Many retail businesses are intrinsically linked to and even defined by their founders, but what happens when it comes time for that person to stand aside? Retail Week looks at past successes and failures and what needs to be put in place to ensure the process goes smoothly

  • High-profile business founders Jeff Bezos and Mike Ashley have both hand-picked their successors
  • “If the brand is healthy, then the new chief executive doesn’t need to put their stamp on it. However, if a business has lost its way, that’s a different scenario,” warns expert
  • Both Bezos and Ashley are stepping into ‘executive chair’ roles, “so could still be very strongly involved”, says analyst
  • Seasalt boss Paul Hayes “focused on building a talented management team” after taking over from founders

There may be a few months left to go, but 2021 has already established itself as the year of substantial succession for some of retail’s largest and most disruptive founder-run businesses.

Bezos, Jeff

Amazon founder and former CEO Jeff Bezos

In June this year, Amazon founder, and one of the world’s richest men Jeff Bezos, stepped away from the helm of the business he founded in 1994. Just two months later it was announced that Sports Direct founder and Frasers Group chief executive Mike Ashley would stand down next year from the business he’d built from a single store opened in 1982. 

In both cases, Bezos and Ashley have been able to handpick their successors internally. Bezos selected long-standing executive and former chief executive of Amazon Web Services (AWS) Andy Jassy, who he says has been at the business “almost as long as I have”, while Ashley is passing the baton to head of elevation and future son-in-law Michael Murray.

In other instances, founders are often succeeded by external candidates, usually picked by major shareholders or private equity investors. 

There are examples of retail founders handing the reins over successfully, but also a litany of fraught successions from recent years ranging from Superdry and Ted Baker to New Look and McColl’s. As Korn Ferry managing director of retail Sarah Lim notes: “History will show that the success rate is not great in many cases”.

As two of retail’s biggest successions in recent memory loom, what are the challenges and opportunities presented by stepping into a founder’s shoes, and what does a business leader need to put in place to ensure the company they built outlasts them?

Internal versus external

While each retail succession is different, they tend to be split between successors being found within the business or bought in from outside. In the case of both Amazon and Frasers, both founders have chosen to promote from within – a choice that will have been aided by both founders also being the biggest shareholders in their respective businesses.

A senior source with an understanding of retail successions says a huge amount depends on whether the founder is also the owner of the business in question.

“If the major shareholder is private equity or another investor they will set the brief for the new chief executive, which might be very different to what the founder might want,” he says.

“AWS is the moneymaker. So Jassy’s appointment is an acknowledgment of the importance of subscription over the long term for Amazon”

Jon Reily, Dentsu Commerce

Korn Ferry’s Lim says that, while not always the case, internal appointments tend to be made by businesses performing well, while external appointments are often forced by major shareholders desperate for a turnaround or who feel a successor has been at the helm too long – with the latter circumstance often leading to a more challenging succession for the new CEO.

“If the brand is healthy, then the new chief executive doesn’t immediately need to put their stamp on it. However, if someone is going into a business that has lost its way, that’s a different scenario,” she explains.

“It’s more tricky when you’re coming in and saying to a founder ’your brand doesn’t work anymore’. That’s been their baby for however long, so there’s a lot of emotion tied up in that”. 

In the case of Amazon and Jassy, its revenues since the pandemic have only grown, while the once purely online giant has increasingly moved into bricks-and-mortar retailing both in the US and UK.

Yet, while Jassy has been at Amazon since the late 1990s and has been the boss of one of its driving forces of growth, experts say he wasn’t Bezos’ first choice for successor. That was supposed to have been Jeff Wilke.

Wilke, who joined the business in 1999, was made chief executive of Amazon Worldwide Consumer in 2016 – the brand’s vast retail arm that includes Prime, the Amazon marketplace, the Fresh ecommerce arm, stores, marketing and Whole Foods Market. When Wilke made the decision to step away in March 2020, Bezos chose to go with Jassy and the future engine of growth for the business. 

