Retail CEO Turnover Soars, Fewer Women in CEO Roles

Management turnover skyrocketed across all industries last year, and in retail in particular.

Next week, new CEOs will take office at both Levi Strauss and Macy's, from their current offices in other parts of the companies. But corner office turnover goes far beyond the big names.

Last year, U.S. companies announced 55% more CEO changes than in 2022, according to outplacement firm Challenger, Gray & Christmas. The 1,914 departures in 2023 set a record since the company began tracking the data in 2002. The company tracks American public companies, along with private, government and nonprofit companies that have CEO positions.

“There was a lot of reluctance among CEOs to leave their organizations in the midst of the Covid crisis,” said Andy Challenger, senior vice president at Challenger, Gray & Christmas. “Covid shook retail in a really significant way. Boards didn't want to make changes, CEOs themselves didn't want to leave. And now that that storm has passed, I think there has been a pent-up demand for people to leave. “

Challenger said the pandemic has accelerated changes in consumer preferences, forcing company boards to look for new strategies and leaders to adapt.

The retail industry in 2023 saw 52 CEO departures, its second-highest number since Challenger, Gray & Christmas began tracking them, and more than double the 21 CEO turnovers in 2022, according to company data. It fell short of the industry's record 63 CEO departures in 2019.

“Retail has probably undergone the biggest shakeup in its leadership in a long time,” Challenger said.

In Korn Ferry's separate analysis of retail CEO turnover in 2023, the executive recruiting firm found that 57% of new CEOs appointed in the industry last year were already working for the company they will lead. Of the 43% of external hires, 45% came from outside of retail, often in adjacent industries such as consumer packaged goods and hospitality.

Next week, Michelle Gass will officially take as Levi Strauss's 13th CEO in its 171-year history, and its first female CEO. She is just one of a handful of women named CEO of a major retailer in 2023.

Thirteen women vacated their retail CEO positions last year, and only five women took senior positions at companies in the sector, said John Long, retail sector leader at Korn Ferry North America.

He called the trend “surprising.”

Gass moves into senior management from her current role as president of the denim brand. Before joining Levi's in 2022, Gass served as CEO of Kohl's and was succeeded by a man, Thomas Kingsbury.

That trajectory was common for other women who took on senior positions in retail. According to Korn Ferry, four of the five incoming female retail CEOs were internal appointments.

Despite recent advances, there are far fewer women than men in CEO positions across industries. But the percentage of female CEOs is higher in all sectors than it is specifically in the retail industry.

“When we look at replacement CEOs [in all industries]”The highest percentage of new CEOs we've ever tracked were women,” Challenger said. “It's a positive number, but it's only 28%, not even close to equity.”

According to Korn Ferry, only 11% of incoming retail CEOs are women. Retail and consumer-facing businesses often come under increased scrutiny for gender disparities at the highest levels, as demographic analysis shows that the majority of consumers making retail purchases are women.

“Many of the reasons certain CEOs are chosen for their roles unfortunately have less to do with the customer, ultimately, and more to do with the mandate the company is pursuing,” Long said. “So if they're pursuing a growth mandate, or a recovery mandate, they're more likely to look for people who have that somewhere in their background.”

The tenure length of outgoing retail CEOs is also stark when broken down by gender. The average tenure of all outgoing retail CEOs last year was 6.6 years, according to Korn Ferry analysis. It was 7.7 years for men and only 3.7 years for women.

Even when removing two CEOs whose very long tenures skewed the data, the average tenure of male retail CEOs falls slightly, to 6 years, still significantly longer than the average tenure of female retail CEOs.

Some factors may explain why women have shorter tenures as retail CEOs.

One reason some experts cite for the shorter tenures of female CEOs is the “glass cliff” phenomenon. The theory suggests that women and minorities are often elevated to higher positions when circumstances are difficult, setting them up for a greater likelihood of faster failure.

“There are systemic barriers that women face. It's getting better, but it's nowhere near parity…getting to 10% of female CEOs has been a real struggle,” said Lorraine Hariton, executive director of the global nonprofit for-profit Catalyst, which works with companies to build better workplaces for women.

“Retail is a flexible industry, we know there is a lot of struggle,” Hariton said. “When organizations are struggling, they turn to a broader pool of candidates, but if you're already in a tough situation, your chance of success is much lower, especially if you're not prepared for the job.”

According to Hariton, this is part of the “glass cliff” phenomenon. The other part is that “unfortunately, unconscious biases still exist.”

“How do they perceive you? Do they give you the benefit of the doubt?” she said.

The fact that women CEOs' patience is lower could explain the shorter average tenures.

Hariton notes that women are “overcrowded” in other roles, such as general counsel, chief financial officer, human resources and marketing positions. But apparently fewer and fewer companies are grooming women for CEO positions in their succession planning.

“I look forward to the day when we don't have to talk about this,” Hariton said.