From upscale department store Neiman Marcus to organic grocer Whole Foods, major luxury retailers and grocery chains are playing musical chairs in C-suites and boardrooms as they streamline management and change creative roles amid declining in-store sales.
While executive turnover is not unusual during the first quarter of the fiscal year, analysts say the whirlwind of changes at the helm of retail powerhouses is driven by major reorganizational trends.
“CFOs have the added pressures of slow growth in the physical sector, significant investments in ecommerce, constant emphasis on supply chain efficiencies and pressure to drive profits on razor thin margins,” Shelley Kohan, vice president of retail consulting at in-store analytics firm RetailNext, tells Global Finance. As the retail industry moves away from opening stores and raising prices, management and designers are now being asked to work together to provide a seamless shopping experience between digital and brick-and-mortar stores, serving consumers better and faster.
“The musical chairs in the creative departments depend on the need for faster innovation, as brands confront fewer new consumers happy with the icons of the past,” says Luca Solca, global luxury goods chief analyst at Exane BNP Paribas.
Companies are removing layers of management and realigning functional roles, Kohan says. Organic grocer Whole Foods announced last November that it had scrapped its co-CEO structure and appointed co-founder John Mackey as its sole chief executive officer. American fashion icon Ralph Lauren, hired the company’s first chief marketing officer and men’s-brand president in February.
Upscale jeweler Tiffany in January appointed Reed Krakoff as its first chief artistic officer to oversee design, ecommerce and marketing. The three companies have also changed CFOs, as has Neiman Marcus.
Doors have also turned at European luxury houses such as Gucci owner Kering, Chanel, Burberry and LVMH’s Dior.
Moreover, the importance of digital experience and gender diversity has dropped the average age of executives by at least a decade, Kohan says. Culture and clashing personalities have ousted top-level executives, she adds. Ralph Lauren CEO Stefan Larsson is leaving in May after disagreeing with the founder. And with interim CEOs taking the lead, chairs will keep moving for at least another round.
