Mytheresa chief executive officer Michael Kliger wants to make something clear: He’s not vying for the title of “ideal CEO.”
It’s not that he doubts he’s good at his job: under his leadership, the German luxury e-tailer has seen impressive growth, ending the most recent quarter with double-digit year-on-year revenue gains even as some of its competitors have struggled.
But Kliger doesn’t believe the perfect leader exists. Much like the persistent uncertainty that has come to define retail since the pandemic, the skillsets most relevant for fashion’s C-suite today are in constant flux, he said.
“There are great people at the right time, and lots of great people at the wrong time,” Kliger said.
As for this moment: the pandemic is almost in the rearview and a recession is potentially on the horizon. Where, when and how most people work has fundamentally changed across many sectors and, in fashion, fast-evolving conversations around sustainability, diversity, supply chain and digital transformation are having an unexpected impact on business outcomes. Meanwhile, impending economic downturn could serve as an apt litmus test to reveal the strengths and shortcomings of many top executives and the companies they lead.
There may not be a one-size fits all leader for every fashion firm but boards are weighing the question: who is best equipped to lead our company right now? Often, it’s not the current CEO. Last year saw The Gap, MatchesFashion, Lyst and others lose their top executives, and already this year, Victoria’s Secret and Stitch Fix announced CEO departures. A number of fashion firms — including The Gap, Kohl’s, The RealReal and VF Corp. — started 2023 without a permanent leader.
The turmoil at the top is a prime opportunity to reshape fashion’s CEO profile and broaden the skills and experience of the industry’s leaders beyond more traditional pathways. To this point, many of the industry’s chief executives have spent the bulk of their careers in retail sectors such as fashion and beauty — and the merchandising, operations, finance and marketing paths remain popular routes to the C-suite.
“There was a time where if you had good merchandising, a good brand and a decent in-store experience, or online, you’d be fine,” said Garrett Sheridan, CEO, Lotis Blue Consulting. “But we’re dealing with more complexity now. The role of the CEO … is changing fundamentally.”
New Retail, New Playbook
More than ever, fashion leaders must be nimble and flexible, have strong change management skills, an ability to create compelling narratives for their customers and employees, and respond quickly and innovatively in a highly-digital world.
Some fashion firms are pivoting from the “merchant king and queen” leadership profile and plucking their C-suite leaders from consumer packaged goods companies, the hospitality and tech industries, and from previously back-office functions like human resources and supply chain, said Kyle Rudy, senior partner at Kirk Palmer Associates.
Last month, sportswear brand Under Armor nabbed Stephanie Linnartz, president of the hotel chain Marriott International for its top post. Around this same time last year Chanel tapped Leena Nair, then Unilever’s head of human resources.
Even if CEOs “grow up” in the industry — Calvin Klein, Sephora and Foot Locker all recently drew their new chiefs from fashion or beauty — the paths many leaders are taking to the top are becoming less traditional. Their resumes are built around capabilities and experiences that weren’t seen as critical in years past, Rudy said.
“Nowadays you’ll see more CEOs with an increased focus on international experiences somewhere in their background,” Rudy said, pointing to Calvin Klein global brand president Eva Serrano, formerly president of Inditex’s Greater China business, as one recent example.
There is still room for leaders with more linear merchant paths to find success in retail but they’ll need to be forward-thinking and flexible as well as build strong teams in areas like design, diversity, sustainability and tech innovation, experts say.
At J.Crew, CEO Libby Wadle — whose resume includes merchandising leadership roles at Coach and The Gap — credits her “merchant roots” with helping her to respond to fast-changing demands from the brand’s consumers and employees over the past two years — including orchestrating the heritage American label’s turnaround effortswhich have recently started to bear fruit.
Wadle’s strategy — which included a revamped men’s design team under the direction of Supreme alum Brendon Babenzien — has been widely viewed as one that is grounded in the nuts and bolts of traditional retail.
“A fundamental and critical piece of being a great merchant is listening to cues from your customers” she said. “I think the same is [true] out of [company’s] culture and people. I’m a listener first. I do not like to be the smartest person at the table, or on the Zoom for that matter.”
A Recession Opportunity?
Should the forecasted economic downturn materialize in 2023, CEOs will have to make tough decisions about layoffs, store closures and more.
Overall, though, the most successful executives will resist the urge to focus all of their attention and planning around temporary economic swings and, instead, keep a long-term perspective and, where possible, continue to invest in areas like talent development and company culture , said Maju Kuruvilla, chief executive officer of Bolt, a fintech company that works with fashion brands such as Revolve, Forever 21, and Badgley Mischka.
“History has taught us that whenever there are downturns like this, that’s when the best companies are built,” he said. “But you’ve got to invest in your people, become really close to your customers… and remove any latency from your processes.”
Mytheresa’s Kliger said he expects 2023 to require a “constant reallocation of resources,” meaning he’ll need to be prepared to shift priorities on a dime. But, for now, he plans to focus on “regional growth opportunities” in the US and China; “operational excellence,” which includes hiring and developing talent; and move deeper into clienteling.
While businesses shouldn’t hire leaders solely on their ability to execute layoffs and cutbacks, given that it’s been over a decade since the last major recession, having some memory of what that’s like can be useful, experts say.
“This is a moment where experience helps… there’s a generation of young business leaders that have no experience about what a recession is or is not. Age is not always a benefit. But sometimes it is,” Kliger said.
J.Crew’s Wadle is also looking to her 18 years of experience — she was president of the J.Crew brand during the recession in 2009 — to help her steer the company through what she views as “another moment of uncertainty.”
The goal, she said, is to keep the emphasis on product and “leading with creativity” while responding to consumer shifts quickly.
“I’ve been through a few of these moments,” she said. “We need to really stay focused on what we’re building. It’s very easy to get distracted with a headline a day.”