9 ways to improve gender balance in the boardrooms of retailers

13 June 2016 Consultancy.uk

For decades, and still today, retailers in the UK face a lack of gender balance in boardrooms. According to a new report, the poor track record to a large extent follows from a number of common ‘excuses’ which are impeding, or slowing down, the transition to gender parity at executive levels. A shift in thinking is however much needed, not just out of ethical concerns, but also out of corporate interest. In doing so, inclusivity, empowerment and flexibility are key. 

In a bid to understand how the retail industry could bolster its gender diversity track record in its top ranks, Women in Retail, a community for executives in the industry, and Elixirr, a London-based management consultancy, joined forces to unravel the secrets that lie behind retail’s diversity gap. The study, titled ‘The commercial advantage of more women in retail’s boardroom’, found that, across the sector’s key players (FTSE 350), women are being side-lined from executive positions – only 20% of executive teams and just 10% of executive boards are women. The results are, according to the authors, staggering, in particular in light of women’s overall representation across the industry – 60% of retail’s employee base are estimated to be female. 

The trend at the top echelon of the industry is not much better from a gender parity perspective. Last year only 15% (less than 7 out of 45) of 45 retail CEO hires were women, compared to 25% in 2014 and 18% in 2013. “In retail, the dial is turning the wrong way – and it’s a long way from the centre,” says Stephen Newton, Managing Partner of Elixirr and co-author of the report. UK’s retail industry, as well as most industries, however, still outperform the international average, with a recent Strategy& analysis finding that the share of women CEOs among all CEOs of the globe’s top 2,500 corporates has hovered between 2.8% and 5.2% over the past seven years.
Women in retail boardrooms
The lack of women in the boardrooms of UK organisations comes with a cost, says Newton, because diversity leads to better business results. “And that is a fact,” adds Fiona Davis, Director at Women in Retail. A study by the Peterson Institute for International Economics and EY for instance found that when companies increased the number of women on the board from 0 to 30%, net margin increased by 6 percentage points. On a more macro scale, a report by McKinsey & Company discovered that $12 trillion could be added to global GDP by 2025 by advancing gender diversity in the workplace. 

Elixirr’s analysis paints a similar picture. Of the 70 senior executives from the 40+ UK retailers interviewed, all of them agreed that gender (as well as other forms of) diversity leads to better business results. “Like any other industry, retailers agree that gender diversity translates into better business results. More women in the boardroom means higher representation, more discussion and more diversity of thought, leading to a broader viewpoint.” The view resonates with a recent broader study by Korn Ferry Hay Group among 55,000 managers, which found that female leaders systematically rate higher on emotional intelligence competencies, a feat which according to the US researchers builds an “evident case” for a more mixed-leadership. 

Walking the talk?
Despite the importance placed on diversity, retailers are failing to walk the talk. “They are not living up, there is a clear gap between ambition and reality,” reflects Newton. 72% of the surveyed leaders felt that their company is still not doing enough to ensure gender balance inside their own companies. Differences emerge within the landscape: 100% of grocers stated their companies are not doing enough, while ‘only’ 44% of their fashion counterparts (and 57% of other sectors), felt the same way. Furthermore, everyone agreed that more can, and should, be done.

Top career influencing factors

To gain insight in how retailers could advance the career opportunities of women in retail, the authors asked the interviewees to rate how much different factors had helped them progress in their own career. Both genders agreed on the most important career influencing factors: experience and expertise. But, genders in some cases diverge in their views. Women, for instance, rated experience and expertise as more important than men. “It’s widely acknowledged that women will put themselves forward for a new position only when they are confident they can do at least 80% of the role, whereas men will put up their hands if they think they can do 20%,” comments Davis.

The second most important attribute is considered to be sponsorship from senior leaders, with both genders relatively in sync on the importance they attach to the factor. The largest gaps in perception between the genders are visible in the luck and inclusion categories. Men rated luck as being equally important to sponsorship from senior leaders. For women, sponsorship was much more important than luck.

Nine recommendations for gender parity in retail boardrooms
On the back of these, and other insights, Women in Retail and Elixirr developed a set of recommendation which, in their eyes, are needed to advance gender diversity in retail’s management ranks and nurture an environment which embeds gender parity principles across the industry and organisations. “Retailers can no longer afford to be passive on the topic of gender balance in the boardroom. It’s not just a gender issue, it’s a commercial one,” highlights Newton.

