Succession Planning in Retail…Pepsi Has It Right

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There was a time when the route to the C-suite was from the sales floor and future leadership was carefully groomed at companies like Lord & Taylor, Abraham & Strauss and Macy’s. With many companies downsizing and eliminating training programs, plus integrating more technology, future retail CEOs may come from unexpected places. Pepsi is the poster child for launching retail CEOs:  Brian Cornell of Target, Lauren Hobart of Dick’s Sporting Goods, Vivek Sankaran of Albertsons, and Mary Dillon of Foot Locker. Can retailers steal a page from Pepsi’s playbook? Liza Amlani, Principal and Founder of Retail Strategy Group joins Robin and Shelley to talk about how leadership needs to be able connect product to customers which typically happens when talent is groomed from within. They also discuss how retailers can retain talent by giving frontline jobs a quicker route to the top.

Special Guests

Liza Amlani: Principal and Founder, Retail Strategy Group  

 

*Transcript By Descript

Because she didn’t have that apparel experience, I feel like she couldn’t back herself up, as much as maybe someone who had that apparel experience, or footwear, or soft lines experience.  And I think that with Stephanie’s departure,  I think because of the lack of performance in wholesale,  that really,  like, they just could not cut it.

Retail Unwrapped is a weekly podcast hosted by Robin Lewis and Shelley Kohan from The Robin Report. Each episode dives into the latest trends and developments in the retail industry. Join them as they discuss interesting topics and interview industry leaders, keeping you in the loop with everything retail.

Hi, everybody, and thanks for joining our weekly podcast. I’m Robin Lewis, founder and CEO of The Robin Report, along with my podcast partner, Shelley Kohan.  And today we warmly welcome our guest, who is Elisa Amlani. And she is the principal and founder of the Retail Strategy Group.  And we’re going to be talking on the topic of succession planning in retail today and how should retailers and brands be approaching succession planning.

And this is a big deal and has been for some time now with the onset of COVID 19. technology and all the different things that that pours into a business. Anyway, before we do jump into that topic please tell our listeners, you know, about what you do and what, what is the Retail Strategy Group?

Retail strategy group. We are a consulting firm that works with brands and retail leaders on improving organizational effectiveness and also improving gross margin. And I come from the retail world. So, I am a retailer. Talking the retail language. I was a former merchant for two decades, actually, maybe a little more than that.

And I worked with brands all over the world. Climonico, Ralph Lauren, a lot of times department stores, too. So I’ve kind of seen both sides of the merchant life and also product development and product creation. Well, you know, according to Fortune magazine, PepsiCo  of all brands.  It’s a rock star talent due to their intense, incredible focus on identifying and developing high performance within the organization and that the process is very deliberate and  systematic.

The company identifies their high potential talent and, you know, kind of throws them into the deep end of the pool, so to speak.  Essentially talent is challenged, mentored, and actually given room to fail. So Lisa, you’ve talked about this kind of I don’t know, soda mafia thing. So it’s explained what this means and, you know, to kind of pull it into what’s, what, what’s going on in retail with succession planning, like where are we at, what’s, what’s happening there and what, what is Pepsi doing so well? 

Well, I’m going to start with what Pepsi is doing well, because what is clear to us, and, you know, from the latest in Forbes, we’ve seen that PepsiCo really empowers their leaders to try different things and they are looking at the business as,  So almost like the, what we talk about the retail ed to ed, they’re actually learning the business by doing, but in all parts of the business, they’re not just focused on one thing.

And what this does is it trains that leader to understand What cross functional teams, how they impact each other and why decision making should be streamlined and more efficient because it does impact all parts of the business. And I truly believe, and I’m telling you this with working with leaders today, how critical that is to have that point of view that is so diverse across the entire business and PepsiCo actually encourages that.

 That’s great. I know they have a lot of current leaders in the industry that have come from Pepsi university, we’ll say. One of them being John Scully, who actually was former Pepsi, and then he went to run Apple for like 10 years. But he got all his, he got his background from that whole mentality of owning the whole business, which is what, you know, Pepsi does and now he is, he founded a company called Zeta Global that’s a marketing company.

