Through a series of in-depth interviews, we asked over 50 CEOs and general
managers in the retail, fashion and luxury sector about how their businesses are
evolving. We asked them to reflect on their leadership style, its impact on building
effective teams, and to outline priorities for succeeding in a period of rapid change.
In this era of geopolitical and economic uncertainty, leaders are faced with a
unique set of challenges. Transformation is on the agenda of every company
as disruptive technologies and the accelerating pace of change threaten to
destabilise the industry. CEOs have to look closely at their strategy and the
talent implications of these forces, address any skills deficits and oversee
cultural change to ensure that their companies respond to demographic shifts
both in the workforce and among consumers in different markets.
Luxury brands are dealing with greater complexity than ever before. Loyalty is
eroding and social media is making it harder for brands to maintain control of
their image. Developing the market without sacrificing exclusivity or alienating
core consumers requires careful management. Consumer expectations are
constantly growing, forcing traditional companies to enhance their online
offerings into seamless omnichannel experiences.
In this digital era, every business in the sector needs to identify and nurture
talented leaders with the right capabilities to navigate a shifting agenda and
exploit the availability of new tools such as artificial intelligence and predictive
analytics. In the midst of heightened global risk and accelerating transformation,
the role and required skills set of the CEO are changing.
at a glance
This article explores five key
areas in which leaders in the
retail, fashion and luxury sector
must excel if they are to gain
- Build a culture of trust,
- Put the shopper and customer
at the heart of your strategy
- Stay agile, make use of
data and streamline
- Rethink your organisational
- Leverage a knowledgeable
and supportive board
What does it take to be a
successful leader today?
We believe that CEOs must embrace the complexity
brought on by accelerating changes in consumer
behaviour and the increasing availability of information.
Data are not only valuable in supporting
day-to-day operations but have a dramatic impact
on strategic investments decisions.
Significant cultural changes are necessary in most
businesses as they seek to adapt to economic and
social change. CEOs will have to set the tone from
the top. Since much of the cultural challenge falls on
their shoulders, CEOs need the support of a well
informed and digitally savvy board.
In recent decades, iconic leaders presided over the
expansion of their brands, planting flags on previously
unconquered markets. Today’s leaders, by
contrast, have to deal with an unpredictable ecosystem
driven by technology innovation, one in which
the centre of gravity has shifted towards the Asian
consumer. These changing circumstances inevitably
affect the capabilities and attributes that companies
will look for in their future leaders.
While other sectors like hospitality, services and
consumer electronics are further along the transformation
path, most companies in the retail, fashion
and luxury sector have more recently begun this
journey. They are facing significant challenges in
bringing their businesses up to speed.
CEOs must focus on creating the right strategy and
assembling the most talented team around them.
At the same time, they will have to question their
own managerial style and adjust to innovative new
We have identified five key ways in which leaders
in the retail, fashion and luxury sector must excel
if they are to gain competitive advantage:
1. Build a culture of trust, ownership
Unlike a company’s vision, mission and strategy, which are explicitly
articulated by leaders with the goal of guiding the organisation’s activities,
culture is pervasive and invisible, working silently in the
background to direct how people throughout the organisation think,
make decisions and actually behave. Culture represents the “unwritten
rules” for how things really work in the organisation: It is the manifestation
of the shared values, beliefs and hidden assumptions that shape
how work gets done and how people respond to one another and to
“Culture is the engine that
keeps the business going.”
One of the primary tasks for any CEO today is to help foster an organisational
culture that promotes continuous learning and instils a
consumer-first perspective across the business. The leaders we talked
to acknowledged the need for a better framework to help them understand
their culture and how to develop or change it.
Most CEOs we interviewed recognise that their leadership style can
have a significant impact on culture which, in the transformation
context, is a dynamic and continually evolving aspect of the company.
How leaders behave and communicate, the effect they have on their
team, will have a direct impact on the level of trust in the organisation.
In successful digital pure-play companies, for example, leaders create a
culture in which individuals and teams can flourish without fear – all
the while maintaining a strong focus on performance and results.
