Nitheesh NH
FROM THE DESK OF DEBORAH WEINSWIG
The C-Suite Revolving Door Is Picking Up Speed What in the world is going on right now among executive officers in retail? Announcements of CEO and C-suite changes at major retailers appear to have picked up speed recently.- This week, Dollar General announced that its CEO is retiring, to be succeeded by its COO.
- On July 11, Gap Inc. announced that its CEO would step down and that the former President and CEO of Walmart Canada would join the company as President and CEO of Old Navy.
- In early July, GameStop abruptly announced the termination of its CFO.
- In late June, Dollar Tree announced that its CFO would transition out of the role and that its Chief Legal Officer and Chief Strategy Officer were no longer with the company.
- Kohl’s announced in a SEC (Securities and Exchange Commission) filing prior to its first-quarter earnings report and guidance cut in May that its Chief Marketing Officer and Chief Merchandising Officer would leave the company.
- In February, Bath & Body Works announced that its CEO would step down and that its Chairperson would serve as interim CEO.
Figure 1. Management Changes at Selected Major Retail Companies by Month (Number of Changes) [caption id="attachment_151514" align="aligncenter" width="700"]
Source: Company reports/Coresight Research[/caption]
As always, there are many reasons for management changes, ranging from company-specific causes—such as underperformance, dramatic shifts in customer demand and unethical behavior—to standard reasons, such as management team members reaching retirement age.
Given still-healthy US retail sales growth (6.1% in May), the environment remains healthy in dollar terms—not taking into consideration current inflation rates—providing a tailwind for retailers in general. As this does not appear to provide the backdrop for major management changes, it is possible that some changes are the result of pure exhaustion. For instance, nonessential retailers had to scramble to handle supply chain challenges and shift to the online channel in 2020, and demand swung widely in 2021. This year, we are seeing category demand unpredictability persist and inventory challenges as consumers are returning to “normal life” and are shifting their buying preferences quickly. Thus, the stress on C-suite executives continues, with new hurdles to overcome, such as high inflation rates and skyrocketing fuel prices, in addition to shortages caused by political conflict.
There are few old-timers at the helm of major retailers who remember the inflationary early 1980s and recall how they dealt with these challenges, and we are not yet experiencing the new concerns that a reduction in demand and economic slowdown amid rising interest rates will bring. The challenges and scrutiny on retail C-suite members will no doubt intensify, likely leading to continued high levels of management changes.
US RETAIL AND TECH HEADLINES
Amazon’s Smart Grocery Carts Launch in Whole Foods Locations (July 11) CNBC.com- Amazon is expanding its smart Dash carts to a Whole Foods store in Westford, Massachusetts, in the coming months, before expanding the technology to other locations.
- The carts use Amazon’s “Just Walk Out” cashierless technology and were first deployed in Amazon Go convenience stores. They allow users to bypass the checkout line by tracking and tallying items as they are added to the cart and charging their Amazon account once they leave the store.
- Discount store chain Dollar General has announced that its current CEO, Todd Vasos, will step down, effective November 1, 2022, and will be succeeded by Jeffery Owen, who has served as Dollar General’s COO since 2019 and was Executive Vice President of Store Operations from 2015 to 2019.
- Vasos, who has been Dollar General’s CEO since 2015, will serve in a senior advisory role from November 1 through April 1, 2023, at which time he will retire from the company. He will then enter into a two-year consulting agreement with Dollar General and continue to serve as a member of the Dollar General board.
- Fashion retailer Gap Inc. has announced that Sonia Syngal will step down from her position as President and CEO, as well as from the company’s board, effective immediately. Bob Martin, the company’s current Executive Chairman of the board, will serve as Gap Inc.’s President and CEO on an interim basis.
- Gap Inc. also announced that Horacio Barbeito will join the company’s leadership team as President and CEO of Gap’s Old Navy banner, effective August 1, 2022. Barbeito most recently served as President and CEO of Walmart Canada.
- Supermarket chain Schnucks Markets has expanded its partnership with food-delivery platform DoorDash to serve 21 additional grocery stores in Illinois, Indiana and Missouri.
- Schnucks first joined DoorDash’s growing list of retail partners in March 2021, offering a variety of prepared foods for delivery from five of its locations in the St. Louis area. Customers can use the Schnucks Rewards app or the DoorDash app or website to place a delivery.