And they’re really going hard on all the marketing stuff. So if you think about Apple and you think about Pepsi. You know, his lead into owning his own marketing company makes perfect sense, especially in today’s day and age where marketing has changed.

The other interesting piece is that the retail industry in 2023 saw 52 CEO departures, which is. Double that it saw in 2022. So there’s more turnover at that CEO level which is really interesting. So, and I’ll mention one other thing, Lisa, cause I know you probably agree with this too, is  when we look at kind of the front lines and we look at the people that are working in retail, very diverse, there’s lots of women, there’s lots of, you know, ethnic backgrounds.

The higher and higher you go up that corporate level, it kind of thins out, you know, there’s not enough women, there’s not enough minorities, there’s not enough BIPOC individuals, you know, out there in those top ranks. So what makes it difficult for retailers to train like a Pepsi or like a company that has these great succession plans?

Yeah, you know, Shelley, there’s a couple others that you didn’t mention, Brian Cornell, the target. Was a Pepsi graduate, Warren Hobart, sporting goods,  and also Mary Dillon. Of course, now she’s CEO of Foot Locker, having done an incredible job at Ulta. So, you know, yeah.  So as you say, that’s These are what makes it difficult for retailers to do the same type of training.

I think that what retailers used to do, and I’m sure we’ve all talked about this as well, that they used to have these training programs in house training programs. And these training programs gave sales associates Access to different areas of the business, including the corporate office, the warehouse visual merchandising, marketing, all of these things that make retail, retail.

And today’s leaders, there’s such a disconnect from the sales associate to the C suite. Because we’re missing that training across the retail end to end. That disconnect is almost pushing these frontline workers further and further away from the corporate office, and that makes the corporate office really unattainable for these folks, which is You know, you talk to Mary Dylan, you talk to even Frank Fran Horwitz.

Like, I mean, she’s phenomenal as a leader and she started the sales floor and she has that ability to connect product to the customer. And that is what a sales associate does.  A leader that has not spent time on the sales floor cannot do that because they have not experienced that.  So that disconnect is really apparent when you see leaders walking the shop floor.

I talk about this a lot because as a merchant, you As a head of buying, I walked the shop floor as much as I could. I worked on the shop floor every week I would go in and I would help customers in the fitting room to understand if I was creating product and buying the right product for my customer.  If you cannot connect product to the customer and you’re a leader that walks the shop floor, you are not going to pick up on these things.

And that’s a fact.  Very good points. Very good.  And you know, you mentioned, I think, the department stores you know, like Macy’s and Abraham and Strauss, Lord and Taylor, they used to have incredible training programs and they more or less now have, have done away with those, you know, cutting costs and so forth and so on.

You know, the other, the other thing that the opposite and the other side of this issue is that a lot of brands and retailers have, you  know, when things  got a little difficult or their, their business was in decline you know, they would, they would reach out  and hire CEOs,  you know, come into the C suite and many of these pics, so to speak had no experience in retailing.

I mean, You know, for example, Stephanie  Linares, formerly VP of Marriott International you know, was hired by  Kevin Plank,  the CEO and founder of Under Armour and she was brought in, and of course, she had no, no experience in, you  know, apparel retail.

So If you’d like to comment on that and expand on that, it’d be helpful.  I think Stephanie had a lot going for her. The fact that she was already a successful leader. She was a woman in the C suite. She empowered the Under Armour teams. And I know this because I work with many of those teams.  And having a woman in leadership gave  not only the front line, but also, you know, managers to VPs to DMMs this  this showcase that women can actually lead  a amazing performance brand.

She was really not set up for success. The way that Kevin managed, I mean, he still had, he obviously still has a huge stake in the business, but  because she didn’t have that apparel experience, I feel like she couldn’t back herself up.

As much as maybe someone who had that apparel experience or footwear or soft lines experience.  And I think that with Stephanie’s departure,  I think because of the lack of performance in wholesale,  that really,  Like, they just could not cut it, and I think that it was a very drastic move. I think that she could have done well in this position, because she had really great leaders under her.

But now a lot of them have left. There’s a huge restructure. I mean, it’s still happening. Oh, they’re still, yeah, they’re still in decline. Yeah, they are. And wholesale has a lot to do with it. So I think that if Stephanie had continued her journey. She talked about wholesale as being this amazing channel that they need to invest in.

