Why Are Non-Merchants Running Retail Businesses?
From the outside looking in, running a retail operation looks relatively simple. Open a store/website, get some stuff to sell and count your money. In truth it is far more complex and loaded with potholes that distract and interfere with the whole money counting part of the equation.
After the retail implosion of ’08 and ’09, many retailers cleaned house in the executive suite assuming the problem was the result of internal and external issues. Since then some of those retailers have replaced merchant leadership with bean counters or operational experts. The result? Bad retailing.
Take Christopher & Banks, retailer of women’s clothing aimed at menopausal women. They’ve been through three CEO’s in 3 years. Recently C&B was offered a buyout by a hedge fund – Aria Partners. C&B refused, somewhat rudely, then punctuated the snub by adding a “poison pill” within the company to scare away other suitors.
In a letter to C&B, Aria Partners, Edward Latessa called out non-executive board member Paul Snyder (who is retired from KPMG, the global accounting firm) personally. Latessa said, “Is the company really taking its fashion direction from an accountant? Has it ever occurred to you that you are out of your element? If you were on Project Runway you would have been laughed off.” Harsh? Definitely. True. Yup.
C&B is not alone. Other retailers like Gander Mountain and Regis (hair cut shops) have non-merchant leadership.
While there’s a good chance I’d be laughed off Project Runway myself, I do know that running a retail business is not just about spreadsheets and just-in-time inventory systems. Ask any merchant you know, running a retail business is equal parts art and science. A great merchant is right and left brained – although not always perfectly balanced.
Take a look at a couple of the merchants I admire, Mickey Drexler (J Crew and Gap) and Steve Jobs, and you’ll see complex but creative leaders. More retailers could benefit from the kind of thinking proven successful by Drexler and Jobs.