Marks & Spencer digital boss Laura Wade-Gery has warned about the dearth of multichannel positions on retail boards, but businesses will likely have to update other top roles too.

Boardroom

The growth of online retail has presented the sector with one of its biggest challenges yet as shopper habits move faster than you can say “click-and-collect”.

Some of the UK’s largest retailers have delivered meteoric growth in the channel as it has evolved over the last decade to become vital to many’s success.

So why has this often not been recognised internally? Marks & Spencer executive director for multichannel ecommerce Laura Wade-Gery has questioned why she remains “rare” in sitting on a retail main board while running an online business.

It’s not just digital roles that remain in the shadows. From technology to supply chain to customer experience, roles that do not fit into a traditional retail main board structure are gaining in prominence and there’s a growing clamour for retailers’ top teams to mirror this shift.

Digital heavyweights

Wade-Gery argues that without champions for digital investment at the highest level, the boardrooms of multichannel retailers may not be “sufficiently digitally literate”.

There seems to be some truth in her assertions. Strong multichannel businesses including Next and Sainsbury’s do not have an ecommerce boss on their main boards despite the crucial element digital has played in their
sales increases.

Retail heavyweights do recognise the importance of digital roles. Tesco’s group multichannel director Robin Terrell, hired from House of Fraser in January, sits on its executive committee below the grocer’s main board, while Argos created the role of digital director, reporting to boss John Walden, when it brought in former EMI music executive Bertrand Bodson in July.

However, Wade-Gery’s main point is seen as a valid one in the industry.

“This is something retail chief executives and chairmen are genuinely concerned about,” says Ian Shepherd, director of search specialist Barracuda Digital. “They know their board may lack knowledge about digital. Boards are undoubtedly going to change in shape.

“Laura Wade-Gery makes an excellent point. It would never be acceptable for a director or non-executive to say they could not read a balance sheet and in a few years’ time it will be extraordinary to say you do not know how a website or social media works,” adds Shepherd. “What we will see in the short term is the increasing presence of specialists on boards, people who have run their careers through digital. It’s simply become something every senior executive needs to know.”

Shepherd observes that multichannel roles are becoming more senior and positions previously two levels down from main board are now just below the board and likely to become more senior in the next five years.

Korn/Ferry Whitehead Mann senior client partner Sally Elliott believes that the job of multichannel director “will emerge as a starring role” in future as the “de-facto number two role”.

In a Korn/Ferry Whitehead Mann report on the changing face of the boardroom, Elliott argues: “As a result of the growing importance and elevation of the multichannel director in retail, the role is emerging as the most likely route to chief executive of a major retailer. The experience and skills gained in that role will take precedence over expertise in any other individual function such as store operations, buying and marketing.”

Elliott cites former Sears online boss John Walden’s appointment as Argos boss, ex-Lovefilm chief Simon Calver’s recruitment to lead Mothercare, and the promotion of Dixons UK chief executive Katie Bickerstaffe, who had held ecommerce responsibilities, as appointments that signal a trend.

But she echoes Wade-Gery: “In the UK today, there are simply not enough retail executives who combine true technical understanding with leadership experience.”

However, others in the industry caution that those with specific skills have been promoted too quickly. Although they have digital nous they have a comparative lack of wider business experience.

A further question remains over where the responsibility for digital development, ecommerce and internal systems lies.

Some retailers have clearly defined structures. However, many have roles that straddle the functions. Whether the role is IT director, chief information officer (CIO), multichannel or omnichannel director, retail boards face a challenge to clearly define responsibilities for digital.

Shepherd argues: “What boards do is make long-term capital and strategy decisions. To do that you have to be able to see what’s going to happen in five years’ time and understand technology that customers use and your internal systems. Whether that means the CIO sitting at the board table or non-execs who are more technically literate. Non-execs used to come from the financial community and that will happen less and less.”

Customer remains king

The evolution of digital innovation is also upping the ante in terms of understanding the customer. Former Tesco boss Sir Terry Leahy attributed much of the grocer’s rise to become the UK’s largest retailer to its Clubcard insight.

