title of ceo. It didn’t help that Larsson perhaps pushed too hard when sources said he suggested to Lauren that the founder consider handing over some of the design responsibilities to another person.
Les Berglass, ceo of executive search firm Berglass + Associates, said Larsson had to first build a good working relationship with Lauren.
“Stefan Larsson came from a business where he was running Old Navy and the question with Ralph is, you have a leader whose DNA is tied to the brand, who you’re going to have to partner with. It’s not Ralph Laruen’s fault,” Berglass said. “Stefan had to work on building his relationship with Ralph first and then the retailer and then the customer, he didn’t do it in that order.”
While Larsson found himself at a strong brand needing to evolve and in the midst of some tricky politics, others are jumping into situations that are more dire and have already gone though a few would-be saviors.
“The problems plaguing the industry have more to do with the historic structural sustainability of these organizations than the single individual at the helm, particularly if at the helm there’s been a succession of changes over a short period of time,” said Elaine Hughes, founder and ceo of E.A. Hughes & Co.
“The revolving c-suite [stems] from a lack of conscientious succession planning which should be a disciplined exercise in every company and something the board of directors should demand,” Hughes said.
The corner office departures at Ralph Lauren, Victoria’s Secret, Lands’ End, Stein Mart and Tiffany’s can’t be linked to any one common cause, she said.
“The individuals chosen for these roles who now have been released probably displayed the drive, resilience and thought leadership these boards sought,” Hughes said. “What was lacking was a combination of historic success in a similar model coupled with an inability to sustain as well as improve these businesses in a time of unprecedented change and acceleration.
“As long as the industry retains a myopic view on leadership and organizational development as well as refuses to see that the world is a flat canvas for talent that can be integrated from other industries particularly on the technology side, we will remain not only an industry which will be late to change but may erode because of it,” she said.
The fact that so many ceo’s are on the move could be an indication of just how seriously fashion brands and retailers are finally taking the broader shifts in the market.
“The amount of change that’s going on behind the scenes and at the c-suite, people realize they have to change, they’re looking for different ideas and talent to accelerate the pace of change,” said Tom Snyder, global practice managing partner of Heidrick & Struggles consumer markets practice.
“Everybody’s trying to figure out how can you make your stores or your web site a destination that isn’t easily replicated by Amazon or some other lower-priced competition that doesn’t have brick-and-mortar,” Snyder said. “When you look at some parts of apparel, everybody’s product looks alike…how many places do you go to shop that have the wow factor?”
If all the ceo changes are any indication, not enough.