“We believe in the power
of collective intelligence
and in maximising
employee initiative to
The most effective leaders benchmark themselves against best-in-class
companies outside the sector. They get the most out of individuals
when they focus on coaching rather than exercising authority (especially
noticeable in small and mid-cap companies). These leaders seek
to remove the limits from people’s thinking, creating a less defensive,
risk-averse environment in which entrepreneurial initiatives and innovation
can flourish. They also assemble cross-functional teams and
move some of their most talented people into areas of the business
where they have no previous expertise.
CEOs must be willing to adapt and lead the change, but they cannot
do it alone. They need to identify ‘cultural influencers’ within the
organisation, as well as appoint outsiders as change agents who
embody the desired culture and values. Success is built on new ways of
working, and CEOs must learn the art of delegating and empowering
staff. They must also pay close attention to transparency and communication
to build a sense of common purpose and thereby raise
It is vital for leaders to stay abreast of emerging roles (such as that of
chief data officer or chief digital officer) in case such appointments
would accelerate change within the organisation. In Spencer Stuart’s
experience, legacy businesses run the risk of tissue rejection when
hiring a change agent, so that person must be carefully assessed from
a cultural perspective and bring the right combination of domain
knowledge, drive, sensitivity and influencing skills.
Priorities & actions
Building a culture of trust, ownership
Define the brand culture, heritage and legacy.
- Determine the brand singularity.
- Set up a model for better collaboration across
- Align a clear and distinctive set of values and
leadership behaviours with the brand culture.
- Create a sense of ownership, pride and
belonging within your team.
- Practise inclusive leadership, not command
- Assemble diverse teams with wide-ranging
skills to collaborate on innovation.
- Create conditions that allow the
imaginative storytellers to work alongside
- Adopt a test-and-learn attitude, making
informed bets, learning from them and
making quick adjustments.
- Develop the ability to read and learn from
consumer response in real time.
- Enabling authenticity in others
- Embracing diversity
- An attitude of trust and support rather than
command and control
- Coaching others and leading by example
- Focusing on excellence rather than perfection
- Able to create enduring partnerships
- Constantly questioning what has been done
- Not being risk averse, but willing to take risks
(which may be well rewarded)
2. Put the shopper and customer at the
heart of your strategy
In recent decades, companies in the luxury segment have concentrated
on brand image and creativity. Designers and CEOs have worked
together, constantly reinventing the brand story and generating a unique
emotion with each collection. While using the high-end segment as an
inspirational source, retailers have also disrupted the traditional model
based on seasonality, moving to fast fashion instead. The brand has
been the boss, directing how people should live and consume.
Today, it is consumer behaviour that drives brand strategy. In our
discussions with CEOs, we found a renewed focus on creating tailormade,
differentiated consumer experiences and innovating around
every point of contact.
“Digital forces you to
be more authentic with
The distinction between global and local consumers is blurring.
Companies need to provide a consistent message across markets and
consumer segments, while tracking individual preferences and
presenting customised offerings.
In order to build their proposition around the consumer experience,
companies have to invest in analytics and maintain the agility to
change direction quickly to meet consumer expectations. Staying relevant
to consumers means paying close attention to the space where
they shop, whether in-store or online, and ensuring they have an
outstanding experience before, during and after the sale.
Today’s consumers are less loyal and base their decisions on information
from multiple sources. They want to access products and services
on their own terms and in ways that are convenient to their lifestyles.
All the more reason for companies to create organisational models
that are geared towards meeting consumer expectations. This may
require a cultural shift with an emphasis on the vital importance of
first-rate customer service.
The new generation of CEO needs to act as the Chief Energy Officer,
bringing a new vitality to the organisation and focusing it on
colleagues who have the greatest impact on the consumer. Not only
does this motivate them, but it demonstrates the kind of energy you
want them to bring to your consumers.
everything now, and
that means making
quick decisions and
For most executives, the mantra “consumer first” has to mean
“employee first.” They may have very little contact with consumers, but
they can act as role models and set the tone for how their organisation
will relate to consumers. Employees who do not feel engaged, empowered
and valued are unlikely to engage with and care for the consumer
in the way you want them to.
Priorities & actions
Putting the consumer first
- Capture data on consumer behaviour and
- Develop close collaboration with global and
- Include the voice of the consumer in the
decision making process.
- Stimulate brand desirability with constant innovation
and product/service improvement.
