NEW YORK — Retailing’s next generation will need a completely different skill set than today’s leaders — and most likely will come from outside the industry.
A survey of 135 presidents and chief executive officers revealed that a strong majority — 74 percent — will look beyond the sector when they recruit for leadership positions in the next five years. The study, conducted by Equation Research for executive search firm Herbert Mines Associates and WWD to coincide with the start of WWD’s annual CEO Summit here today, was dominated by executives from stores focused on fashion and beauty, but about a third of respondents were involved in hard goods or other categories.
Nearly seven in 10 — 69 percent — selected “want leaders with a new perspective” when asked why they would look “outside the box” of retailing for leadership prospects. The second most popular response to that question was “want leaders who are better prepared for new ways business is conducted,” at 52 percent, followed by “want leaders with skills/expertise that are not currently available in the industry,” at 45 percent. Slightly fewer — 43 percent — felt the talent pool in retailing is limited.
Overwhelmingly, those surveyed believe retailing is failing to get its due among the pool of prospective leaders. Ninety percent said the industry isn’t attracting “the best and the brightest” from college campuses, versus just 10 percent who indicated that it is. What stood in the way of luring the best entry-level talent? Fifty-seven percent said “sexy careers are elsewhere,” such as in the financial, media and digital worlds, and 55 percent said compensation is the problem. Forty-four percent said the industry had done a poor job of communicating opportunities at the college level, just ahead of “long hours in retail” (43 percent) and “lack of quick career growth opportunities” (42 percent). Thirty-eight percent cited the lack of formal training programs.
Asked to indicate the biggest challenges confronting retailers in the development of future leaders, 62 percent checked off “understanding new ways to connect with and market to consumers,” an obvious nod to the critical nature of social networking and e-commerce. Next in importance was “developing cross-functional capabilities” at 58 percent and “keeping on top of a quickly changing competitive landscape” at 57 percent. None of the other choices garnered more than 45 percent (training), and compensation, at 17 percent, received the lowest affirmative response rate.
“We are witnessing shifting sands with the way retail leaders are approaching their customers, employees, vendors and investors,” said Hal Reiter, chairman and ceo of Herbert Mines. “The survey findings give us a window into the collective psyche of top management in retail, their challenges and perspectives about their vision for the future.”
The results make it clear that the skills and attributes that propelled the respondents to the top of their profession won’t necessarily apply to those who will succeed them.
When asked to designate the primary areas of expertise that helped them advance, 51 percent indicated marketing, 44 percent sales, 42 percent merchandising, 33 percent product design and development, 26 percent operations, 23 percent finance and 19 percent international business. Technical and legal expertise each drew a 6 percent response.
However, pressed to identify the single discipline that would be the most effective pipeline for the next generation of leaders, merchandising trumped all other skills, with 26 percent, followed by marketing at 21 percent, product design and development at 13 percent and, at 11 percent each, digital/technology and international business.
Sales, so prevalent in the development of the current crop of leaders, garnered just a 6 percent response, tying it with operations and ahead of only finance, at 2 percent.
Reiter told WWD that the relatively low standing of financial skills shouldn’t be taken as a lack of regard for their importance. “So many companies have a strong chief financial officer who’s joined at the hip with the ceo,” he said. “That wasn’t a surprise to us.”
But Reiter was surprised that nearly three-quarters of those responding — 73 percent — said their firms had no formal ceo succession plan in place. Succession is a tricky proposition, with heirs apparent often getting impatient for their opportunity and the current ceo clearly not the ideal person to orchestrate the procedure.
What are retailers’ top priorities over the next five years? Asked to designate just one, 16 percent said “talent acquisition and development,” followed by e-commerce and product development (14 percent each) and international growth and branding (13 percent each). One in 10 indicated “marketing in a new media landscape,” while mergers and acquisitions were selected by 8 percent of respondents and new retail store locations by 7 percent. Licensing drew just a 1 percent response.
Asked to specify the single most effective digital investment they could make, 40 percent said “improved e-commerce,” followed by social-media marketing initiatives at 22 percent.
The 135 participants were predominantly male (62 percent) with a median age of 51.8 years and a median tenure of 7.1 years at their current company. Fifty-one percent work at fashion specialty stores, 10 percent at beauty specialty stores, 6 percent at department stores and 2 percent at mass merchandisers. Hard goods specialists and “other” account for 28 percent of the sample. Three-quarters of respondents were either ceo’s (42 percent) or presidents (33 percent) of their organizations.
Those executives were asked what leadership skills would be most important for success in a top retail role in the next five years, and the most popular choice was “strong vision for the company,” at 80 percent, just ahead of “understanding the consumer,” at 79 percent. Also attracting a better than 50 percent response rate were “team build/foster talent” (72 percent), good communications skills (70 percent), strategic skills (66 percent) and ability to foster innovation in others (62 percent).
After witnessing decades of consolidation, bankruptcies, mergers and acquisitions, and outsourcing, the retailers surveyed seemed to have few regrets. When asked if they’d choose a career in retailing if they could start their careers over, 73 percent said yes, while 27 percent said no.