You don’t have to be a criminologist to know that Serial Killers kill people. Retail Serial Killers (or RSKs) on the other hand, are, in my opinion, CEO’s who through their lack of skill, recklessness, disingenuousness, or gross incompetence, destroy the businesses they have been tasked to lead.
I believe that RSKs are the scourges of the retail industry. Businesses which have taken decades, if not generations, to become successful through the talent and hard work of dedicated teams, are murdered in short order by RSK’s. These RSK’s should never have been given the baton in the first place, or who, upon demonstration of lack of skill, should have been promptly removed from power when it became apparent they could not perform credibly. RSK’s are never indicted. In fact, they are often rewarded handsomely for their efforts.
Consider some of the retail industry’s most notable Serial Killers:
Bernie Brennan was the CEO of Montgomery Ward who brilliantly convinced Mobil Corp. to sell his company, instantly making him extraordinarily rich. Pity he couldn’t brilliantly manage his company. His ill-advised foray into “stores within stores” (remember “The Gold Store” and “Electric Avenue”?), coupled with his impossible management style, resulted in endless rounds of senior management appointments and dismissals and doomed the company. Montgomery Ward is long gone.
Joe Antonini ruled Kmart more as emperor than as CEO. While he luxuriated in his Troy, Mich., redoubt, the company ran itself into the ground. We have to assume Antonini didn’t pay any attention to the emergence of Walmart; his company certainly did nothing meaningful to escape its grasp.
Chuck Conaway followed Antonini to became Kmart’s CEO after a stint as chief financial officer of CVS Corp. Though he may have been a well-trained accountant, his decision to take on Walmart by going after them on the basis of price proved the undoing of the company. Without Walmart’s operational flexibility and financial capacity, Kmart’s strategy was an immediate failure. Sad that Conaway never examined Target’s attempt and failure to take on Walmart in a similar fashion in the early 1980s, albeit on a limited test basis.
Alan Lacy gets most of the blame for the ongoing tragedy that is occurring at Sears. A CEO impersonator, Lacy presided over five years of mindless cost cutting, hapless merchandise manipulation, and the train wreck and ultimate fire sale of the company’s credit business. He also is responsible for an ill-advised acquisition of Lands’ End in which he not only overpaid, but failed to have any viable strategy to integrate the business with Sears. Then, his coup de grâce: The purchase of 51 Kmarts from none other than Kmart’s newly installed principal shareholder, Eddie Lampert, for $605 million. These stores were to be the backbone of another failed Lacy strategy called Sears Grand. His final accomplishment enabled Lampert, a hedge fund operator and vulture investor without a scintilla of retailing or management experience, to take over Sears Roebuck and merge it with Kmart to form Sears Holdings.
To continue the saga, Eddie Lampert brilliantly seized control of Kmart in bankruptcy and then merged it with Sears with the aid and assistance of Lacy and his clueless Sears board of directors. For a year or so, it appeared as if Lampert actually intended to manage the business as a going concern. But then, having failed to improve the performance of the two companies in any way, outside of massive operating and capital expense cuts, he begin the ongoing process of stripping the enterprise of its assets for cash. The senior leaders he hired have all been puppets, merely employed to carry out his bidding. If you have read his public comments over the past nine years concerning the performance, or lack thereof, of the Sears Holdings business, you can only come away with the view that Lampert is either dishonest, delusional, or, at best, completely disingenuous. Sears and Kmart remain in a death spiral that will not abate until both brands have completely disappeared from the marketplace.
Julian Day spent about a year at Sears impersonating as its CFO, and then when terminated by Lacy, showed up at Kmart as Lampert’s principal henchman. His next stop was CEO of RadioShack, where he spent several years unsuccessfully attempting to convince investors to take the company private rather than devoting himself to moving the business to a sustainable platform. Day, who appeared to be looking for the same extraordinary payoff that he received at Kmart (and that Lacy received at Sears), failed. RadioShack may survive its recent trip into Chapter 11 but if it does it will be reduced to a shadow of its former self.
Greg Josefowicz was heralded upon his appointment as CEO of Borders as a perfect leader for the company given his lifelong devotion to books and reading. Too bad he completely failed to note that his customers were increasingly apt to browse his stores and then purchase their choices from newly minted Amazon. And, of course, the company under his leadership never connected the dots between the purchase of physical books and digital downloading, from Amazon and others on the marketplace horizon. In fact, he was foolish enough to outsource Borders’ web business to its archangel of death, Amazon. His less than competent successors tried vainly to reinvigorate the business, including attempting to drive traffic back into the stores by installing miniature golf-style putting greens — all to no avail. Borders is long gone.