- Ingrain a sense of service and dedication
Learning continually from market transformation and consumer behaviour
A personal affinity with consumers
Embodying the new standards
Attention to detail and desire to provide a unique service
Avoiding arrogance and certainty
3. Stay agile, make use of data and
The availability of vast amounts of data and breakthroughs in predictive
analytics, cognitive computing and machine learning are changing
the relationship between brands and their consumers.
Many companies are investing heavily in data acquisition and analytics,
acquiring both technology and skills, in order to better understand
consumer behaviour. The pace and rhythm of interactions between
companies and consumers have changed – faster and better decisions are
made when intuitive thinking is supported by data from these interactions.
“Agility and adaptability
are the antidotes
Technology has changed the competitive landscape. Speed has
become as important as size in determining success and this calls for
new ways of working. As a result, CEOs and senior management teams
must personally embrace change and be willing to adopt an attitude of
continuous learning. Without their collective commitment to becoming
more agile, the best attempts to innovate in a fluid, flexible and
collaborative way will run into trouble.
More than ever, leaders need to connect the dots, break down silos
and make it possible for innovation to emerge from anywhere in the
world. Executives need to be well networked across the organisation
and learn to think and act laterally.
Leaders of the future will need to be ambidextrous and culturally agile,
with the sensitivity to pick up on cultural nuances. For example, there
is no substitute for having lived and worked in different countries,
something that will be expected of the next generation of leaders.
“Every single function in
the company has to plan
for the impact of digital.”
Leaders who want an agile and learning organisation have to display a
growth mindset themselves. They have to be role models for agility, willing
to try new things, failing at times and then learning and adjusting.
Priorities & actions
Being agile and reaching decisions faster
- Develop an ecosystem with
- Master data analytics.
- Define a clear strategic vision, but be
prepared to adjust to market conditions.
- Develop collaborative, cross-functional
- Fail fast and learn.
Curiosity and open-mindedness; exploring the
world outside your comfort zone
Ability to inspire and communicate a clear vision
Pragmatic and tactical, taking realistic steps to
Agility – essential for maintaining a leading
Belief in people and the power of collective
intelligence in creating sustainable growth
4. Rethink your organisational model
Retail, fashion and luxury businesses have embraced the challenge of
digital to varying degrees, although some form of transformation is
on the agenda of nearly every company. Disruptive technologies and
the accelerating pace of change are constantly threatening to undermine
legacy businesses. Even pure-play companies that were among
the earliest technology disrupters are now being forced to re-evaluate
Large brands are seeking to replicate the success of smaller, more
nimble organisations in getting closer to consumers, speeding up the
innovation cycle and decision-making process, and reducing the time
it takes to respond to changing market conditions.
model must evolve in
synch with consumer
From our interviews it was clear that leaders are rethinking their
organisational models, adopting flatter structures and creating dedicated
taskforces to tackle challenging projects. Less hierarchy leads
to more transparency, better sharing of information and greater
autonomy for teams.
It is a major undertaking to embed a collaborative mindset in an
organisation. The CEO of one global brand has abandoned its hierarchical
structure, taking people out of individual offices and creating
open spaces to encourage better communication. “I am testing the
ability of my team to work differently and across generations,” said one
CEO. “If a goal is particularly difficult, I will personally sponsor the
“I expect the next
generation of leadership
talent to come from
companies that have
been exposed to the
Ensuring that the workforce is prepared for change is one of the most
critical tasks for any leader. If there is to be a lasting and effective
transformation, the CEO must work closely with the head of human
resources to rethink their traditional approach to talent strategy. Their
single most important task is to develop, attract and retain the next
generation of talent. They should consider two fundamental questions:
Do we have the internal talent to pivot and make this transformation,
or do we need to go external?
- Are the roles we have today relevant for the next 3 to 5 years?
Many of the CEOs we spoke to have tried wherever possible to develop
talent from inside the business, while others have recruited high-quality,
digitally native executives from outside to set the standard for
future hires. Wherever the talent comes from, it is important to find
new ways to motivate them and to plan for career advancement opportunities
that did not exist previously.
“We are seeing the
‘death of arrogance’
teams and greater
young people to
Companies in the retail, fashion and luxury sector tend to employ a
high proportion of Millennials who have a strong sense of social
purpose and a desire to make an impact. They have different expectations
about how they should be managed and this is prompting some
leaders to rethink their leadership style. According to one CEO, leading
Millennials “has a lot to do with attitude and soft skills. It is like
managing volunteers. They have a choice. You have to make it a great
place to work every day.”