Inclusivity is the first big step which needs to be taken. “Retailers must make a deliberate decision to have a gender-balanced boardroom,” says Davis. This implies that they, among others, must commit to drafting a diversity agenda, and once they enter into the execution phase, always consider female candidates when recruiting and promoting into executive positions. The authors however are weary of the introduction of quotas – “we do not advocate quotas as we don’t want to see tokenism” – yet do highlight the importance of results-based management. “We all know that what gets measured gets tracked and gets done, so retail leaders should set gender balance targets, and continuously measure and report on them,” explains Newton. The role of an ‘Executive owner’ is a next step, a move which ensures ownership and accountability are taken care of.

9 ways to improve gender balance of executives in retail

Achieving a culture of inclusivity at the top will subsequently pave the way for empowerment and flexibility, the two other main components of their recommendation agenda. “Empowerment is all about supporting women on their career journey and removing obstacles along the way”, states Davis. Mentorship, sponsorship and coaching are regarded as well-established pillars that provide the fundament to the change, yet more will need to be done. “Talent programmes need to be inclusive from the outset, and the definition of leadership needs to be based on an unbiased profile. It should be inclusive – one that is heavily weighted on skills, mindsets and strengths, rather than experience alone,” says Davis.

Although not specific to retail, the authors find that the industry is particularly vulnerable to losing women at the ranks between middle management and the first layer of senior management, mainly as the phase coincides with the child bearing age. The sector also still struggles with flexible working conditions and more tailor made performance management systems which accommodate different phases of women’s career, and personal, aspirations. “It is clear that more can be done.” Among the recommendations put forward are the need to design jobs for a 24/7 world, focussing on outputs, not hours, and implementing more adaptable operating models.

Reflecting on the report, Newton says Elixirr and Women in Retail aim at pinpointing improvement areas and invoking positive action in the wider retail landscape. He concludes: “Only together can industry turn the gender balance dial not just in the right direction, but get it to that centre spot. And as their employees and customers are predominantly female, we believe that retail is uniquely positioned to lead the way.”


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Consumer goods start-ups grow interest from venture capital

23 April 2019 Consultancy.uk

Funding the latest consumer goods start-up has been a real money-spinner for venture capitalist firms, with a number of $1 billion companies – or unicorns – having emerged in the space in recent years. New analysis has explored the resulting corporate consumer products activity in the acquisitions space.

Consumer products have enjoyed years of strong growth as new markets opened in developing Asia. China in particular has enjoyed strong growth across a range of consumer good types as the country’s middle class expanded. Private equity firms have been keen to pick up targets in the space as they expand their portfolios to include additional local capacity as well as customers in new markets.

As a result, a study from Bain & Company has found that interest from PE firms in the consumer product space grew sharply in 2018, hitting 6.1% of all invested capital for the year, and making it the third most sought-after category. It is now only behind financial services (23.9%) and advanced manufacturing and services (13.9%).

Corporate venture capital investment

The ‘M&A in Disruption: 2018 in Review’ research found that growth in the segment reflects key changes in the segment as a whole. This is particularly true of insurgent brands, which often leverage local expertise in order to take on international giants in domestic markets.

Short change

The market changes have led to shifts in motivations for consumer goods company investments from PE firms. The number of strategic investments stood at 50% in 2015 compared to deals that increased scope. This has shifted significantly, with 34% of deals focused on strategic outcomes in 2018 compared to 66% for scope. The move towards scope reflects companies seeking out fast-growing products that enable stronger revenue growth streams.

Acceleration in scope-oriented M&A in consumer products

However, there were other motivations for deal activity in the space. Activist investors have put pressure on companies to expand their portfolios in recent years, with the trend expanding from just US targets to Europe.

Further trends

The other key shift in the space regards outbound deal activity. The study found that outbound deal activity has increased significantly in the Americas (up 363%) with total deal volume up only slightly (15%). Key deals included Coca-Cola and Costa, Procter & Gamble and Merck’s consumer health unit, and PepsiCo and SodaStream. In the Asia-Pacific region, outbound deal activity rose 195% while total deal activity fell sharply, by -36%. The EMEA region saw both a sharp decline in outbound deal activity, at -68%, as well as lower overall deal activity, which fell by 32%.

Cross-regional deal making

Deal-making in the current environment is increasingly fraught with uncertainties, as business models change on the back of new technologies, new consumer sentiments and wider market changes from new entrants. As such, acquisitions are increasingly useful as possible hedges on changes in market direction. As such, companies are increasingly pressed to take a future-back position, making sure to incorporate a vision of how the company needs to look in five years into acquisition strategy.

The firm notes that certain acquisitions which enhance a remembrance of a nobler mission, revive a sense of entrepreneurialism and engage directly with consumers may be necessary qualities in acquisitions that transform a company to fit market expectations in the coming decade. While going forward, focus on innovation, partnering with retail winners, reducing cost base and constantly reallocating scare resources will be necessary to protect market share in areas where insurgent local and strategic competitors are active.

Related: Private equity asset growth top priority for 2018.