She talked about investing in women and women in sport and investing in lifestyle to capture that athleisure customer. She didn’t have a chance to do these things. So I feel that even though she didn’t have that apparel experience, she could have succeeded in this role. Well, it’s interesting. I know, Robin, I know you want to jump in here, Robin, because I know you have an opinion on what they’re doing now, but just, I just want to touch upon what Lisa said about the wholesale.

So you and I, Robin, we talked about this all year about the wholesale business and the wholesale business for a lot of these brands has really, retailers came out of the pandemic. They want to buy less stuff. They want to have less inventory. We saw it with Levi. We saw it with. You know, Yeti, we saw it with a lot of companies that are really going after the direct consumer and not so much on the wholesale side.

And when we looked at some of the anti reports of some of these companies, it’s the wholesale side that hurt. So I’m sure that was not helpful from a timing perspective for Under Armour. But I don’t know, Robin, I know you have an opinion about, you know, bringing Kevin back to run the business. Well, first of all, I was really interested in hearing Lisa’s commentary about Stephanie.

I obviously didn’t get to know Stephanie, uh, well, and, but I do, you know, Kevin Plank is another kind of Not a mystery, but he’s he’s got a huge ego. He he he is. He’s a what do you call it? he is  He’s got to have an opinion on everything that goes on in that organization.  So he’s kind of a Leader  and the word I’m looking for now.

It doesn’t matter but but He did need,  he did need her to move faster,  but I hear what you’re saying, Lisa, and perhaps if she was given enough time, she would have been able to move that thing forward. And now that Kevin’s back, in my opinion, I think they’re going to have a very difficult time. I do know that he’s losing a lot of, a lot of good people just because of the way he manages, which is a micromanager.

It’s what I was looking for on everything anyway. But so you know, and I think Michelle Goss, who was hired by Cole, came out of the consumer, you know, I think she was Starbucks or one of, one of those. Anyway, bye bye.  I also feel that she was not given, first of all, she went through a horrible time at the beginning of the pandemic.

And you know, Cole’s was struggling with a lot of their different brands.  And so she didn’t from the, from the get go, she had a big, huge burden to tackle.  And I don’t think she was getting enough time. Now she’s at Levi. She’s CEO there. And I think, I think she will prove to everybody that she’s quite quite a good leader.

So if you think about if you think about michelle for because this is a great example of succession planning So here’s michelle. She’s ceo of a company in poles. They go to her and say hey, you know We want you to take a step down come in a lower level at levi and wait 18 months so that you can train and you can sit side by side and you can Mentor and understand the culture and all this and then take over.

So I think sometimes you have to have the perspective of, okay, for me to really succeed at a company like Levi, I, you know, I’m going to take a step down and I’m going to sit in the wings for 18 months and I don’t mean, you know, that she’s going to sit there not being active because she was very active in learning the business.

And I think that’s a great way to succession plan someone into a business. And she came from a retailer to, you know, Levi, which is a wholesale retailer, but what a smart move for Levi to do that.  Yeah, very much. So, and you know, Paul Sharon used to be the CEO of Liz Claiborne once told me that what he does when he gets to take, you know, takes, takes over.

He’s a CEO positions. He said he spends one year. Doing nothing but listening, and essentially, Shelley, that’s kind of what you’re saying. In other words, I’m not going to go in there with all kinds of plans to turn stuff over  and kind of blow the thing up.  So, I think that’s also important point to make here.

Obviously, Michelle.  Been listening to, um, what the former, now the former CEO and learning from him, the nuances of, you know, around the Levi brand. So we’ll see. Yeah, should be well.  So Lisa, one of the things that you talk about, I love your garden analogy. And when we talk about succession planning, so tell us a little bit about your garden analogy.

Well, the garden analogy is really quite simple. If you don’t tend to the garden, the garden doesn’t grow  and you know, I have a few of these things, but this one in particular, and I think that, you know, bring up Michelle is actually perfect for this analogy is that  she was, she’s taught the business.

