Today, most consumer-driven companies are playing catchup in a rapidly changing world. We see mistakes made by their leaders and unexpected changes in companies’ strategic directions. The retail industry has suffered not only from badly thought-out decisions but also from the increasing pressure of online retailers.
While retail companies are trying to catch up and win back customers, I’ve decided to look at the issues from a leadership perspective. What has changed in the capabilities and skills of successful retail leaders? Who can turn things around? Who can be a future game-changer? Mark Cohen, professor at Columbia Business School and former CEO of Sears Canada, helped me with answers to these questions.
Lilia K. Staples: Let’s start with challenges. Today, in your mind, what are the top three issues of retailing leadership of large corporate enterprises?
Mark Cohen: Insuring that the entire organization is properly focused on the strategy of the company and its execution. Insuring that the enterprise is correctly and completely serving its customers and is completely focused on the behavior and performance of its competition. Insuring that the enterprise retains its financial vitality and capability consistent with its goals and objectives and congruent with shareholder expectations.
In your opinion, today, where is the opportunity for retailers?
The opportunity for retailers today is to build more binding relationships with its customers through creation of excellent differentiated and properly priced products, product assortments, differentiated presentation (which includes customer service), and, increasingly, by providing seamless omnichannel touch points.
Unfortunately, the retail world is facing more challenges today than ever. We see a lot of unexpected movements in the leadership in large national retail chains. Why do you think it’s happening? What went wrong?
There are far fewer truly experienced and seasoned executives at the helm of major retailers today. That reality coupled with weak boards and ruthlessly aggressive short-term focused shareholders, have forced, in many cases, unwarranted and disruptive executive turnover.
The reason so few retail executives have enough, if any, real experience is that the traditional retail training ground — the department store — has all but abandoned the practice of talent development and education as they have moved into late-stage consolidation.
How important is it to develop a leadership team on the board and in management that embraces transparency and collaboration? Why is it so challenging for retail boards and management leaders to do?
Most retailers’ boards are composed of executives with little or no retail expertise. Many, literally, have no knowledge or insight into what makes their company tick. The obvious example of this is the catastrophic and completely avoidable events unfolding at JC Penney. Retailers need capable and powerful leaders at their helm, and informed and engaged boards who participate meaningfully in performance reviews, strategy development and succession planning.
Over the past few decades, online retail has displayed distinct advantages over physical stores. This shift had been noticed by the boards and management. That’s why we’re seeing a new trend in offline retailers recruiting talent with online experience, creating new leadership roles to lead the change. In your opinion, what would be the effect of this transition? Can online tactics have the ability to elevate the retail strength?
In short, virtually every brick-and-mortar retailer must become a differentiated and successful player in the online space to thrive, if not survive today. Retailers need omnichannel leadership and capabilities that are completely transparent to their customers, who increasingly expect this of them.
Next-generation retailing leaders will more likely need a completely different skill set than today’s leaders. What leadership skills will be the most important for success in a top retail role in the next several years?
Retail leaders must possess high level skills of acknowledgment (awareness of customer and competitive trends and issues), assessment (ability to create meaningful forward strategies) and action (ability to lead an organization by way of superior execution).
What would you most like to see change in the retail industry in 2014?
The business needs relief from the largely destructive influence of private equity short-term stakeholders, whose presence is almost always a harbinger of poorly formed and poorly executed short-term strategies.
Some national retail chains found themselves in more difficult positions than others because of leadership mistakes, a lack of innovation or unsuccessful strategies. What should be the retailers’ top priorities over the next five years to make sure they stay competitive?
Retailers cannot survive without talented and committed executives throughout their organizations — from the occupants of the corner office to the newest members of their team who have just joined them at entry levels.
Lilia K. Staples is a client services coordinator at Hunt Executive Search, a boutique executive search and selection firm specializing in C-level, general management and senior functional head recruitment in consumer goods and services.