Growing the store brands business can help retail companies differentiate and win. With an initiative this important, retail organizations require the right kind of leader to provide vision, direction and execution. This Viewpoint details two options - the Retail Rising Star and the CPG Free Agent - and discusses the pros and cons as well as tips to enable success.
Many retailers are making a push to dramatically grow their store brands businesses to differentiate their stores and win in market. Boards demand it, shoppers expect it, and competitors see the same opportunity. As a result, retail organizations require the right kind of leader to provide vision, direction and execution to grow their store brand businesses.
Top retail management faces a dilemma about what kind of leader to select. Today they often have a choice between leaders with two distinctly different experiences: the internal retail rising star, or the proven consumer packaged goods (CPG) leader from outside the company.
Making the right choice depends on understanding the strengths and perceived weaknesses of each profile, and addressing the unique aspects of each choice within the context of your organization.
The Retail Rising Star
The retail rising star, is typically someone who has moved up in her retail organization via the fast track. She has been successful in buying and/or supply chain roles, gaining increasing levels of responsibility. She has built a number of strong, cross-functional relationships over the course of significant initiatives conducted within the company. This leader has demonstrated success in both driving operating results and in building talented teams. Although building a store brands program is outside of her expertise, senior leaders in her organization trust her to take on this substantial responsibility.
There are a number of obvious advantages to selecting the internal retail rising star for this role. First, this person is a known entity in terms of cultural fit, and will not require as much time to become integrated into, and accepted by the company. It is likely that the vast majority of executives see her as the logical choice for the role, as she will likely have a strong, informed view of the issues and opportunities associated with taking the store brand program to the next level. Also, this leader is capable of quickly putting together an internal team, drawn from people she has directly worked with and mentored throughout her career. She will likely have the trust of senior leaders, peers and other key executives required to navigate the inevitable challenges that will occur in the course of growing the store brands program. As a result of these advantages, the retail rising star should be able to quickly build a strong, long lasting coalition of cross-functional support to ensure the success of the program.
However, there are a number of gaps that may exist in the rising retail star’s capability set. It is likely that she has not directly lived leading practices in bringing new store brands and merchandise to market. Many of the leading practices for the strategies, tactics, structure and processes required to build a thriving brands program reside outside of retail, and instead are often found in CPG companies. Because of this, she may not have a deep-rooted understanding of the best way to execute this initiative.
Further, the rising retail leader’s skills and experiences may not transfer to the unique type of leadership needed to build new capabilities within the company. If the program struggles, doubters may be quick blame these deficiencies on the retail rising star.
To ensure her success, retail leadership must support the retail rising star in several ways:
- Enable her to hire a first lieutenant from outside the company – and from within the CPG ranks – to complement her strengths and bring credibility to the team. As a leader, she should be able to supplement her team with additional outsiders as needed, especially in the early phases where building momentum is key.
- This leader should take the time early on in her new role to ensure her team understands leading practices for establishing a viable store brands program. This may be accomplished by attending conferences, conducting secondary research, leading workshops and summarizing the insights and implications from this learning process. This will provide the team context for their own strategy development.
- Finally, retail management must understand that building a leading store brands program requires ongoing investment to realize sustainable results. As such, the retail rising star must be able to present a business case requiring upfront investments which lead to a strong, three to five year ROI. To succeed, her team will need to secure short term “P&L relief” to build a superior, differentiated store brand program.
The CPG Free Agent
The other choice, the CPG free agent, is someone who has advanced in the CPG ranks via the fast track, often in more than one company. She has likely been successful in brand building, product development, or supply chain roles, and has gained increasing levels of responsibility. This leader has established a reputation in the industry for building and launching successful brands and/or products and is well known outside of her company. Similar to the retail rising star, this leader has had success driving operating results, building teams and playing leadership roles on important initiatives. A retailer would see opportunity in this person because of her proven ability to build and launch brands.
There is a different set of advantages to selecting the CPG free agent. Simply, this leader understands what to do and how to do it. She knows how to set a vision and strategy based on the unfulfilled wants and needs of the shopper and end-consumer, and how to successfully execute this plan. She knows how to put the right operational processes and technologies in place, and how to measure and motivate cross-functional teams to bring new brands and merchandise to market. CPG free agents often come from companies that have greater access to market and consumer insights than retailers themselves.
Of course, possible deficiencies may exist in the CPG free agent’s capability set. As an outsider, she will be an unknown within the organization, and as such, will need onboarding and integration time, which may affect her ability to ramp up growth activities quickly. She may face challenges from internal executives who competed for this role, and from others who would have preferred the leader to be promoted from within. Ultimately, she will need to meld into the culture to form the cross-functional relationships necessary to be successful. She may face challenges from her new team, with unrealistic expectations about the size and timing of the operating and financial impact that a new leader can have.
Finally, as it is unlikely that she will have first-hand experience as a senior executive in a retail company, there will be aspects of retail that she simply may not understand well.
To ensure the success of the CPG free agent, the retail organization must address both her strengths and weaknesses.
- The CPG free agent will need strong sponsorship at the C suite level, with one person clearly owning responsibility and accountability for the new leader’s success. The retailer should support her by collaboratively building consensus and aligning expectations for the role by developing a “100 days plan” during the recruiting process. A draft plan should be completed before the first day of hire, and vetted with the two to three key executives she will work with most, ideally from supply chain, marketing and finance.
- The CPG free agent should be granted the ability to recruit internally and reassign a highly regarded, high talent first lieutenant to complement her capabilities and bring credibility to the team. This asset should not be someone who was a candidate for the CPG free agent’s role, but rather a more junior employee with high potential.
- Finally, the CPG free agent will require time to understand what she has inherited. She will need time and a budget to assess the retailer’s current program, to set priorities and to establish a multi-year roadmap for her growth program.
Both the retail rising star and the CPG free agent have the potential and skill sets to succeed in leading a store brands program when provided adequate support from senior retail leadership. With either choice, the retailer should expect a three to five year journey from initial selection to the fulfillment of the new leader’s vision and strategy, including investments in delivering results and building sustainable organizational capabilities.
While selecting the right leader is the first step, the key in today’s short-term focused business environment is to deliver quick wins to demonstrate progress, and then to stick with a subsequent long-term growth program to fuel ongoing differentiation in the market.
With contributions by Mallory Engler