“[Bezos] has clearly been thinking about this for some time and Wilke was the original choice because he ran the retail business, which is the public face of Amazon,” says Dentsu Commerce president and former Amazon head of user experience and ecommerce design Jon Reily.

“But it’s not the moneymaker – AWS is. So [Jassy’s appointment] is an acknowledgment of the importance of subscription over the long term for Amazon.”

At Frasers, Ashley lost his right-hand man and long-serving past chief executive David Forsey in 2016, who became the fall guy in the wake of the retailer’s Shirebrook scandal. The financial situation at Frasers Group is also complex. At its most recent set of results, Frasers Group reported a drop in underlying profit before tax for the full year to April 25, down 95.1% to £5.8m. 

Despite struggling on paper, the group continues to be one of the most active UK retailers in terms of leasing and fitting out new shops. It also reported a sales uptick in its premium lifestyle business, which it sees as an increasingly important part of its long-term strategy and which Murray has been the driving force behind.

So, while Jassy might represent continuation, Ashley’s successor Michael Murray represents something different. Murray is only 31-years-old and has not been with the business since its inception. Coming from a property background, Murray became close with Ashley after meeting his daughter Anna on holiday in 2011.

While Murray has become Ashley’s right-hand man over the last few years, some experts worry he may not have what it takes to run the business. 

The beach or the boardroom?

Retail history is littered with founders who found it impossible to step aside from the day-to-day running of their businesses, even after choosing to stand down.

Julian Dunkerton

Superdry co-founder Julian Dunkerton

Superdry co-founder Julian Dunkerton led an investor coup to reinstate himself on Superdry’s board and oust his successor and former CEO Euan Sutherland in 2019. Dunkerton, who had moved from chief executive to chief creative officer prior to leaving the business in 2018, led the insurgency after sales dipped, which he blamed on Sutherland’s change in strategy.

The son of Morrisons’ founder Ken Morrison, who helmed the business from 1956 until 2006, also had a notoriously difficult relationship with his successor Marc Bolland.

Bolland was widely credited with turning around Morrisons after the botched integration of Safeway following its acquisition in 2004. However, after he left to head up Marks & Spencer in 2010, Morrison criticised Bolland, saying he “was no retailer”

Although Ken Morrison stood back from all official roles at the grocer in 2008 AGP founder Tony Gregg says he was “a constant thorn in the side” of both Bolland and his successor Dalton Philips. “He didn’t let the successors win, because it had to be that he was the one making the hard decisions,” says Gregg 

Bezos’ and Ashley’s respective successors will have the dubious honour of serving as chief executive while their predecessor moves into the more ill-defined executive chair roles.

Bezos has gone on the record saying that the executive chair role will allow him to “focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post and my other passions” while also having input into Amazon’s strategic direction.

Mike Ashley

Frasers Group founder Mike Ashley

Ashley has said less on how he envisages his new role working, but Peel Hunt analyst Jonathan Pritchard believes it’s pretty obvious. 

“I don’t think we need to be under any illusions. Mike [Ashley] is still going to be very strongly involved. So expecting a real change in strategy or tactics is entirely unlikely,” he says. 

“I don’t think there are any banana skins that Murray won’t be fully aware of. He’s been at the business a long time, he’s worked as Mike’s right-hand man for a long time. To start with, he’s going to have Mike there to guide him so I think it will be a smooth transition in many ways.”

The senior source says whether having a founder stay with the business is helpful or not for the new chief executive depends primarily on the health of the retailer they are stepping into.

He argues that if a retailer is trading well when a founder chooses to stand down, then their relationship with and understanding of the customer is worth mining by their successor. However, if a business is struggling, then the founder may have lost their touch and a clean break may be for the best. 