Steven Roth, William Ackman, Ron Johnson
Whoever thought any one company could top the gross incompetence that we have witnessed at Sears Roebuck and Kmart? Well, this dynamic trio managed to do just that. Coming out of the Great Recession, JC Penney was struggling to find its way to profitable growth, which was in decline even before the economic downturn. It was no surprise, then, that avaricious value investors, William Ackman and Steven Roth, responded to the presence of blood in the water. They correctly noted an incredible opportunity to seize control, force major changes and dramatically improve the company’s performance. The first such change was the removal of CEO Michael Ullman, who they felt was largely responsible for Penney’s dire condition, and to replace him with Ron Johnson. Their expectations of Johnson and his transformational strategy were completely delusional. Johnson should have methodically rebuilt JC Penney.
Instead he set it on fire. Never in the history of the retail industry has a company lost as much volume and seen so much of its brand equity and shareholder value destroyed in such a short a period of time. Whatever he deserves as credit for his prior service at Apple, the fact that he never served as a CEO, never participated in a turnaround, had no meaningful fashion apparel and accessory experience, and had absolutely no common sense or judgment, rendered him a tragic choice as Roth and Ackman’s surrogate. But choose him they did. Now, JC Penney is once again in Michael Ullman’s hands. Though a replacement CEO waits in the wings, the company appears to be busily attempting to recreate the same failed strategies that it held when this terrible saga began.
Andrea Jung as CEO of Avon is responsible for what will likely be the eventual failure of an iconic global brand. An ill-advised acquisition of an unrelated jewelry business, poor execution of new operating systems, manufacturing processes and inventory controls, endless strategic reviews and restructures, and the incomprehensible bribery scandal that took place under her watch in China that has cost the company hundreds of millions of dollars to resolve, have all taken a terrible toll. But Jung’s real transgression was her failure to prepare the company for a brave new world driven by the Internet and doing business with a customer who is no longer at home prepared to answer the doorbell rung by a neighborhood Avon representative. My guess is that Avon never recovers as a viable enterprise.
Dov Charney is an impressively talented merchant with absolutely no capacity to credibly manage the American Apparel business he created, or to behave in an acceptable manner personally. That he was permitted to reign for as long as he did is unbelievable. It’s anyone’s guess what the future now holds for this troubled business.
Another talented merchant, Michael Jeffries gets enormous credit for creating a powerful brand from a nearly defunct Abercrombie & Fitch. But all brands must move with the ever-changing wants and needs of their customer lest they lose their relevance. Most brands are not “timeless,” certainly not those catering to youth. Jeffries’ behavior, both personal and professional, should long ago have signaled that he was not immortal and that Abercrombie & Fitch was not a timeless brand.
Gregg Steinhafel is the recently dismissed CEO of Target who managed to swing and miss at three incredibly important pitches. First, over a period of years, during which he steered Target increasingly toward food and away from apparel, accessories and home furnishings, the company lost much of its differentiation from its principal nemesis, Walmart. In a word, Target lost its cool. Second, despite a catastrophic data breach at TJX some years ago, which should have been a wake up call for Target, he failed to adequately ensure that his customers’ personal data was properly protected. And third, his strategy for entry into Canada proved to be catastrophic. He overpaid for a portfolio of mixed-value real estate, then decided to open well over 100 stores, all at once, without regard to fully preparing the logistic support for those stores. Then, to cap it all off, he failed to recognize the degree to which Canadians have come to expect prices at or near parity with the United States. In a nutshell, he threw a lavish party his “guests” found fundamentally unworthy of them. The outcome: 17,600 associates laid off alongside a corporate write-off of well over $7 billion.
Are you invested in a company run by a Retail Serial Killer? Sell or face the consequences. These individuals are value destroyers. Working with, or for, an RSK? Quit and find alternative employment. RSK’s invariably walk away with a boatload of cash when they are finally unmasked. You, on the other hand may very well be left with nothing. Rely upon a company run by an RSK as an important customer for your products? Find another pathway between yourself and your ultimate consumer. RSK’s bring tremendous chaos, confusion, and in some cases, financial ruin to those that supply them with goods and services.
Be forewarned. There are still Retail Serial Killers on the loose.