Fashion industry’s musical chairs is not only valid to the high transforming rate of creative directors. 2019 also saw a record number of CEO departures and appointments. Given the tall turnover-rate, a study by fashion merchandising platform Nextail aims to to uncover signs of change in the industry.
The motives for changing leadership can vary significantly, driven by company performance, macro trends or personal reasons. Nextail finds that new CEOs must bring the right mix of retail operations, product expertise, and analytical skills to the table, in order to successfully lead fashion companies into the future. Its latest research shows new CEOs are bringing 81 percent more analytical backgrounds than their predecessors.
More than 70 new CEOs joined fashion companies in 2019
In 2019, more than 70 new CEOs joined leading fashion companies worldwide (+2 billion euros average revenues). These leadership changes occurred across the entire fashion industry, with a strong presence in teady-to-wear and luxury.
Former CEOs held their roles longer than the general average
Outgoing CEOs had held their roles for an average of 7.2 years, while the average cross-industry CEO tenure is 5 years and shrinking, with some former leaders spanning multiple decades (e.g. Mango, Pinko, etc.), while others held their roles for less than a year.
A top reason for new hires: Transformation & growth
The number one public reason in 2019 for hiring new talent was to bolster growth in the form of digital transformation (e.g., Feelunique, Bally); followed by CEOs who left poached by another company (e.g., Stella McCartney, Sandro, etc.).
This motive may be a company’s reaction to dropping margins or new customer requirements. But more importantly, data-forward companies are simply taking decisive action and are proactively bringing in new leadership as part of ongoing digital and innovation strategies to increase their lead over competitors. Nike’s hiring of former eBay and ServiceNow CEO, John Donahoe, to focus on digital transformation and D2C strategies, is a great example of this.
When looking at the different verticals, luxury saw the highest increase of analytical profiles (73.3 percent in 2019 vs. 40.0 percent previously). Luxury has been slower to adopt digital strategies and innovation, however luxury groups such as LVMH and Chalhoub Group have been making great strides in terms of fostering innovation.
A jump in the number of women CEOs
Representation of women in the CEO role in 2019 jumped by more than 75.0% in 2019. Not only do women make up half of the world’s population, they also consume more, and influence 70-80 percent of overall purchasing decisions.
In 2019, 31.8 percent of new CEOs were women, versus 18.1 percent of predecessors. Women CEOs primarily joined beauty, footwear, and RTW categories.
In conclusion, Nextail observed a change in the professional backgrounds that fashion top executives bring: an expertise mix to successfully drive brands into a digital, data-driven future; namely reflected by a substantial increase in analytical backgrounds (+81 percent vs their predecessors).
In some cases, this has been achieved promoting professionals from within, who not only understand the company from the inside out, but also bring the data-driven capabilities to lead digital transformations. In others, it has required fashion companies to tap “outsiders” who bring in expertise in areas where they had been lacking.