Why should retailers hire a chief operating officer, and what value do they provide?

Retailers including Asda and Kiddicare have appointed chief operating officers in the past year.

Dan Murphy, director at AlixPartners, says there is growing need for the chief operating officer role as retailers can no longer focus on managing their daily business against a relatively stable and predictable backdrop.

He explains: “Retailers have to respond to a number of significant external pressures including a general consumer downturn, growth of multichannel, rising commodity and shipping prices and so on. Retail chief executives are increasingly involved in managing the response to these influences in terms of strategy, direction, and communication with external stakeholders. One effect of this is to reduce the time that the chief executive can devote to ‘business as usual’ and this is where the chief operating officer comes in.”

The chief operating officer co-ordinates and manages the key operational areas of the business (commercial, supply chain, logistics, stores and other channels) and ensures critical metrics such as sales, margins, working capital, return on space and availability are not allowed to drift. It is quite distinct from a store operations director who looks after stores and everything in the field.

Murphy adds: “As the retail market continues to experience major change, we are likely to see more retailers moving to this dual role of chief executive and chief operating officer to ensure that both strategy and operations receive the right amount of senior attention.

“In stressed situations, where a retailer is trying to recover from poor performance as well as managing strategic direction, there may also be a requirement for a specialist chief restructuring officer as well as a chief executive and chief operating officer.”