- Walmart has signed an agreement with electric vehicle maker Canoo to purchase 4,500 electric Lifestyle Delivery Vehicles (LDV), with the option to extend the purchase up to 10,000 vans.
- Walmart employees will use the Canoo vehicles to deliver online orders to consumers, ranging from groceries to general merchandise, starting in 2023.
EUROPE RETAIL AND TECH HEADLINES
Boohoo Launches Return Fee To Offset Rising Transportation Costs (July 12) RetailGazette.co.uk- British online fashion retailer Boohoo has introduced a fee for customers returning clothing to offset rising shipping costs. Boohoo will charge customers £1.99 ($2.37) per package returned to its warehouse.
- Customers will receive a refund for any returned items, minus the fee. The fee does not apply to premier customers, who pay £12.99 ($15.49) per year for unlimited next-day deliveries and free returns.
- Spanish fashion retailer Inditex has announced its investment in textile recycling company Circ. Circ’s technology generates new materials from textile waste by breaking it down to its raw materials, with the goal of eliminating the need for virgin materials.
- Overall, Circ raised more than $30 million in Series B funding led by Bill Gates-founded organization Breakthrough Energy Ventures. Textile company Milliken & Company and investment firm Lansdowne Partners also contributed to the funding.
- British fashion retailer MatchesFashion has appointed former ASOS CEO Nick Beighton as its new CEO, taking over from Paolo De Cesare, who will hand over responsibilities by the end of July.
- Beighton is currently the part-time Chairman of British fast-fashion retailer Secret Sales. He left ASOS in 2021 after 12 years at the company; he initially joined as CFO and COO and became CEO in 2015. Before his time at ASOS, Beighton was Head of Finance and Executive Board Member at British fashion and homeware retailer Matalan.
- Lithuanian online secondhand apparel and accessories marketplace Vinted has launched a business-to-business (B2B) digital shipping platform named Vinted Go.
- The platform connects and optimizes third-party carrier infrastructure for Vinted’s marketplace as well as for future business customers. Vinted Go’s new service is now available across Europe for both domestic and cross-border deliveries.
ASIA RETAIL AND TECH HEADLINES
Alibaba’s Freshippo Seeks New Funds (July 12) Reuters.com- Freshippo, a supermarket chain owned by Chinese e-commerce platform Alibaba, is seeking to raise funds at a valuation of $6 billion this year, which is significantly less than its previous valuation of $10 billion.
- Freshippo had to lower its valuation forecasts amid the impact of China’s ongoing Covid-19 restrictions, which have had significant impacts on financial districts in major cities.
- Thai retail conglomerate Central Group is set to invest $825.3 million in Vietnam over the next five years to expand its presence in one of Southeast Asia’s fastest-growing retail markets.
- The investment will support the group’s expansion in 55 provinces and help it reach $2.7 billion in sales in Vietnam by 2026. Central Retail stated that it plans to double its omnichannel sales penetration to 15% to become the top omnichannel platform in the country for both food and real estate by 2026.
- South Korean convenience stores chain GS25 plans to open its first store location in Malaysia in 2023 in partnership with Malaysian retail giant KK Group. The partnership will operate under a franchise deal, in which KK Group pays royalty fees to operate GS25 stores.
- Over the following five years, GS Retail and KK Group intend to open another 500 GS25 stores in Malaysia. After Vietnam and Mongolia, Malaysia will be GS25’s third overseas market.
- Reliance Retail, the retail division of Indian multinational conglomerate Reliance Industries, is in discussions with London-based luxury department store Fortnum & Mason for an exclusive collaboration that would see the opening of luxury outlets in India under the Fortnum & Mason brand.
- The move comes as part of Fortnum & Mason’s expansion in Asian countries. The retailer launched its first online store in China this month. In 2019, the luxury company opened its first entirely owned and run store and restaurant in Hong Kong, laying the groundwork for a significant presence in Asia.
- Wheelocity, an Indian enabler of supply chain networks for fresh goods, has raised $12 million in a Series A funding round.
- The round was led by Lightspeed Venture Partners, with participation from Anicut Capital. Wheelocity currently handles logistics of 700 tons of fruits and vegetables every day and serves 12 cities in India. Over the coming year, it plans to expand to more than 30 Indian cities and develop new farm operations solutions.