Posts Tagged ‘retail news’

CAREERS: THE RETAIL INDUSTRY EARNS THE RESPECT OF THE EDUCATED

Thursday, February 6th, 2014

CAREERS: THE RETAIL INDUSTRY EARNS THE RESPECT OF THE EDUCATED

The demanding retail environment requires executives with higher education. Back in the 1960’s retailers aggressively started recruiting college graduates. In the survey conducted by Plummer & Associates, a New Canaan, Connecticut executive search firm specializing in the retail industry shows 88% of the CEO’s of the top 100 retailers have college degrees. That compares favorably with the 93% of Fortune 500 (all industries) CEO’s. This 88% also compares favorably with the 2008 study of retailers conducted by Plummer & Associates which showed 85% had college degrees and the 2002 study which indicated 60% had college degrees.

Retailers now need to recruit executives with advanced degrees. Of the Fortune 500 CEO’s, 68% have advanced degrees (MA, MS, MBA, Ph.D., JD) while retail only has 35%. Retailers have not made much progress attracting/developing CEO’s with advanced degrees as our studies in 2002 and 2008 show 37% and 29% respectively.

CEO’S WITH DEGREES

                                                Retailers                                  Fortune

Study Year       2002    2008    2014                500

BA                    60%     85%     88%                 93%

MA+                 37%     29%     35%                 68% (MBA,MA,MS,JD,Phd,etc)

MBA                            23%     29%                 40%

JD                                6%       7%                  

Note: The supermarket industry has the largest population of CEO’s w/o a college degree. This is followed by a group of entrepreneurs who built significant businesses. (i.e. Michael Dell at Dell Computers). The retailers surveyed are the top 100 based upon sales volume and includes those who operate store, catalog, e-commerce, and/or direct sales channels. The Fortune 500 statistics are from US NEWS May 14, 2012.

Retailing is a big part of our economy and the landscape is constantly changing.  Through internal growth and consolidation, the retail industry is now composed of more large national and international chains versus the smaller regional chains which existed up until the 1980’s. As a result, the CEO’s of these large retailers need sophisticated tools to meet the challenges they will face in the near future.

Challenges the industry faces include:

An oversaturation of retail stores. There is too much retail space for our population and too many retailers (including online retailers) are dividing up the sales pie.

Retailers are increasingly international, adding to the complexities of managing the business.

Growing options for the consumer; not only are there retail stores, but also direct sales, catalog retailers, online retailers, and rapid delivery choices that compete for the store customer.

Marketing options are growing. Retailers must keep abreast of new technologies (CRM, Texting, Emails, Twitter, Instagram, Social Media, Direct Mail, Advertising (Print, Broadcast, on line), etc.    Retailers also need to build a brand strategy which is reflected in the facilities, the products carried, the employee service levels and the overall experience in the store. They also need to understand ‘omni-channel’ marketing to ensure that the customer’s brand expectations are consistently met whether through the retail store, the catalog operation, or the e-commerce operation. It is of utmost importance that retailers learn how to segment and target customers and fashion a product assortment, ambiance, and service to meet customer expectations.

Price competition is severe. All channels need to take costs out of their operations so they can be price competitive. Customers will pay more for a product if they perceive a difference in service which is of value to them, but this value needs to be justified by research.

Retailers with stores need to maximize four wall contribution. They will need to ‘right size’ operations. They need to maximize efficiencies of their supply chain operations.

Retailers with stores need to deal with ‘showrooming’. If online customers visit stores to evaluate products, these stores need to capture the sale immediately by having a competitive price and an environment to close the sale.

Retailers need to recruit and develop well-educated talent to make a difference. Talent is needed in merchandising, marketing, supply chain operations, and in the stores to meet customer expectations and to minimize costs.

Plummer & Associates is  a highly respected boutique executive search firm which specializes in recruiting senior level executives for the direct-to-consumer industry (retail, retail services, direct marketing and sales, e-commerce, catalog, food service, and businesses which sell to this industry segment). Based in New Canaan, Connecticut, Plummer & Associates conducts assignments in the U.S. and globally. For more information: www.plummersearch.com or contact John Plummer: jplummer@plummersearch.com. Phone:  (800) 603 9981.

Retail Executives: Education of the Highest Paid CEOs

Tuesday, August 31st, 2010

In 2009, our firm published an article (listed below) indicating the level of higher education held by the CEOs of the top 100 retail companies. We have now identified the ten currently highest paid retail executives and have discovered that this group confirms our previous study. The complexity of the retail business is such that executives who possess the most intellectual tools rise to the leadership roles. The statistics are as follows:

Education of Highest Paid CEOs             Education of Top 100 Retail CEOs

BA degrees                 90%                                             85%

MBA degrees              10%                                            23%

JD degrees                   10%                                             6%

According to our research, the following executives fall into the category of the top ten highest paid executives. Total compensation for each is based upon current public records of publicly traded retail companies in the U. S.

