Leading Through Change: A Perspective from Paul Charron

Written by:



\"LewisDart-Perspective-PCharron\"America@250, a multiyear research initiative and national dialogue launched by A.T. Kearney, looks ahead to what America may be like in 2026 when the nation will celebrate its 250th birthday. This ongoing inquiry includes Retail@250, a study of the immediate future of retail, which A.T. Kearney is pursuing in partnership with The Robin Report, The Wall Street Journal, and the NPD Group. We’re interviewing dozens of current and former CEOs across retail sectors, as well as consumers, academics, economists and more.

The goal of Retail@250 is two-fold: to clarify what’s driving the most significant changes unfolding in our industry; and surface useful, applicable insights into how winners will prepare for Retail@250.

The retail industry is currently navigating a profound transformation as it races to respond to growing consumer power and ongoing technological breakthroughs We all know the retail world is changing, but the jury’s still out on the type of leadership needed to respond. To help answer that question, we sat down with Paul Charron, who is certainly no stranger to leadership.

Paul is the Chairman of the Board of American Apparel and former Chairman of Campbell Soup Company. He previously served as Chairman and CEO of Liz Claiborne, in senior positions at VF Corporation, and as a Senior Advisor in the private equity firm Warburg Pincus.

In our interview, Paul helped unpack the forces shaping the retail landscape, and even more importantly, how leaders can effectively prepare for Retail@250.

Demographic Flux

Paul pointed to several demographic shifts driving rapid change in our retail reality. One big change: urbanization and related suburbanization. “I think it will be very interesting to see how things are going to play out in New York, Boston, Philadelphia, Washington, Chicago, Detroit, Houston, Miami, Atlanta, San Francisco and Los Angeles versus everywhere else,” he said. “There’s a tremendous difference in the mindset, values, and composition of the urban population. I think the gap between rural and urban will only widen.”In fact, The Economist data shows that population growth in the 50 biggest U.S. cities has been three times the growth in the rest of the country over the past 15 years. People in these cities also earn 20 percent more. Many of these urban centers are filled with millennials, another demographic force to be reckoned with, according to Paul. “The whole idea of demanding millennials—with their demographic and psychographic segmentation— is epic. If you’re a retailer or a CPG firm trying to tailor products to consumer needs, you need to understand all that. For example, they’re legitimately concerned about sustainability and global warming,” he noted. Millennials are also driven by a whole host of other buzzwords that retailers need to take seriously: authenticity, transparency, customization, personalization, co-curation…the list goes on. These attitudinal and demographic shifts are critical because they’re changing consumer behavior. To keep pace, the consumer has to be at the center of everything a brand or retailer does.

Consumer-Directed Technology

Paul particularly emphasized that while it’s tempting for retailers to get distracted by new technology, the consumer has to come first. “Everything begins and ends with the consumer, in my opinion, not with the technology,” he said. “Look at consumer behavior and key factors influencing it, then see how technology impacts it. Technology is only a tool.”

That said, Paul sees technology as a hugely valuable tool, once it’s directed by consumer insights.

“Technology is the biggest thing impacting retail,” he said. “I see technology as an enabler that gives consumers more control, choice, and convenience. But I also see it as a threat that gives people less control and invades their privacy. Technology will help us target our messaging better. For example, CVS already knows everything I buy. I may want to get rid of the CVS app because they send me too many messages and too much information. But I still want the 30 percent-off coupon, because who pays retail?”

Paul cautions that any technology-driven competitive advantage a retailer develops will be fleeting. “Every advantage is temporary,” he observed. “Everyone’s taking a good idea and making it better.

You’re constantly evolving, instead of setting and forgetting.” So if constant improvement and innovation are the new competitive mandates, our next question for Paul was, naturally, how do you pull them off successfully? It begins with fresh thinking.

Dawning Age of Flagships

One example: Paul says retailers now need to seriously rethink their real estate strategy. We all know the U.S. is overstored. In fact, a Lazard Frères study showed that in 1980, there was twice as much retail space as demand warranted—and it’s been growing at 4 percent per year since then, even after flattening briefly during the Great Recession.

Paul suggests that when considering which stores to keep open and which to close, not all stores should be treated equally. “Successful retailers will have a series of flagships, not outposts, keeping the focus on clicks,” he said. “Think of the Wild West. You had Fort Dodge. It was an impenetrable command post, while the outposts were much more vulnerable to attack.”

Specifically, Paul thinks retailers should sell 25 percent or more of their stores to be able to invest more time and energy in the highest performers—the flagships. The remaining stores should all have highly tailored assortments according to key demographics and location.

For consumer packaged goods companies, Paul recommends progressive adaptation, citing Campbell Soup Company as one example. Soup consumption has been in secular decline for many years.

This presents a major challenge for Campbell’s in a world where soup represents more than 50 percent of the company’s business. But Paul says the company, led by CEO Denise Morrison, is fighting back, by rethinking fundamental questions like “What business are we in?” and “What problems are we solving?”

“Denise said, ‘I’m going to shift my portfolio from soup to the broader category of well-being.’” Campbell’s is redefining how to reposition and market soup and get into higher-growth categories. Additionally, Campbell’s is going to change the organizational structure to become more nimble and responsive as well as free up $250 million in annual cost savings. Paul explains, “Denise decided to fundamentally alter the way the company is run and how it chooses to compete.”

Leading A Revolution

Despite all the change he prescribes, Paul believes that the leaders most likely to be successful at taking their companies through the next decade won’t be as fresh-faced as the popular media might suggest.

“If you walk into any retail company and you look at its financials and at the world it will be competing in over the coming 5 to 10 years, you will probably conclude that they need a revolution. And for a successful revolution, for the most part, you need new leadership,” he said. “But you don’t need a bunch of 30-year-olds. They haven’t lived enough life. They’re full of promise, but not perspective. You need to rethink the interaction with the consumer, the application of consumer insights, the structure of the organization, the allocation of data, how much capital you require, and how you deploy your assets—time, dollars, people. The CEO has to rethink all that. If you don’t, you won’t get organizational change, which you need for behavioral change.”

In sum, Paul envisions Retail@250 being marked by flagships and by more specialized brands, with fewer and more localized stores, all dominated by technology. The leaders best positioned to take their companies through this retailing revolution will be savvy, curious, nimble, and a bit more seasoned.

Are You Ready for Retail@250?

Retail@250 is part of a broader research initiative and national dialogue called America@250.

Upcoming articles in our Retail@250 series will take a deeper dive into many of the key challenges ahead, including retail-specific posts focused on technology, the new consumer, social responsibility, the future of the store, the role of private equity, and supply chain of the future. Stay tuned!




Scroll to Top
the Daily Report

Insights + Interviews right to your inbox.