New retail chief executive appointments tumbled in 2020, while the hiring of female and minority candidates plateaued, according to new analysis from Korn Ferry.
The coronavirus pandemic took a heavy toll on the retail sector in 2020, with rolling lockdowns and other restrictions slashing overall sales by 0.3%.
A new report by management consultancy firm Korn Ferry shows the crisis also had a profound impact on new retail chief executive appointments.
Retail Week pulls out four key points from Korn Ferry’s UK Retail CEO Tracker 2021 to understand the effect the coronavirus has had on the sector’s top jobs and job seekers.
‘Better the devil you know’
For the whole of 2020, only 33 new retail chief executives were appointed. This was 30% down on the 47 appointed in 2019.
Not only were overall appointments down, but at the end of the year there were still five retail chief executives roles unfilled, indicating that top talent may have either been in short supply or many were simply unwilling to risk a move.
Of that reduced number of new appointments, Korn Ferry found the vast majority were internal promotions rather than external hires.
“Given the widespread nervousness as a result of Covid-19, many boards were reluctant to create even more uncertainty by changing out the CEO last year unless it was absolutely necessary”
Sarah Lim, Korn Ferry
The data found that 67% of new chief executive hires were made internally last year, with not a single new chief executive being bought in from outside the retail sector.
Korn Ferry managing director Sarah Lim said: “Given the widespread nervousness as a result of Covid-19, many boards were reluctant to create even more uncertainty by changing out the CEO last year unless it was absolutely necessary.”
New paths to the top
Last year continued the trend of retail chief executives being chosen from commercial, strategy and finance backgrounds, compared with the more traditional retail operations route.
Commercial, buying and merchandisers were the most likely to go on to take top retail jobs in 2020, with 34% of new hires last year coming from those functions.
Strategy and finance each provided 21% of new hires, while operations provided a further 15%. Branding and marketers were the least likely to take a chief executive role, with just 9% of new hires coming from those functions.
Korn Ferry said it was notable that “many more in either pure-play or largely online businesses had appointed CEOs with a prior strategy background” than in any previous year, including new Amazon UK boss John Boumphrey, Murray Lambell at eBay UK and Geoffroy Lefebvre at Yoox Net-A-Porter.
Diversity on hold
While there was a marked 64% increase in first-time chief executives at retailers in 2020, it’s fair to say the year will not be remembered as one where the dial was moved much on diversity.
In the first year that Korn Ferry tracked ethnic minority hires among retail chief executives, it found there had been just two in 2020 – Ajay Kavan who joined Matchesfashion and Chirag Patel who took over at Pentland Brands.
Going back over previous years’ data to 2015, Korn Ferry noted that there had been “no improvement in the appointment of ethnic minority CEOs in the past five years”.
The number of women taking on top retail roles also dropped in 2020. Only eight women were appointed to chief executive roles in the sector last year. Of those, only Pippa Wicks at John Lewis and Sarah Welsh at N Brown Group were external hires, with the remaining six being promoted internally.
With Karen Hubbard stepping down from her chief executive role at Card Factory, there are now no female chief executives of FTSE 350 listed retailers in the UK.
“We know that organisations with diverse leadership perform at a higher rate than those that do not. It is critical that boards prioritise bringing more diverse candidates into the recruiting mix”
Sarah Lim, Korn Ferry
Korn Ferry noted that over the past five years, the percentage of female CEOs appointed annually has remained fairly static at around 20-23% of the whole – around 8-11 appointments per year in real terms.
Lim said: “We know that organisations with diverse leadership perform at a higher rate than those that do not. It is critical that boards prioritise bringing more diverse candidates into the recruiting mix.”
Year off to a slow start
With the pandemic still grinding on, Korn Ferry said 2021 had been off to a slow start in terms of new chief executive moves.
However, based on the assumption that the closure of non-essential retail stores would lift in March when schools reopen and the vaccine roll-out in the UK continues at a similar pace, Korn Ferry said 2021 would likely be more active in terms of appointments.
It predicted more “pent-up demand” from those businesses and people whose moves had been put on hold by the pandemic, as well as more new market opportunities down to increased mergers and acquisitions activity in the market.
Korn Ferry also noted that the uncertainty around Brexit that has dogged the economy for the best part of five years was now over, and predicted consumer demand will “pick up at pace, with a return to shopping, travel, leisure activities and dining out”.
Lim concluded: “With Brexit ‘done’, momentum behind the Covid-19 vaccination programme and considerable interest from foreign investors in buying into the UK market, my expectation is for a bounce-back in CEO appointments as we head into the second half of this year.”