Andrea Jung. Chairman and CEO – Avon

Total Compensation: $13.7 million

Education: Bachelor’s – Princeton University

Michael T. Duke. President, CEO and Director – Wal-Mart

Total Compensation: $13.3 million

Education: Bachelor’s – Georgia Tech

Terry Lundgren. Chairman, President and CEO – Macy’s

Total Compensation: $8.7 million

Education: Bachelor’s – University of Arizona

Francis S. Blake. Chairman and CEO – Home Depot

Total Compensation: $8.3 million

Education: Bachelor’s – Harvard College

JD – Columbia University

Myron E. Ullman – Chairman and CEO – J.C. Penney Company

Total Compensation: $8.0 million

Education: Bachelor’s – University of Cincinnati

Trudy Sullivan – President and CEO – Talbots

Total Compensation: $6.9 million

Education: Bachelor’s – Manhattanville College

Katherine L. Krill – CEO, President and Director – Ann Taylor Stores

Total Compensation: $6.9 million

Education: Bachelor’s – Agnes Scott

Robert A. Niblock – Chairman and CEO – Lowes

Total Compensation: $6.1 million

Education: Bachelor’s – University of North Carolina

Gregg W. Steinhafel – Chairman, President and CEO – Target

Total Compensation: $6.0 million

Education: Bachelor’s – Carroll College

MBA – Northwestern University

Carol M. Meyrowitz – CEO – TJX

Total Compensation: $5.7 million

Education: no degree

Following is the study we released in April, 2009, on the education level of the CEOs for the top 100 retail chains.

TOP RETAIL EXECUTIVES HAVE TOP EDUCATIONS!

A new study conducted by Plummer & Associates on the Chief Executive Officer education at the top 100 retailers in the United States shows that today over 85% have college degrees. This represents a significant increase over Plummer & Associates’ 2002 study that showed only 60% had earned college degrees. The number with advanced degrees has remained about the same; however, the new study shows the breakdown at 23% with MBA degrees and 6% with JD degrees.

Does this continuing trend mean that the industry can no longer be led by the person who starts with a push cart? Our research shows that while working your way to the top may have been a viable career path in the past, the constantly evolving and complex nature of today’s retail landscape requires that executives must couple their ground up experience with the sophistication and strategic vision gained through earning a college degree.

Retailers have consolidated from regional companies led by founding families into massive, complex businesses requiring sophisticated tools to manage them effectively. This new breed of retailers is intensely competitive and constantly looking for cost and marketing advantages to secure their market position.

Some of the complexities facing retailers today demand a command of the following disciplines:

  • Marketing – Sophisticated reporting systems have elevated the ability to forecast demand, measure customer buying pattern changes, brand awareness and customer loyalty, and help build brand value. Each retailer now operates through more than one channel, (retail, e-commerce, catalog, direct marketing) requiring that the decisions made for each channel are highly strategic.

 

  • Supply Chain Management/Logistics – Today there are tools available to help retailers secure significant cost advantages throughout the supply chain while simultaneously improving customer service. This gives retailers significant competitive advantages.

 

  • Merchandise Management – Advanced technologies are now required to source merchandise for product development, assortment planning, SKU rationalization, customer knowledge, trend analysis, and inventory and category management. The most important part is using these technological advances to increase profitability.

 

  • Finance – This function has quickly progressed from recording history to active involvement in creating value through analytics and is now vital in allowing a retailer to compete for capital against all other industries.

 

  • Legal – Our society has become more litigious making larger businesses more of an attractive target. The complexity of new regulations has resulted in an increase in legal staff. A retail leader is now required to be more involved and responsible for setting the tone of legal strategies.

 

  • Human Resources – Once considered just a major expense, Human Resources managed effectively must now create differentiation versus competition. A company’s culture and devotion to the customer are now more important than ever.

 

  • Information Technology – In the past, technology seemed to be the sole domain of the IT department. With advanced POS systems, the retailer has learned the power of information and no longer relies solely on market information provided by the vendor. Leading edge IT departments now interrelate with the entire organization by providing useful information to aid in decision making, control costs, forecast, and analyze. Companies are now operating enterprise-wide systems and the CEO must know the capabilities of these systems to ensure the company gains a competitive edge.

 

  • Global Reach –The days when retailers only operated stores in the U. S. with product only secured from U. S. sources are gone. The implications of the global activities are enormous.

 

Forward-looking retailers who saw the need for talented executives brought highly educated executives into the retail industry. In the late 60s and 70s the retail industry started recruiting top students from colleges and graduates from MBA programs. The top leaders at that time were: Jewel Tea, Federated Department Stores, J.C. Penney Co, Sears Roebuck & Company, Kroger, The Dayton Hudson Corporation, and The May Department Stores Company. Those recruiting programs have produced many of the CEOs of today’s successful retailers.

For those looking to progress up the ladder in retail, the data indicates that the career path from bagperson to CEO is no longer viable, nor practical. Retailers striving to be successful must compete for the best educated. And future leaders in retail must strive to educate themselves and that education must include minimally the rigors of earning a bachelor’s degree. Earning an MBA and/or a JD degree greatly improves one’s chances. This is not because one needs a degree to punch up a resume; rather it is the intellectual tools gained through formal education combined with on-the-job training that prepares an executive for the rigorous and evolving challenges facing retailers today.

While the 2002 study indicated no particular school had the lead in producing future CEOs, the current research indicates that a new trend is starting to develop. Harvard University has taken the leadership position having five CEOs with undergraduate degrees and five with MBA degrees. Second is The University of Pennsylvania’s Wharton School of Business with three CEOs holding an undergraduate degree. Columbia University and the Kellogg School of Management at Northwestern University are tied with three CEOs each holding MBA degrees. The University of Illinois has three CEOs with undergraduate degrees.

It is clear the retail industry needs to compete in the market place to bring the brightest talent with superior intellectual tools and education to manage the business for the future.