With shopping patterns assessed in real-time via ecommerce - a spike in traffic during a break in The X Factor is now plain to see - a pinpoint understanding of the customer at board level is increasingly crucial and the role of customer director has become a talking point.

Etail giant Shop Direct last week hired Dene Jones, former chief marketing officer at gambling site Full Tilt Poker, as its first customer director to personalise its offer. And grocers Morrisons and the Co-op, which have historically been behind the curve in leveraging customer data, this year recognised the role’s importance, respectively hiring former Tesco executive Crawford Davidson and poaching Sainsbury’s insight and loyalty boss Andrew Mann to draw on his Nectar experience.

Shepherd says: “In future, the chief marketing officer will become more digital and include more customer relationship management (CRM). I suspect there will be a chief customer director. At the moment, CRM sits inside marketing. In five years’ time marketing will sit inside CRM.”

Design consultancy Fitch stated in a new report that it believes the role of chief experience officer should also be created to ensure an holistic approach is taken to using customer data, building brand loyalty and delivering a seamless approach in store.

Digital innovation and ecommerce is also having an impact on traditional senior roles - often at operating board level - such as human resources director. The role is evolving and growing in importance.

Since the pool of senior directors with notable digital experience is relatively small, the HR director’s role has become increasingly vital to find people at all levels with the right credentials and it is possible to envisage a role of talent director becoming increasingly important.

AdMore Recruitment senior partner Jez Ellerd-Styles says: “Today, successful retailers are more reliant on people with highly specialised skill sets, rather than product [knowledge] than ever before. With new roles created in strategy, product innovation, channel development and social marketing, there will be an insufficient pool of people with adequate knowledge and skills to satisfy the market.

“Consequently the role of talent director will continue to grow in prominence. Straddling the traditional training department, recruitment and marketing, the position will become crucial to securing the best talent.”

He maintains: “With advances in data capture, technology has presented talent managers with the opportunity to measure and quantify performance to such an extent that a seat on the board may be justified. As the evolution gathers pace the market leaders will have developed a robust strategy to secure the best talent on the market.”

Shadow boards

A number of retailers have recognised that their skill sets may not be appropriate to understand the digital age and their customers. So B&Q and the Co-op have introduced shadow youth boards to provide feedback and advice to their top teams.

The Co-operative retail chief executive Steve Murrells told Retail Week last month: “The young members’ board ensures that we can drive the Co-op forward and ensure the next generation feeds innovation into the business.”

The model may also be reproduced in the form of digital advisory boards. Rupert Jupp, director of digital search firm Princedale Partners, says: “The best way for retailers to understand the right resource to manage [digital innovation] is to create an external digital advisory board made up of digitally savvy gurus from across the consumer sectors. These advisers are best placed to ask the board the appropriate questions and bring broader perspective.”

Travel specialist Thomas Cook employed the tactic earlier this year, creating a 12-person digital advisory board drawing on the knowledge of executives who have spent time at Microsoft and user experience agency Foolproof.

Because the growth of digital is likely to lead to additions round the boardroom table, some traditional roles may be deemed less vital.

As the space race comes to a halt among grocery’s major players and store closures make certain retail locations easier to obtain, the role of property director may diminish.

“When retail businesses were property businesses that was an important role, but most retailers now are international and multichannel and it is less important,” says Shepherd.

However, some argue that the role of the property director has actually increased over the past few years as rightsizing the store portfolio has become crucial.

Digital is not the only factor driving the changing shape of the board. In the last year, high-profile problems such as the horse meat scandal and the collapse of the Rana Plaza factory in Bangladesh have highlighted the crucial role supply chain directors play.

Board level directors need to know the detail of often complex supply chains to react to rapidly developing issues. The failure of a senior person to act quickly in a world where shoppers can call boycotts via social media can damage reputations and cause a retailer’s share price to rapidly plummet.

Tesco group chief executive Philip Clarke this week said that if retailers are to survive then they will have to adapt to the biggest generational shift in consumer behaviour since the 1960s.

It is important that the retail board also adapts to mirror changing trends. If transformation continues at the same pace, Clarke may have to pull up a few more chairs at the table in Cheshunt while minutes are taken on Tesco’s new Hudl tablet.