She’s understanding the nuances because as you know, working with a brand that does wholesale as well as DTC, there are a lot of nuances. There’s a lot of learnings. You cannot just come into a brand and start skew rationalizing, which is the first thing leaders do is they start cutting skews and cutting people.

And that to me is just so short sighted learning the business in and out. And Training and developing your talent, whether it is. Someone coming from the outside or someone coming up from, you know, through the ranks  training and developing and empowering teams to fail, to make decisions, to learn, to learn from different parts of the business that is really, that is the garden analogy.

I think you also, so you come from the merchant side  of the business. And if I think about that merchant role, Mercher, it used to be buyer planner, and then at first it was combined, then it was separated out. And now we have the advent of, you know, all kinds of technologies and, you know, AI,  you know, what, what is it, what does that role look like?

And how can you prepare merchants?  I think the  most important thing for merchants of today and the future is that they embrace technology to augment and assist in their roles.  What I mean by that is using technology, digital tools, whether you are a merchant, designer who does both things, does product development, I did that as well.

Using technology to assist you in doing your job better is not a bad thing. And I think there is this theme, especially amongst many of the retailers and market leaders that I speak to and work with,  we still can’t trust the tech and there’s a lot of manual interventions. I believe that trusting the tech and using that tech to help do your job better gives you more room, more time, more space.

To get to know your customer, to develop incredible products, to spend time innovating on materials on products that make more sense. So you have less excess inventory, less markdowns. That’s what we want. We want full price sales,  but egos get in the way, egos and fear of the technology. That’s where  we need to train merchants to start thinking.

As technology as a tool to help them versus a tool that’s going to take their jobs away. Of course, the merchant role is going to evolve. As we start trusting technology, I mean, look at Amazon. Amazon buying is an algorithm. It, there’s, the buyers do not touch the algorithm. They have to go through layers to get approval in order to make a change to the buy.

If I could get the buyers I work with to trust the technology so that they could have more time to go into the store and talk to the customer and see how their customer is changing, spend time on socials, talking to them online,  it would be a game changer in terms of profitability. It makes business sense.

And, you know, it’s, it’s a really interesting point. It’s really the art and science of  retail.  There’s a lot of art involved. And you just pointed, pointed that out and, you know, to be on the floor and to get to know the consumer. And as we mentioned a few minutes ago You know, the old legacy department stores had these incredibly robust training programs, right?

And but now they’re, they’re, they’re downsizing. You don’t have that anymore. That function is kind of gone. So where should, I don’t know, where should the training be coming from, Lisa? I mean, I guess we talked about it and Where should that training be coming from?  I think the training has to start on the shop floor.

If you are a DTC brand, a multi brand retailer, you have to spend time with your customers. If you are an e com retailer and don’t have a physical store, your customer is shopping at physical stores. Spend time with them. And I think that is where You start to really understand the nuances behind the evolving customer.

We talk about Gen Z a lot. I talk about it on stage or I talk about it on a podcast. Or I talk about it in the classroom. The fact is that Gen Z is misunderstood. Because a lot of marketers are marketing in this archaic way and they’re segmenting these customers. They’re not understanding that I might not be Gen Z, but I have similar tastes or a similar shopping style to a Gen Z.

So the way that we market needs to change, but that also means spending time on the shop floor. So no matter the function, we  Even if you’re fulfillment in the distribution center, you should be sending time on the shop floor with your customers. And I think that’s where training really starts. I was just going to say, so if we think about, you know, sales associate to CEO, you know, back in the day, you’re talking, I don’t know what two decades, like  as you’re recruiting these young gen alphas who enter the workforce next year, I’m not sure they’re going to invest that, you know, two decades to to get to that, that C suite.

So we have to do something differently. And also, if you think about how fast our industry is moving, we are just light speed right now. Everything’s, you know, changing, changing, changing, changing, you know, how do you get that skillset  in the top 10? You know, CEO or the C suite or the leaders, you know, they have to now be trained in completely different skills than, you know, I would say 10 years ago, but even five years ago.

So how do you, how do you close that gap, time gap and skill gap?  You know, Shelley, when you made, you made a major point here, and that is things are changing so fast and particularly the enormous and complex infusion of technology.  You’ve got omni channel distribution now, which has never been done before.