“When I came into the business back in 2013, it was important for me to take time to understand it… I fully respected the authenticity of the brand and the product and how the business had been developed”

Paul Hayes, Seasalt

Korn Ferry’s Lim agrees. While she thinks an executive chair role can be hugely beneficial for a handover, she stresses the need for the incoming chief executive and outgoing successor to agree on clear boundaries between the roles. 

“It can work really well, but it depends on whether the rules of the road have been set up from the outset. Where it falls apart is where the board, the investors, the founder and the new CEO haven’t sat down and had the tough conversation at the start about ’how is this really going to work?’” she says.

Seasalt is one example of a chief executive succession that has gone successfully. Current chief executive Paul Hayes was handpicked by the Chadwick brothers who founded the retailer in 1981.

Speaking of handing the reins to Hayes, co-founder Neil Chadwick says: “All founders need to plan for succession. Our appointments in the early years were through connections and the people we knew and we’ve always strived to find people who are better than us. 

“I first met Paul about 25 years ago and I recognised him as a future leader. He’s built a fantastic team around him and together they have taken the business forward as Leigh and I have taken a step back.”

Making a mark

As much as founders may find it difficult to step away and let their successor run their business, the challenge for incoming new chief executives to find the right balance between continuity and change is not to be sniffed at.

Both Bezos and Ashley have been able to orchestrate their exits on their own terms and put in place not just hand-picked successors, but also a strong senior management team around those new chief executives. In August, Frasers promoted Sean Nevitt to chief commercial officer and David Al-Mudallal to chief operating officer, while the average tenure of a senior vice president at Amazon is 18 years.

Ray-Kelvin

Ray Kelvin, the founder of Ted Baker, is famously publicity-shy

This has not always been the case in other retail successions. Experts point to Ted Baker and its painful transition from founder Ray Kelvin to his successor Lindsay Page. When Kelvin abruptly stepped down from the business he founded in December 2018 under a cloud of allegations about inappropriate workplace behaviour, his long-serving financial director Page was thrust into the role. 

The senior source says Page, in a bid to distance the business from the accusations against Kelvin, “changed everything, looked to try and turn the brand into something it isn’t. In doing so, they lost the brand’s DNA.”

Following Kelvin’s departure, Ted Baker’s profits and sales fell off a cliff, and Page and his team stepped down within a year of taking over.

While the Ted Baker example may be an extreme one, it demonstrates the importance for a departing founder of having the time to enact a proper succession plan, and for a new chief executive to understand the role they are stepping into.

By contrast, Seasalt chief executive Hayes says his takeover from the retailer’s founders set him up for success.

“When I came into the business back in 2013, it was important for me to take time to understand it. We phased my level of responsibility over time, giving me the opportunity to learn the business. I fully respected the authenticity of the brand and the product and how the business had been developed, but then I needed to look at the skills and knowledge required to underpin the next phase of growth.”

Hayes says it was also important that he was allowed to build up his own team of people for a different phase in Seasalt’s journey. 

“I focused on building the talented management team we have today, who are not only top of their game in their own disciplines, but also a great cultural fit,” he says. “The Chadwicks’ values still guide us as a business but they have stepped back from day-to-day involvement and Seasalt is now run by a best-in-class management team.

“That meant there had to be some change from the structure of the business run by Neil and Leigh [Chadwick]. It was about respecting people who were there, but over time, the size of the business began outgrowing some members of the team.”

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While Hayes’ slow-and-steady approach to evolving Seasalt’s board has paid off, Korn Ferry’s Lim says many new chief executives can be tripped up by “the arrogance to say ‘everything’s broken here, I’m going to chuck it all out and start again’”.

She says doing that means a business “loses a lot of the inherent legacy knowledge about the brand, the business and so on, and then it’s very difficult to get that back”.

Although there is no panacea for ensuring that a retail succession will be a success, if a founder can trust the next-in-line’s vision, is afforded the time by other stakeholders to hand over the reins, and builds a robust plan for how the handover will work long term, then handing over the reins can have every chance to succeed. 

Yet, as history has shown, there are no guarantees.