Dear Friends and Industry Colleagues,
We are now fully into 2019 and I hope the start of the year has gone well for you all and will continue to progress with suitable style, success and personal achievement.
The last year, for many of us in the industry with a particular focus on luxury, showed signs of a significant improvement over the challenges that retail and luxury has faced over the last five years: whether it was high street closures, the BHS scandal, consumer concerns around data privacy in light of the Facebook/Cambridge Analytica files or the downshift in Chinese international spending, the picture in retail was fairly gloomy until around late 2017.
Global luxury generally fared well though last year with eye-catching performance from a number of high-profile brands, particularly those with differentiated propositions or service offerings. LVMH had something of a roller-coaster ride particularly in the second half of the year due to trade war concerns with China but nevertheless came out of 2018 well. There were of course notable victims of the rapidly retail space – notable closures or retail bankruptcies in 2018 included J. Mendel, Carven, Charlotte Olympia and The Limited – although overall the S&P luxury index has been steady.
Looking at 2018, the main theme that appears to stand out in retail, whether at the high street or luxury level, is that there is a considerable split and polarisation between the ‘winners’ and the ‘losers’. Success in retail seems to be centred on cost management and margin uplift and this is true at all levels of the industry. Many companies seem to be failing more due to poor inventory and promotional planning rather than any particular failings in design, brand identification or product (as customers are continuing to buy, however only during discounting periods). On the other hand, brands which can transcend varied customer groups and spend thresholds have performed well too. Brands which fail to perform on one or other of these levels, such as Marc Jacobs, which is undergoing a major store closure program, simply fail.
To put it more directly, I see brand leadership over the next few years, and no doubt beyond, as having two key pillars – restraint and understanding. This is quite the opposite of the factors behind the success of many major brands which emerged over the previous decade, where a level of managerial aggression was key to the rapid land grab which took place after the millennium.
If restraint (in terms of managerial decision making and operations) and understanding (in terms of knowing and delivering on the needs of varied and diffuse customer groups) will separate the winners from the losers, then I posit that another key issue in the global industry generally, the lack of women at the top level of leadership, will become more important than ever as it is precisely this, underrepresented, group which will be best placed to navigate today’s challenging waters.
Recently there has been an increased focus on the importance of including women in leadership positions, including on boards. But apart from the obvious reason of legal equality, studies have shown that especially in stressful environments, males tend to take more risks in life than females.
In business, where bets often need to be hedged, female leadership, which tends to be slightly more risk-averse, can provide invaluable balance. Multiple studies have shown companies with more women in decision-making roles, and throughout the workforce, achieve better financial results and have fewer governance and reputational problems. This stereotypical reluctance to rush in is partly why at least family firms incorporate more female directors and board members.
Women are becoming more common and visible in chief executive roles. But surveys show corporate employees, especially men, tend to overestimate women’s representation at the top. One issue is still the composition of boards, which tend to appoint C-suite members in their own image. As Columbia Business School Professor David Ross observed to The Huffington Post in a 2014 article on the topic, ‘’Women have made great inroads into lower levels of management, but once you get up there near the top management team or the board, it’s largely a male world, even today.” According to Ross, initially to be a managing director at the company, you had to show “very ex¬troverted tendencies”. But data suggest women tend to undersell themselves to bosses. Research market intelligence agency Mintel found that on average 42 per cent of men feel confident about asking for a pay rise, compared with just 22 per cent of women. It is particularly notable in the UK, where FTSE firms have been criticised over reasons given for male dominance of boardrooms. According to the Department for Business, Energy & Industrial Strategy, the excuses given included:
“Women aren’t a good fit in boardrooms, most of them don’t want the hassle of a big job and they don’t understand the complex issues discussed in board meetings”.
However, despite the fears of Tesco chair John Allan that men are becoming an “endangered species” in boardrooms, the majority of UK company directors are still male and white. Given the market context and challenges faced by brands, retailers at all levels of the industry need more women leaders who bring their perspectives and different skills. Women have long been the majority of customers for consumer goods companies and retailers, yet their representation is lacking when it comes to leadership at such companies. It is clear that the retail and luxury industry would benefit from the increased female representation in leadership positions, as this would best suit the technical and structural challenges of the retail market along with the particular sentiments and needs of consumers. It is therefore promising that though the overall numbers of female CEO’s remain low in the wider global business sector (at least in the FTSE and Fortune 250/500), those who have reached the top of our industry are thriving and setting the path for further diversification.
