Turnover of retail Chief Executives reached a seven-year high in 2019, with churn increasing 25% on the previous year.
Korn Ferry’s 8th annual UK Retail CEO Tracker report highlights that the increase in turnover occurred in one of the most difficult years for the retail sector in over a decade. Wavering consumer confidence, Brexit uncertainty, a general election and ongoing challenges of rent and business rates combined to create an ‘Annus horribilis’ for the retail market.
The report reveals the sector response has been to change out the CEO. The industry has seen an unprecedented number of changes at the top over the past year, with CEO change rising 25%, from 44 in 2018 to 55 in 2019. This is the highest churn since 2012 when the number of changes was 56 in a single year.
More than one in three (38%) of the CEO changes made in the past year saw the former CEO in the seat for less than three years, an increase on the year before, illustrating the growing rate of change in CEO appointments year-on-year. In 80% of these companies, the change in CEO was driven by company performance.
Sarah Lim, Managing Director & Sector Lead, Retail, EMEA at Korn Ferry, commented: “The past year saw a perfect storm of challenges for retail, resulting in profit warnings, a further spate of Company Voluntary Arrangements and a number of high-profile high street names going into administration. As we head into a new decade, one thing is for sure; retail will change unrecognisably over the next ten years – those who lead our industry will need to do so too.”
The difficult environment appears also to have impacted the importance of the functional background of CEOs. The number of CEOs appointed in the past year from Commercial/Sales or Trading/Buying and Merchandising backgrounds fell from 46% to 34%, while those from a Retail/Operations background fell from 22% to 13%.
The next most common functional background for CEOs appointed last year was a Finance/CFO role, up from 15% to 21%, a rise which may be indicative of sector stress at a time where focus often shifts toward strong financial management, debt restructuring and management of investor relations.
The report also notes concern over the attrition rate of female CEOs from listed companies and/or female CEOs running retail businesses of significant scale and complexity in 2019. Today, the only retail listed company female CEO of scale is Karen Hubbard at Card Factory.
There was no material increase in the number of female CEOs appointed last year to the year before; 11 newly appointed in 2019 versus 10 in 2018, out of the 47 confirmed CEO appointments – just under 25% of the total. The proportion of female representation at the top of the industry sits at 23%.