Priorities & actions
A new leadership model is required
- Keep restating the business purpose and
objectives to your team.
- Simplify structure, challenge its efficiency
- Be open to innovative organisational design
and encourage engagement.
- Facilitate more interaction and co-working.
- Create workshops with a project owner and
- Assess people’s capabilities and potential against
desired outcomes and their ability to deliver.
- Identify new leaders based on talent
- Identify missing competencies and either
develop them or recruit for them.
- Reward success.
Ability to be a change agent and work closely with
the leadership team
Willingness to challenge established principles,
organisational design and rules of the game
Ability to think out of the box and act differently
Delegating and empowering others
Communicating and taking tough but fair decisions
Willing to reward innovation through collaboration
5. Leverage a knowledgeable and
During a period of turbulence, the board needs to be fully engaged,
understand the nature of the disruption and have an informed view
about the actions that need to be taken. It is particularly important
that the skills and experiences around the boardroom table should
remain relevant to the challenges faced by the business and the
In the retail, fashion and luxury sector, board members’ understanding
of digital implications can lag reality. It is essential that the entire
board engages in a robust discussion about the impact of technology
and trends in consumer behaviour, and the implications in terms of
risks and opportunities for the business. The most important way in
which the board can support management is in the area of investment
decision-making, since funding is one of the biggest levers it has.
Many chairmen wrestle with the question of whether to have a technology
or digital expert in the boardroom. One of the greatest advantages of an
expert is that he or she can help educate the rest of the board. However,
functional expertise alone may not help boards reap the full benefits —
leadership skills and business knowledge are integral in helping other
directors understand the connection between technology and the business.
Some boards appoint expert advisors to help them get up to speed, or even
assemble an advisory board that is unencumbered by governance duties.
One thing is certain: diversity in the boardroom is critical. Not just in
terms of gender, but also in terms of background, experience and age. As
companies go through transformation, the generational gap can become
a problem – most board members throughout Europe are more than 55
years old. Over the next five years companies will need to address their
board composition in a way that reflects the changes that lie ahead.
One of the key tasks of the board is to prepare carefully for leadership
succession. In the words of one CEO: “In 10 years’ time the profile of the
CEO will be completely different from what it is today. The board’s
responsibility is to build a succession plan that will allow this new generation
of leaders to arise.”
While the primary purpose of the board is to represent the interests of
shareholders, it is also there to oversee the management of risk and
ensure the sustainability of the organisation. A board’s shareholder-first
and risk-management orientation can sometimes make it less focused on
consumers or indeed employees. Creating an agile, sustainable organisation
means having an engaged culture, one that keeps pace with the
changing consumer environment. The board needs to reflect on how it
can engage effectively with the company’s culture, with its employees
and with the consumer experience.
Leverage a supportive and knowledgeable board
- The chairman must ensure that board composition reflects the company’s challenges
and transformation agenda.
- Bring together experienced change agents and digital experts.
- Create an atmosphere of collaboration and trust on the board.
- Challenge management on whether the business model is competitive.
- Prepare a CEO succession plan.
Gaining competitive advantage from the digital opportunity will be one
of the biggest challenges facing CEOs over the next few years. Leaders
will need to keep their organisations focused on the consumer, pay
close attention to creating the right organisational culture, and thereby
attract and retain the best people. They will have to move away from
traditional approaches to talent strategy, develop new types of career
path and new roles, and make changes to how their people work
together. What’s more, we believe that all CEOs should be prepared to
ask themselves: “What change do I have to go through myself in order
for transformation to take root in my organisation?”
Three questions CEOs
should ask themselves in
an era of transformation:
Do we have the right support from the board to initiate
Some boards are up to speed with the changes, others
less so. Board composition may need to change
substantially over the next five years.
Do we have the right organisation, talent and mindset to
realise our goals?
- Preparing the workforce for transformation means being
open to hiring from outside the industry, introducing new
competencies and allowing people to work differently.
What makes the singularity of our brand and our culture today?
- CEOs must foster an organisational culture that promotes
continuous learning to adapt to the shifting landscape.