Retailers trying to fill their c-suite offices are finding that it isn’t easy. The scarcity of qualified retail candidates can be attributed to several trends that aren’t expected to be resolved anytime soon.
One issue is that the industry’s contraction has hurt the desirability of retail as a career path. Retailers generally are closing more stores than they are opening as more sales come from the Internet, thus reducing the need for store managers and cutting back the number of positions that would allow for that crucial climb to the top. Contraction instead of expansion in any industry can hurt the ability to attract talent.
If retailers aren’t closing stores, they might be coping with other financial pressure. In just the past year, Sports Authority, American Apparel, Quiksilver Inc. and The Wet Seal Inc. have all filed Chapter 11. Before them it was Delia’s and Deb Stores. Pacific Sunwear Inc. is barely holding on and Aéropostale Inc. is trying to find a buyer. Bankruptcy is depressing, while emerging tech and start-ups are exciting.
“It’s career suicide to go into retail,” said Farla Efros, president of HRC Advisory. “Going to work for a company that may be going out of business or get acquired or has bad sales because of bad weather hurts your career instead of helps it.”
Anthony Christodoulou, president of executive search firm Janou Pakter LLC, disagrees. He thinks such positions can pay off in a big way. “They come in and they’re not there for life. They’re only there for a fixed period of time. If they do what they’re supposed to do, there’s a very big bonus attached. It’s a perfect ground for smart, bright people.”
Performance is the key and today’s retail executives are only given a short amount of time to prove themselves. “These retailers or fashion companies are crying out for leadership that can deliver,” Christodoulou said. He doesn’t believe there is a dearth of retail executive candidates, but instead feels retailers are now exceedingly specific in the skills they want. This has upended the dynamic of the retail executive search.
“It’s moved away from a job description. It’s changed now to what have people done and what are they going to do differently here,” Christodoulou said. “People want people that are doing exactly want they want them to do. Our clients are very specific about what they want and they want a proven track record.”
Les Berglass, founder and chief executive officer of Berglass + Associates, said he looks for candidates through new filters now. He said historically, placing retail executives came down to a linear skill set and merchants had the most important role in the store. But that has changed.
“If a company is focused on bringing excitement back to the store, we will often look to an executive from the media/entertainment industry. Or if we’re looking to place a retail executive in a fast-paced environment, we may focus our search on someone from a technology company. For exceptional customer service, we may look to quick-serve restaurants. A candidate’s history is becoming a lot less important,” Berglass said.
Years ago, eager college graduates would enter a retailer’s executive management training program and spend years climbing through the layers of store management. Eventually, candidates could work their way up the corporate ladder and get to the c-suite. This investment of time doesn’t sit well with today’s young executives.
“Millennials, in general, tend to spend between one and three years maximum at a company,” Efros said. “They have big ideas and a lot of demands and they don’t have a lot of patience to do their time in order to progress through an organization. That’s creating a lot of angst for a lot of companies.” Efros noted that companies invest a lot of money in these training programs and don’t get a big return afterward because the employees leave within a year.
In 2013, Macy’s hired almost 700 college graduates for its executive development program. That year, Macy’s was ranked 25th among business majors in a list of attractive employers, as surveyed by Universum. By 2015, though, Macy’s dropped to number 36. Liberal arts majors ranked the retailer as the 36th most-attractive employer in 2013, but by 2015 only ranked it 51st. According to Glassdoor.com, the average pay for people in the program is $47,000 a year.
When it comes to Millennial executives, Berglass agreed with Efros. “They want to be heard and listened to. They want to be part of the decision-making process a lot earlier in their careers than older generations.” He noted that while his firm doesn’t fill c-suite jobs with Millennials just yet, the executives he looks for have to be willing, if not necessary, to adapt to Millennial employees.
Besides, if Millennials aren’t willing to take the time to climb the corporate ladder these days they can just become a chief executive officer on their own by creating their own social-media driven apparel brand or e-tailer.
“Bloggers and YouTubers are creating momentum for their brand. They come back home and live at their parents’ house and build these things in their basement,” Efros said. “They think, ‘If I’m really good, I can get linked up to an Aéropostale. I can build up my brand and then get purchased.” In the past, a college graduate’s main goal was to leave their parents, now they can create a retail brand with mom and dad’s support while living at home.”
Ultimately, today’s well-informed digital consumer has redefined what a store needs to do to attract a shopper. That in turn has redefined the overall leadership model in retail. With the drought of retail executives, companies are being forced to cast a wider net to get the ideal candidate.