Retail companies have been hit hard between supply chain issues and inflation pummeling the wallets of their consumers. Some companies are opting to change their leadership as a solution. Burt Flickinger, the managing director at Strategic Resource Group, joined Cheddar News to break down this mass retail CEO exodus.

Closing Bell

What's Behind the Retail CEO Exodus

bell here on cheddar news. Now the retail industry is facing a laundry list of challenges right now from supply chain issues, historic inflation levels to even troubles finding staffing. One way retailers are moving forward is by opting for new leadership and putting delayed succession plans in place, bed bath and beyond gap and under armor are amongst some of the retailers out there with C. E. O. S stepping down. So joining us now is Burt Flickinger, strategic Resource group managing director and Burt. What do all these departures mean for retailers? The departures are a couple of things can one is many of the retailers have had a long tenure and it's just normal succession planning. The second is typical with retail to under performance or poor performance leads to replacing what the Wall Street Journal missed in this story. Source is what really needs to be replaced as the executive search firms that do really regrettable work. Uh, the executive search principles have no operating experience, no uh practitioner experience and they're selecting the wrong people with the wrong skills for the boards and in many cases the wrong people with the wrong skills for uh retail leadership and and operations. And it's led to this accelerating retail ice age, which is the proverbial train wreck under the christmas tree this year. And in the years ahead. So what do you think are other than that, that you mentioned, what do you think are the biggest challenges facing these ceos and perhaps causing or making it easier for them to make the decision to step down. The biggest challenges canner is just getting out of the office and getting in the company car and getting the stores? The people running the stores are suffering from lack of support, lack of resources, lack of attention. The C. E. O. S. Today spend low to no time in the stores. The good Ceo should spend 25 Should invest 25,000 driven miles of her his time 40-60% of total time in the stores leading and motivating and getting feedback from the store leaders to store workers part time full time. Uh And the customers and the vendors and the C. E. O. S in in in the case of of some of these retailers have increased their pay In base and bonus by 10 million a year. While people at dollar general with whom I've spoken in in Texas in many states, they're still getting barely above minimum wage and their hours are being capped at 22-26 hours week even though they've worked for years. So so what really needs to happen in retail is fair and balanced pay meritocracy which isn't in place. And this this whole emphasis of command and control from the corporate offices when the people in the corporate office spend loaded no time in the stores. Which is leading to this proverbial retail train wreck of unprecedented proportion. Bird, I'm glad I didn't sugarcoat it and I want to get back to your S. Ceo searching. What do you think needs to change when it comes to that aspect. Because you mentioned that's one of the failures. Can. The best example is BJ's wholesale club with chris, baldwin bob Eddie and and the great retailers there, I look on your charts. BJ's wholesale club Year Two dates up 5%. The S. And P. Is down 20%. And the difference is leadership, chris and bob spend most of their time in the stores they promote from within. They don't use these screwed up executive big shop executive search firms that don't know what the devil they're doing. And it's a meritocracy and meritocracy. BJ's can beat the wealthiest family in the world and the biggest land based retailer in the world walmart Sam's Club and BJ's is the epitome of investing in leadership and investing in winners. Uh So shoppers benefit is BJ's raised shopper standard of living vendors benefit because BJ's profitably increases sales and the workers all benefit in a complete meritocracy and that's very rare in the rest of retail. Alright, so Burt we got the wrong people in the wrong roles, We don't have enough people in the stores. The pizza, the pizza parties are not going as far as they used to. But what about inflation? How bad is inflation affecting the C. E. O. S. In these retailers in inflation typically can. Is the best friend of any ceo because you can uh it profitably increases sales with price increases in a little bit of margin expansion. So the U. S. Department of commerce numbers tomorrow for retail will be a disaster because most of the retailers haven't benefited from inflation. So inflation adjusted, even internet sales including amazon are down and shows poor performance on on retailers from online to on land and inflation. Uh While while it's reported to be a challenge is actually in retail of typically a big business benefit in the prior seven major roof inflationary cycles during the last 100 years. So do you think that perhaps some companies are getting rid of quality C. E. O. S. Hey getting rid of quality C. E. O. S. In the case of Home Depot for example. Craig Muneer quality ceo but he had he had really invested the same amount of time, that is just great predecessor frank Blake did great former CFO carol Tomei did. Uh So it's a retail ceo lifecycle. So so many of the retailers are doing the right thing with succession planning and promoting from within like be like BJ's does and others are just change changing Ceos with poor executive search firms like free agents and and bad basketball teams like like the new york franchise teams for the N. B. A. All right, my last question for you. I'm gonna ignore that new york thing is that um when it comes to ceos that have been recently placed in the roles, which ones are you most hopeful about? And which one do you think makes the most sense? Uh This the c E O. S most hopeful is under armor because kevin Plank and the board have done a great job with Made in America uh and with new leadership, working with an America first strategy. Uh, That'll be a real winner. Gap is historically problematic. And you you look at Home Depot is another all star retailer with a succession of stars running the company as Ceo s. All right, I'll see you at the next corporate team building event Burt Flickinger, Strategic Resource Group, Managing Director Bert. I appreciate your time and your expertise. Thank you so much.