You’ve got AI and data analytics that are totally unprecedented. And as Lise has been saying, rapid shifts in consumer behavior. But  to the macro point, and one thing that maybe we aren’t really thinking too much about is that the C level and senior suites across this industry are themselves still trying to keep up and literally, I guess a good example is like change the plane while it’s still in the air, so to speak.

And that’s almost on a daily basis. And so if they’re trying to, they are trying to keep up,  how can they even know what should be programmed? Into 21st century training.  There’s one thing that I tell and when I mentor students or young people within fashion and retail, I tell them to reach out to the leadership team and say, I want to shadow you.

I want to see what your role is like,  and how I can learn from you. And the one thing that this younger generation has that we didn’t have is that there’s, there’s so bold. Yeah.  They’re bold and they use their voice  and they hold people accountable. They hold retailers accountable. They hold brands accountable.

And I think this is a beautiful thing for our industry.  What I tell these folks is that reach out to these leaders. And even if you don’t have the job. Reach out to them because all they can say is no, right? One will say yes to you. And be bold and share your ideas because your ideas matter, your voice matters.

You are the future,  and you are the future customer. So this is where leaders can really start to think about spending time with that new customer. Training this new customer, this Gen Z, the Gen Alpha, and even  Millennials and Gen X. I mean, I think that Many retailers have lost touch on who their customer is.

So spending time with them, whether it is for an internal function and a role, or it is for developing a product assortment, spending time with customers is key. And that goes back to, we need to train on the shop floor. We need to spend time with customers. We need to fit garments, see how they’re styled, how they’re outfitted.

I work with some brands today and there is a disconnect between the customer and what the buyer is buying because they’re buying what they like. But is that what your customer likes? It’s like the age old discussion that, you know, I think we’ve been having for decades is are we connecting product to the customer?

No, not always.  I’m very passionate about this. Can you tell? I can tell. Yeah.  I think some retailers have also lost track of the employees. So the employees want something different today than they want out of their work environment, especially frontline workers. And so retailers are working very hard to make that front line working experience better.

Higher pay, benefits, you know, all kinds of things. But how do you, how do you retain and keep that top talent and keep them interested and show them the trajectory of a career path that’s not going to take, you know, 20 years to get to? I think retailers really have to think about that. I think Walmart does a fantastic job with this, and I would say that other brands, other department stores and multi brand retailers need to follow Walmart’s lead where they not only invest in their Bye Sales teams on the shop floor, but they show that even a store manager can make 500 grand a year.

I don’t know if you saw that the other day. It was in the news.  And they do invest, right? They’re building out Bentonville.  Right. As we speak, and there’s going to be a training facility and a coffee shop and a place for your kids to go during the day. So it’s almost like the old Google head office that we used to hear about.

And just like want to go eat at their cafeteria. I’ve done that and it was amazing. Walmart is doing the same thing and it is becoming a leader in the industry.  Yeah, Amazon will be probably the number one online retailer in the future, but Walmart is just going to bury them because they’re doing that on every front.

Very, very smart. They really are. Macmillan,  probably one of the best leaders  in this industry ever. Yeah, that’s why they need you, Lisa.

I need to preach to that.  That’s right. This has been a great, great session and you’ve given us a lot of new insights into what’s going on out there. So keep up the great work. Thank you, Robin. I appreciate you. And thank you, Shelley. And we’re actually going to write an article on this subject too for you guys.

So I’m very excited. Excellent. Yeah. Excellent. We’re going to keep it going. Yeah, you got to keep it going. Well, we have to keep this conversation going for sure. It’s important in our industry. So absolutely.  But thank you, Lisa, for being here with us. We really appreciate it.  And I want to thank all of our listeners again, and Lisa again, and by the way, if any of you have a topic that you would like Shelley and I to cover send me an email, it’s robin at the robin report.

And thank you so much again.  Retail Unwrapped is a weekly podcast hosted by Robin Lewis and Shelley Cohan from The Robin Report. Each episode dives into the latest trends and developments in the retail industry. Join them as they discuss interesting topics and interview industry leaders, keeping you in the loop with everything retail.

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