Leadership
UK Retail: The C-Suite door revolves again
In 2022, the UK retail sector experienced an unprecedented surge in CEO changes. Read our 11th Annual CEO Tracker report to find out more.
They got their organizations through Brexit and managed their stores through the pandemic. And in 2022, when faced with further economic uncertainty, potential labor strife, and a big inflation wave, a number of the "old guard" UK retailers said, “I’m done.”
After a pandemic-inspired lull, CEO turnover has more than doubled in 2022, and as a result the new bosses are facing a year of uncertainty ahead, albeit with a bit more optimism than last year.
It has not been easy for UK retailers. UK retail sales fell 6.1% in 2022, the worst annual drop since at least 1989, when statistics began. Stocks of the sector fell about 30% in 2022 (it had been 40% before a late-year rally). Poor trading performance also convinced some boards to replace their CEOs, said Sarah Lim, Korn Ferry managing director and author of Korn Ferry's annual CEO Tracker.
As a result, in the last twelve months there were 42 new CEO appointments across UK retail, according to Korn Ferry’s CEO Tracker, a large jump from 18 changes in 2021. “Post pandemic a number of CEOs wanted to retire, and others just wanted to change. They’d sat in seat a long time and wanted to do something different,” says Lim.
Thirteen of the 42 appointed CEOs (31%) were women, the highest number of female CEOs appointed in over ten years. The rise in the number of female CEOs is a huge step forward. Companies with a majority of women customers are now aware that they need to recruit CEOs who are more reflective of the customer base, and where they do, it leads to better profitability and better shareholder return.
New incoming bosses have had to deal with wage inflation, labor shortages and a cost of living crisis, resulting in a tightening of consumer purse strings. UK inflation was 10.5% in December, lowered slightly from the 11.1% in October but still exceedingly high. Inflation rates spiked throughout 2022, fueled by surges in energy prices as Western sanctions on Russia started to bite.
Economists have already predicted a recession for the UK economy during the first half of 2023. Top of mind for many new bosses has been the shortage of workers and a fundamental shift in the emotional contract between employers and employees post pandemic; the power base has shifted into the hands of the workforce who are increasingly vocal about pay and their right to more flexible working. Brexit has made it almost impossible to recruit foreign nationals to work in the UK while many people who left the workforce during the COVID pandemic are yet to return.
Half of the incoming bosses appointed recently are first-time CEOs, many coming from within their respective organizations. According to Lim, the number of people new to the role has much to do with the financial constraints that publicly-traded organizations have on paying executives. Candidates with prior CEO experience would rather work in privately held businesses where there is less time in the spotlight of public scrutiny and more time available to get work done.
“So much is about managing shareholder expectations, making sure you are not going outside proxy guidelines, managing messaging, and without enough time to focus on running the business,” Lim says. “Privately-owned UK retailers can often offer better financial reward,” Lim says, “with far more generous incentive plans”.
Read our report for more UK Retail CEO highlights in Korn Ferry's annual study.