Retail leaders such as Angela Ahrendts (who as Apple’s SVP of retail and online is Fortune’s most powerful woman in retail), Maureen Chiquet (CEO, Chanel) and Francesca Bellettini (CEO, Yves Saint Laurent) have led their respective companies and brands to and through periods of fantastic success, whilst female entrepreneurs such as Natalie Massenet (Net-A-Porter) and Katrina Lake (StichFix) are regarded for building and leading disruptive industry platforms. Away from the luxury market, two of the world’s largest retailers both have women in the most senior of their ranks, with Judith McKenna leading Walmart internationally and Maggie Wu, Alibaba’s CFO, being perhaps the most significant investor in global retail (of note, when Alibaba was established in 1999, a third of the co-founders who enabled Jack Ma to get the business off the ground were women).
Despite these, and numerous other successes and the increased focus on the importance of diversification and its benefits within industry, turnover rates in business leadership positions are far higher for women (31%) than for men (24.1%), and that is particularly true at retail and consumer goods companies, according to research from The Network of Executive Women. Female managers in such companies are leaving their jobs at nearly twice the rate of men, while those in higher-level positions and at the executive and C-suite levels are leaving at nearly four times the rate, according to the report. That is despite the fact that women are being hired and promoted at roughly the same rate as men for entry-level and middle management positions. As a result, the candidate pool for executive-level manager and C-suite positions is homogeneous in global retail: 83% white and 67% male.
So, what can be done to improve the situation further and benefit both the industry and the next generation of female leaders? Having spent a significant amount of time speaking to Board Level executives and HR teams, I have some personal thoughts and observations. The key, as I see it, is for all parties to collaborate to create a culture which fosters women from the early stages of their career to understand the possible paths to the top and provide them with the skill-sets and training required – this of course includes the top down structure of a company (from the board through to the HR, training and employment programs) but also at the start and even prior to their entry into the world of work, at school and home so that when they enter the work place they are at least better equipped to identify the skill sets they will need to develop to reach their goal.
At the top, Boards need to adopt clear goals on gender diversity in leadership in the CEO bench pool enabling the cultivation and growth of their female leader. Companies also need to look lower down the ladder and put in place processes to identify biases or policies that might restrict any limitations on career growth. A culture of support needs to be implemented across all levels and put centre stage.
As Board recruiters will readily report, companies are eager to add female directors or place women into the most senior positions, but women themselves need to be proactive in developing and putting forward their candidate-ship. Unless a woman is a sitting CEO, being considered as a candidate for a leadership role or directorship involves honing a “value proposition,” around their specific area of expertise and suitability for leadership. Candidates have to put themselves out there, create a network and build visibility. All this of course takes time – companies need patience and persistence to change the composition of at the top and this will need a mixture of structural change and the personal motivation of senior leadership and the candidates themselves. Change is often top down, but it can also be supported from home, and one of the world’s most recognisable female CEO’s, Indra Nooyi, credits her family and their supportive culture as being her influence, guiding her rise to the top (she is now being tipped to lead the World Bank).
Women are a rapidly growing economic force: in the United States, female share of spending may be as high as 80 percent when it comes to retail purchases. It is critical for companies to ensure that they represent this important customer base within the boardroom. Without greater female representation on their boards, companies are losing out on not only an important segment of talent, but on a critical marketplace perspective. One could also argue that many workplace issues currently being addressed could have avoided had more female leaders been steering the organisations from above. Understanding this is key to the future of all industry, not just our own – a new McKinsey Global Institute report finds that in a full-potential scenario in which women play an identical role in labour markets to men’s, as much as $28 trillion, or 26 percent, could be added to global annual GDP in 2025.
It is against this exciting and positive future that I can happily announce the appointment of Asil Attar to the role of CEO at Damas Jewellery, placed by Luxury Recruit, commencing in February.
Following an extensive search, during which Luxury Recruit and the Damas Jewellery Board worked closely together to identify the particular skill-sets, leadership talents and global perspectives needed to lead Damas, Asil was identified as having the perfect profile and will lead the group from February. Asil will take her wealth of experience, which includes leading a number of prominent Middle Eastern retail groups, including Majid Al Futtaim Fashion Group and Al Yasra Fashion, to her role at Damas. With her wide global network and deep knowledge of the Middle Eastern market, Asil, who is a prominent speaker and proponent of women’s rights, will surely progress diversification of leadership in her high-profile position leading Damas. We wish her all the best and look forward to seeing her, and Damas’s, on-going success.
With that, I wish you all a prosperous year ahead – please do not hesitate to get in touch to discuss your opportunities and needs ahead – we are here to help.
CEO – Luxury Recruit