Why Retail Boards Are Choosing Less Risky CEOs

Retailers such as J.C. Penney, Target and Gap are recognizing that they’re at a crucial crossroads for their companies. As a result, boards are appointing traditional CEOs known more for their accomplishments at traditional brands, rather than recruiting leaders known for being visionaries or inclined to take creative merchandising risks.

“The selection of Marvin Ellison builds upon Penney’s need for operating effectiveness.”

All eyes are now on these organizations to see whether this new generation of CEOs—with their proven operational abilities and command of incremental improvements rather than sweeping paradigm changes—is up to the task of carrying their companies through a weak sales period.

The latest case in point is J.C. Penney. The big box retailer turned to traditional-retailing veteran Marvin Ellison—the executive vice president of U.S. stores for Home Depot—as its next CEO. After a long transition, Ellison will replace current Penney CEO Myron Ullman, who has been trying without success to stabilize and revitalize the iconic soft-goods retailer during his second tenure as chief.

“The selection of Marvin Ellison builds upon Penney’s need for operating effectiveness and Ellison’s record of operating” at Home Depot, said Joseph Pastore Jr., a Pace University business professor. “It also re-affirms the fundamental principle for performance in mass retailing: low margins/high volume based upon cost-effective, low price, nationally branded product offerings.”

The Wall Street Journal called Ellison’s recruitment part of “a broader shift in retail in which some big companies have favored detail-oriented operators over executives mainly lauded for brilliance in merchandising, as the industry faces giant new challenges in managing its supply chains and keeping customers from defecting to the web.”

Dale Buss :Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other business publications. He lives in Michigan.