PLMA October Leaderboard

Exec turnover costly for retail

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The movement of mass retailing executives continues, with a number of high-profile departures from some of America’s largest retailers. In some cases the moves involve companies that are struggling to right themselves after a period of indifferent performance.

MMR OpinionAll the more reason to ask why. Are the departures centered on quality-of-life issues, involving remuneration and fringe benefits? Or are they tied to more subtle reasons, concerning the nature of the jobs they are leaving?

Frankly, we don’t know. What we do know is that the people leaving their positions are, in the main, people with impressive credentials, executives who have consistently performed in the past and given every indication of continuing to perform in the future.

Perhaps the answer lies with the companies rather than with the individuals. Has life at a major retailer — moreover, one that is currently struggling — become too difficult? Are the challenges becoming too daunting? Is the remuneration less significant than it should be? Are the jobs themselves not properly defined? Or are they too narrowly defined? Are the opportunities elsewhere too appealing to ignore?

Whatever the reasons, the parties in real jeopardy here are the retailers. Especially if one assumes that most senior managers are in the jobs because they deserve to be. Seasoned merchants, those people who have earned their position and status, are not all that plentiful these days. Indeed, mass retailing has swung to an operational model, one that puts the store or brand in the spotlight, one that relies on the shopping experience more than the buying experience for success. After all, the prevalent thinking goes, merchandise assortments don’t vary all that much from one store to another. Thus, the shopping experience itself determines which stores a customer favors, and which one she will return to.

Perhaps it is telling that merchants appear to be departing more quickly than operators these days. Perhaps the merchant’s job needs redefining or reclassifying. There is a movement toward simplifying the merchant’s responsibilities, perhaps redrawing categories or reducing the content of a category. This much is known: The merchants occupying key slots in mass retailing are apparently not viewed with the same regard they once were. Often, perhaps too often, their decisions are not viewed as final or irrevocable. Other deciders may overrule them or, more commonly, open another door to distribution, one that did not exist in the past.

One thing is certain: This retail brain drain cannot be allowed to go unaddressed much longer. Even now, cracks are starting to appear in retail facades. Stores no longer measure up to a standard of excellence as they once did. Many retailers have begun to test new-store concepts without a definite objective rather than improving on a model that in itself has not been sufficiently tested.
Much of this uncertainty is merchant-based, revolving around a lack of continuity or insufficient exposure to existing store models. In the end, retailers are doing themselves a disservice, condemning a format without giving themselves the time to tweak it and iron out some of the ­deficiencies.

So the problem here is simple, if multi-pronged. Retailers must take more aggressive steps to stop or slow down the exodus of senior managers while doubling back on store formats to make certain that the store of today remains the store of the future.


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