After Bed Bath & Beyond claimed one of the biggest CEO exits in 2022 — Mark Tritton, who left the company 10 months before it filed for bankruptcy this April — the home retailer is once again one of the biggest names to lose a CEO in 2023. Jonathan Johnson, who ran Overstock since 2019 and led the company’s acquisition of Bed Bath & Beyond out of bankruptcy, unexpectedly left the chief role last month.
Johnson is far from the only CEO to leave a major retailer in 2023, however, nor is he the only one to do so in surprising fashion. Dollar General, which replaced CEO Todd Vasos with Jeff Owen in November last year, brought Vasos back after just 11 months.
CEO turnover in the retail sector is up meaningfully year over year, according to executive search firm Heidrick & Struggles. Catherine Lepard, global managing partner of retail and direct to consumer at the firm, told Retail Dive in October that turnover was up to 17% in 2023, compared to 11% in 2022.
The Conference Board, which measures the consumer discretionary category, has reported a relatively steady CEO succession rate compared to previous years. As of August this year, it was sitting at 14.9%, up from 14.2% last year and 14.7% in 2021. That number is significantly below the 17.9% succession rate in 2019, but notably higher than 2020’s 12.4%.
“The retail sector has been one of the most embattled in the last decade,” Matteo Tonello, managing director of The Conference Board ESG Center, said via email. “This is due to a confluence of factors: the disruptive effects of Amazon's growth and shifting consumer habits, the lockdowns during the pandemic, subsequent global supply chain issues, and, most recently, inflation's impact on the prices of discretionary goods and on consumer spending.”
Retail Dive covered 50 CEO exits in 2023
All told, through the end of November, Retail Dive covered 50 CEO exits from retail-focused companies. Some of the departures were aimed at positioning a young brand for its next phase of growth, a few were simple retirements and others were firings.
This count isn’t comprehensive: Retail Dive doesn’t cover every departure that falls under the realm of retail, including for example, the recent CEO exit at Hailey Bieber’s Rhode beauty brand. Our list doesn’t account for some CEO appointments at specific divisions of a company, like Artemis Patrick’s elevation to CEO of Sephora North America, and excludes Allbirds, where one co-CEO switched roles halfway through the year and is now chief innovation officer.
This data also doesn’t account for CEO exits that were announced in 2023, but won’t be executed on until 2024: That list includes Macy’s, where CEO Jeff Gennette plans to exit early next year, as well as Costco, where Ron Vachris will take over from current chief Craig Jelinek come Jan. 1.
The CEOs exiting in 2023 range from longtime industry veterans to startup founders and even Rihanna. By The Conference Board’s count, three female CEOs exited in the consumer discretionary segment as of August this year, out of a total of 32 succession cases at that point.
“These exits are primarily driven by business performance or lack thereof,” Heidrick & Struggle’s Lepard said of the retail space, noting that even well-performing retailers are seeing their stock devalued. “While there are multiple factors driving this devaluation, the bar and expectations of shareholders have been set high. Slower growth puts a spotlight on business challenges, attracts activists, and has prompted boards to seek out change and deploy new leadership, perhaps with different skill sets, to navigate fast-changing consumer behaviors and meet shareholder demands for growth.”
The move for new leadership hasn’t been limited to a certain time of year. CEO exits occurred every month, ranging from just one in February to a high of eight in January, by Retail Dive’s coverage. Between April and October, the number of CEO exits per month never fell below 4.
January had the industry’s largest number of CEO departures announced
The trends driving CEO departures vary by year, whether it be economic uncertainty or a worldwide crisis like the COVID-19 pandemic. In 2018, for example, the #MeToo movement caused a spike in forced CEO departures due to personal misconduct, according to Tonello. That was also the No. 1 disclosed cause for CEO dismissals in the Russell 3000 Index in 2020, Tonello said, which may partially be due to the conclusion of long-term investigations into corporate culture and leadership styles.
“We know that the pandemic has catapulted Human Capital Management (HCM) to the top of the list of boards’ concerns. Boards have become more attentive to the well-being of the company’s employees and more appreciative of how inappropriate behaviors by senior leaders can corrupt corporate culture and create a toxic work environment,” Tonello said. “In the coming years, boards interested in driving executive performance in the HCM sphere may also choose to accelerate CEO succession plans in cases where, despite the absence of egregious situations of abuse, directors believe that the leadership style does not favor a healthy and prosperous corporate culture.”
In 2023, Lepard believes devaluations in stock prices have caused a “ripple effect” across the industry and put “immense pressure” on CEOs to perform up to shareholders’ standards.
“The pace of change has transformed cracks in the business into chasms, speeding up decision-making and driving turnover in ways we haven’t previously seen,” Lepard said.
Retail's exiting CEOs had tenures ranging from 3 months to 16 years
Out of the CEO exits Retail Dive tracked, tenure fluctuated from three months to 16 years, with the majority of CEOs staying five years or fewer. Two years and four years were the most frequent tenure lengths for exiting CEOs, with 9 apiece. Overall, average CEO tenure within retail is decreasing, according to Lepard.
“We’re experiencing such rapid change in retail that makes it difficult for one person to have the right skillset for any one company for an extended period of time,” Lepard said. “The unpredictability of the market has triggered a cyclical pattern of CEOs coming and going as retailers evolve their leadership and strategy to keep pace and meet the latest marketplace demands and trends.”
Whenever CEOs exit, attention turns to the successor. Frequently, the new leader is named in conjunction with the outgoing CEO’s departure, but that is not always the case. Last year, a handful of CEOs exited their roles without a permanent CEO replacement and their successors weren’t named until 2023. The RealReal founder Julie Wainwright, for example, stepped down abruptly in June 2022 and wasn’t replaced until over six months later, in January. In the case of Gap, Richard Dickson only took over the position in July this year, almost a year to the day since Sonia Syngal’s departure was announced.
A handful of CEOs joined in 2023 after their predecessor's 2022 departure
New CEOs are generally expected to show impact within their first year at a company, Lepard said, but if they need to implement a new strategy, which is likely the case for Dickson, it can take two to three years to show proof of concept. The RealReal and Gap CEO switches are also potentially risky in that they bring in an external candidate. Hiring from the outside poses cultural risks and could cause a candidate to “impose a playbook from where they have been successful at another company without fully understanding the unique nuances and mechanics of the business,” Lepard said.
According to data from The Conference Board, 75.5% of CEO appointments in the consumer discretionary sector last year were inside promotions, compared to about 25% that were outside hires. This year, as of early August, 68.8% of CEO hires in the segment were inside promotions versus 31.3% that were outside hires.
In that same time period in 2023, the average age of incoming CEOs in the consumer discretionary sector was 55.5, according to The Conference Board, and 12.5% of incoming CEOs were women. Outgoing CEOs, on the other hand, were an average age of 60.7, and 9.4% of them were women.
What a retailer is looking for in a CEO varies by company and by year. In previous years, for example, softer skills or ESG knowledge might have come to the forefront, according to Lepard, but now retailers are looking for CEOs that have fundamental business skills and operational execution down.
“In the current economic climate and business environment, we’re seeing that new CEOs are more often being tasked with operational excellence and driving an existing company’s strategy forward versus asked to come in with a radically different strategy,” Lepard noted.