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Sarah Lim is Korn Ferry’s managing director and Retail sector lead in the Europe, Middle East and Africa, and also head of the UK Consumer practice.
One company switched leaders after its profits fell by 25 percent in a year. Another firm switched out its CEO who also was a member of the family that founded the company in 1882. Finally, there’s the firm that hired a CEO who lasted just two months! Let’s hope the board kept the receipt.
Businesses swap out leaders all the time, of course, but all of this happened in the same sector—retail—in the same country—the United Kingdom—in one year. Indeed, UK retailers swapped out
50 CEOs in 2017, the most in the sector in one year since 2012. It isn’t like the intervening years didn’t have any turnover, either. There were 41 changes in 2016 and 45 in 2015. I bet you didn’t even think there were that many big retailing companies based in the United Kingdom. All told, half of all UK retailers have changed CEOs at least once in the last four years.
These changes at the top have impacted some of the most well-known brands in the world, let alone the UK. The Body Shop, Topshop, Alfred Dunhill and others got new leaders in the last year. It isn’t surprising that there’s so much turnover; after all, the industry is trying to figure out how to succeed where consumers are cost-conscious and can shop for anything online from anywhere in the world. But what’s amazing is that the enduring leaders—at least the savvy ones—have carved a successful path for their organizations and, more often than not, they’ve done it using familiar techniques.
Of course, anyone familiar with shopping and the Amazon effect knows about the industry’s turmoil, but UK retailers have a couple of unique challenges. The British have embraced online shopping even more than other shoppers around the world, with shares of UK web sales doubling in five years to more than 20 percent, compared to 10 percent in the United States. Retailers also have the Brexit headache and all its uncertainty to deal with, not to mention a weakening British pound that has raised the cost of imports.
Yet with all that, some UK retailers are doing just fine, and it’s due in part to following some basic, but not always followed, principles of sound leadership. First, there’s a focus on talent. The current boss of the supermarket Sainsbury’s, Mike Coupe, has only led the firm since 2014, but he’s been with the firm since 2004, working up its ranks. As CEO, he has filled out his executive team with many former CEOs of other retailers. With that talent horsepower, the grocer, which started in 1869, now agilely uses excess store capacity to sell other merchandise, has its own bank and made two smart acquisitions.
The best leaders also keep their firms centered around a singular vision. In 2014, Euan Sutherland took over Superdry, best known for selling shirts and jackets with Japanese characters on them. Sutherland didn’t see the company as a bunch of stores to manage, but as a global brand to build out and continuously innovate. He’s made it easy to buy Superdry clothes online and has expanded the brand across the world. Annual sales are up 75 percent since he joined.
And then there’s culture—and how retail’s new or surviving CEOs are overhauling their organizations. Tesco, the UK’s biggest retailer, was reeling from both lower-priced competition and a financial overstatement. In came Dave Lewis, an executive from Unilever, who emailed all 500,000 employees, asking them to focus on what customers wanted while assuring them that Tesco would be an open and honest business. Plus, he energized employees by promising bonuses to those who hit key targets. Sales and profits have risen ever since, which has allowed Tesco to buy UK’s leading food wholesaler.
Perhaps all the retailers that have swapped out CEOs recently will turn around, but it’s the stand-out leaders who are making their firms thrive. It goes to show that even in the toughest of environments, if you make the right leadership purchase then you don’t often have to go shopping again.