“Digital transformation” was the top reason for CEO changes, accounting for 27.4% of new hires in 2022 and up from 26.8% in 2021, according to the 2023 Nextail Fashion Talent & Trends report.
Today’s digital transformation is focused on operational efficiency and cross-organizational innovation
Not five years ago, digital transformation was largely an aspirational idea geared toward enhancing the customer experience through sexier, customer-facing innovations. Of course, the pandemic threw retail into high gear in their investments in digital transformation projects meant to bring about recovery.
According to Accenture, “Prior to the COVID-19 pandemic, digital transformation largely focused on customer experience. Then, everything changed—and accelerated. Now, digital transformation is the centerpiece of operational efficiency and innovation across the organization.”
Increasingly, fashion brands recognize the need to strengthen their digital expertise and invest in new technologies, such as machine learning and AI, to get closer to their customers, anticipate demand, and digitize decision-making for more overall operational excellence.
It’s no wonder then that the latest edition of the annual Nextail Fashion CEO Talent & Trends report found that “digital transformation” accounted for 27.4% of new hires in 2022, up from 26.8% in 2021.
Fashion companies are replacing founders as digital transformation takes priority
This new direction may be found in leaders specifically schooled in digital and analytical fields, it also means replacing legacy thinking at the head. Nextail analysis finds that a record number of founders were replaced in 2022. At least 6.3% of fashion founders were replaced last year at brands including Glossier, Eileen Fisher, Shang Xia, Frasers Group, Jacquemus, END., Joe Browns, Lively and Lyst; while Simons appointed its first CEO who is not part of the founding family.
Fashion entrepreneurs have their own struggles as investors signal they are going to be stingier about which firms they back going forward, suggests Business of Fashion. “Founders and CEOs who were masters at driving top-line growth may not be the right fit in an environment where profitability matters more,” it says.
Investors will want to back the fashion companies most primed, not only to survive, but to grow even while the future is full of uncertainties. Fashion companies are choosing leaders that fit the bill, such as incoming Under Armour CEO, Stephanie Linnartz, lauded by her new employer for previously having driven the multi-billion dollar digital transformation of Marriott.
While the tenure of outgoing fashion CEOs has traditionally been longer than that of CEOs among companies in the S&P 500 Industrial Index (8.1 years versus 4.9 years), this is possibly due to the tendency for fashion companies to be smaller, founder-led and often family-run.
As the fashion industry continues to prioritize digital growth requiring a more analytical skill set and given the uptick in the replacement of founders, tenures could begin to shorten moving forward.