Retailers across the United Kingdom have seen a huge change in employment—and apparently it hasn’t stopped at the C-suite.
According to a Korn Ferry report, the industry replaced 55 of its CEOs in 2019, up from 44 a year earlier and the most turnover since 2012. The past year saw a perfect storm of challenges for retail, resulting in profit warnings, and worse financial troubles, including a number ofhigh-profile high street names going into administration, says Sarah Lim, Korn Ferry’s managing director & sector lead for Retail in EMEA. “It created an annus horribilis for retail,” she says.
The CEO turnover is compiled in Korn Ferry’s 8th annual UK Retail Tracker. The firm analyzed more than 200 retailers and brands operating across the UK and Ireland. It covers all major brands and retailers, online and physical retailers, for companies whose annual revenues are at least £50 million. It found a host of difficult news for UK-retailers, thanks to both the ongoing technology disruptions and UK specific issues such as wavering consumer confidence, uncertainty over Brexit, and the recent general election. Even as the UK economy is close to full employment, retail employment has fallen by about 85,000 jobs over the last three years, according to the British Retail Consortium, an industry trade group. Retail is the UK’s largest private sector employer, with more than 3 million workers.
CEO tenure has been falling for years across sectors—it’s between six and seven years—depending on how it’s measured. But that’s nearly an eternity when compared to the UK retail sector. More than one in three, 38%, of the CEO changes made in the past year saw the former CEO in seat for less than threeyears, a slight increase from 2018. In 80% of the firms that made a quick switch of CEOs, the change was been driven by company performance, Lim says.
The industry has also changed where it’s finding new CEOs. Last year, half of the new CEOs had sales or merchandising backgrounds. That fell to just one-third in 2019. At the same time, the number of CEO replacements with financial backgrounds rose from 15% to 21%. Experts say that change may be indicative of the sector’s stress, where boards are looking for CEOs with experience in debt restructuring and strong relationships with investors.
There was not much of an increase in the number of female CEOs appointed last year; 11 in 2019 versus 10 in 2018. The proportion of female representation at the top of the industry sits at 23%, higher than most any other industry. “One thing is for sure, retail will change unrecognizable over the next ten years,” Lim says.