One cannot help but be fascinated by the musical chairs being played out in the retail sector at the moment. The music comes in fits and starts and the bottoms have hardly the chance to settle into their seats before being they’re moved on again. It’s less musical chairs than musical hot seats and I don’t think it can be good news in the longer term.
The latest reshuffle is underway at Arcadia, the retail conglomerate demerged from Debenhams in 1997 that owns a wodge of high-street brands such as Top Shop and Warehouse. It is attended by the usual protestations about how amicable everything is. Stuart Rose, sometime rising star of the old Burton Group (as the un-demerged Arcadia was known) is to make his way back from the chiller cabinets of Iceland to be chief executive, ousting incumbent John Hoerner, who has presided over a share-price collapse from 400p to little more than 50p.
Naturally, Hoerner has let it be known that he wanted to go anyway and, at Iceland, a certain amount of hasty revisionism has put the story across that Rose’s move is tremendous news because Malcolm Walker, who built up Iceland originally, was looking to step back into day-to-day management and relished the chance to do all that hard work once again. This, apparently, is far better than the idea that shareholders had been led to believe was the prevalent one – namely, that Rose was absolutely the main man and ideally qualified to see through Iceland’s merger with cash-and-carry concern Booker.
Furthermore, Rose is to take Charles Wilson, managing director of Booker, with him to Arcadia in a further selfless boost to Walker and Iceland’s shareholders, who will be all the less troubled by bothersome senior directors standing between Walker and his doubtlessly sincere desire to do absolutely everything all the time for both companies.
My sarcasm is not targeted at the exercise of free-market forces on personnel in the retail industry. I have no doubt that people such as Adam Broadbent, Arcadia’s chairman, have a fiduciary duty to do their best by their companies’ shareholders, and doubtless this involves hiring the best people to do the job, but I do have reservations.
Rose might well be the most brilliant retailer ever to have drawn breath on a high street, but he doesn’t seem to hang around in one place long enough for us to establish that beyond any reasonable doubt. After running Burton, he joined catalogue-retailer Argos, where his contribution was to oversee its failure to resist a hostile takeover from Great Universal Stores. From there he went off to Booker, which he threw enthusiastically into the embrace of Iceland, and now he makes the full-circle return to Arcadia.
As I say, this new – or old – job at Arcadia might fit Rose like the perfectly-tailored Burton suits that he used to wear. But, on the evidence of a resumé that has as much to do with travel as it does with shopping, we can rightly assume that any number of senior personnel could have taken Hoerner’s place. A Rose by any other name may, as it were, have smelled as sweet to Arcadia’s shareholders.
But that’s the way of the modern business world. Top people do deals – running things is just so 20th century. I must be at an age when it’s okay to be old-fashioned, so let me say this: I believe that a reputation based on an executive’s ability to run a company is high streets ahead of one who does deals. It’s the difference between a retail-business brain that spends its time in the shops and the sort that lounges in the offices of merchant bankers and venture capitalists.
I’m not being too much of an old buffer here. I’m not harking back to an imaginary golden age, when families ran chains such as J Sainsbury. Nor do I think that, in the time that before Marks & Spencer became such a retail basket case, Sir Rick Greenbury’s work as man and boy for well over 40 years for the company was the principal impetus behind its former glories.
Just in case anyone misses the point: Executives who chase the next deal and share option package are not a conspicuous improvement over the old retail careerists.
Roger Holmes, for example, recently quit Kingfisher after being lured by a handsome package as chief executive of M&S, a move which obliged Kingfisher chairman Sir Geoff Mulcahy to delay his demerger strategy for Woolworths and Superdrug.
After running things at Asda and Wal-Mart, Allan Leighton talks of “going plural” with a portfolio of interests from dot-coms to the chairmanship of BhS. This multiplicity of roles – either concurrently like Leighton’s or sequentially like Rose’s – may be good news for the individuals concerned, but it isn’t for the retail industry.
Research from Verdict predicts a poor Christmas for the fashion retail trade, and suggests that we are losing a talent at shop level for attracting customers. But can we really be surprised when so many of our top retailers seem to be spending more time in the company of City dealmakers and head-hunters than with their shop managers?
George Pitcher is a partner of issue management consultancy Luther Pendragon