While management changes are necessary, replacing a leader can be difficult and disruptive. Finding the right leader to navigate through a changed industry is another battle altogether.
Recently we have seen John Browett (Dunelm), Anders Kristiansen (New Look) and Simon Belsham (Notonthehighstreet) all step down as chief executives.
While the situation for each will be very different, it is clear that their jobs were far from complete. Replacing leaders is expensive, disruptive, and finding good ones gets progressively harder. But the requirements of leadership are changing.
Retailers need to adapt
Every business is unique, but the evolving market is unlike any we have ever seen. And the vast majority of senior retail leaders have learned their trade in completely different trading conditions.
The single biggest difference is that after generations of relentless expansion, retail market growth is over. It would be impossible to overstate the significance of this, and its implications.
“Replacing leaders is expensive, disruptive, and finding good ones gets progressively harder”
After generations of “build it, and they will come”, growing sales today means taking business from the store next door.
For decades, much of retail leadership was about managing the growth that came your way in an expanding market. Today, consumer spend is finite and with capacity growing every month, holding onto your share of the cake has become paramount.
The skill most needed in this market is selling, and selling is about people.
Over the years there has been lots of confusion about what makes a great retailer. This has often centred around traders and dealmakers, but I think these are separate skills.
Doing a great deal is important but it’s a support act, it is not the most important. The essence of retailing is demand-driven. It’s about understanding exactly who the customer is, what they want, and being able to source, price and merchandise accordingly.
And it’s about doing this consistently, with continuity of supply and sustained quality, with appropriate service levels. There are leaders in today’s market that genuinely have these skills.
“The skill most needed in this market is selling, and selling is about people”
At the heart of being a great retail leader is people and specifically, relationships with the leadership team, suppliers, customers and the staff who serve them.
In years gone by, these people were called merchants – a word rarely heard these days as they are such a rare breed.
Taking care of business
We are seeing lots of symptoms of this dearth of true retail leadership. One is cost cutting.
There is nothing wrong with tight control of expenses, but there are some expenses that when cut, impinge on the sales line. Staff, for example.
Most retailers are cutting headcount and whatever PR spin might be trotted out, when going into stores it becomes very clear just what is happening.
Customers notice everything, often before the leadership team does. Staff sell, or they should.
Another is price promotions. This is the most promotional retail market we have ever seen. Sterling may be down and hedging may have all but run out. But promotions are actually a little higher than last year.
This isn’t being driven by the customers, but by retailers without the brand confidence to stick to their pricing guns.
Leadership needs to be far more commercial and closer to customers. Product does not become more relevant if the price is lower.
Opening lots of new space will no longer divert attention away from a weak offer badly executed. Pricing is central to trust and being on sale much of the time erodes the brand.
We will see more changes at the top, as the industry struggles to deal with static demand and steeply rising costs. Leadership in retail is more important than ever, and so too are people. The two are bound together.