Commerce Clip

Matt Nemer and Chris Nealey

The boards of directors for most of the leading US retailers and restaurant chains have a surprisingly low number of members with digital experience. For the top 100 consumer chains, we estimate that less than 10% of their boards seats are occupied by someone with broad digital, online commerce, or technology experience. In fact, 40 companies do not have a single director that specifically brings this expertise. This is a material gap in an age when digital touchpoints impacted an estimated 49 percent of total retail sales and Amazon is taking more than a third of all sales growth in the US. Is it possible that this broad lack of digital expertise at the board level has delayed the response to a shifting retail environment and the many symptoms that come with that including poor financial results and financial restructurings? Absolutely. More that twenty years after Amazon was founded, it is only just now becoming commonplace for retailers to hire a chief digital officer, or to make corporate venture capital investments. As for Amazon: 5 of the company’s 9 board members have digital experience, including Tom Alberg (Madrona Ventures), John Brown (Chief Scientist at Xerox PARC), Jonathan Rubinstein (HP, Palm, Apple), Patricia Stonesifer (Microsoft), and of course, founder Jeff Bezos.

Retail Boards Are 9.1% Digital, 90.9% Analog

The analysis: We examined the board members of the top 100 retailer and restaurant chains, including a deep dive into 858 individuals to determine if they had prior digital experience, including a prior operating role in digital or broader technology expertise. We also considered the directors to be digitally savvy if they were tenured board members at other companies that would provide that perspective. In some cases, it was obvious where the director had leadership experience at Google, Facebook, etc. In other cases, the director worked at a leading private equity or venture capital firm, putting them in frequent conversations around emerging business models. In total, 120 out of 858 directors had digital experience. Across all categories, the average board was 9.1% digitally savvy and 90.9% analog – 40 companies had 0 digitally savvy board members.

Boards with zero digital experience

The Analog Luddites

Can Grocery Adapt To Amazon / Whole Foods Without Digital Expertise?

Looking at specific retail categories, Grocery and Restaurant chains had the lowest digital representation on their boards with an average of 8% and a max of only 36%, which is ironic given Amazon’s recent acquisition of Whole Foods. Not to mention the explosion of venture investments into disruptive food businesses, including those focused on home delivery, meal kits, smart vending machines, and even pizza making robots. Specifically, three large grocery chains Giant Eagle, HEB Grocery, and Publix Supermarkets do not have any digitally native board members and have an average director age of 70 years old. On the other hand, 3 of the directors at YUM! Brands have digital experience and the average age is 59 years. This includes, Michael Cavanagh (Comcast CFO), Thomas Nelson (High Technology Group at Morgan Stanley), and Mirian Graddick-Weir (25 years at AT&T).

Food Leaderboard

Costco Clear Standout In Mass Merchant Category

The mass merchant category also doesn’t look digitally savvy with digital directors comprising only about 13% of the board, on average, surprising given the broad selection of branded products that are usually easily attainable on Amazon or other digital platforms. Laggards such as Big Lots, BJ’s Wholesale Club, Dollar Tree, Stater Bros., and SUPERVALU did not have a single board member with digital experience. In fact, Costco significantly skewed results for the overall category with 6 of their 13 board members having digital experience including directors Susan Decker (Yahoo), and Jeffrey Raikes (Microsoft). It would be fair to point out that Costco is notably late to ecommerce, although the membership club model is the original engine that powers Amazon Prime. QVC has 4 digitally experienced directors including “cable cowboy” Dr. John Malone.

Mass Merchants Leaderboard

Hardlines Retailers Lead The Retail Landscape With Digitally Experienced Boards

The hardlines category was the top overall retail subsector with around 17% of their boards comprised of directors with digital experience. Laggards such as Lowe’s, Bed Bath & Beyond, Sears, and Ace Hardware didn’t have a single board member with digital experience. On the other hand the boards at Gamestop, Advance Auto Parts and William-Sonoma have broad digital experience. Specifically, William Sonoma has director Sir Anthony Greener (previously Reed Elsevier) and Robert Lord (previously CEO of AOL Platforms) while Advanced Auto Parts boasts directors Brad Buss (QLogic Corp Director) and Fiona Dias (previously EVP of Strategy for Radial).

Hardlines Leaderboard

Softlines Boards Are A Little More Digitally Savvy Than Average

The softlines category was a little above the overall retail sector with 12% of their board members comprising of directors with digital experience. Laggards included Foot Locker, Burlington Coat Factory, and L Brands. Leaders included The Gap, and J.C. Penney. The Gap benefits from its San Francisco location with Brian Goldner (Hasbro CEO and former Tiger Electronics COO) and Dr. Bobby Martin (ran technology services for Dilliards).

Softlines Leaderboard

CVS Leads Convenience / Drug, Overall Category Is Middle Of The Pack

The convenience / drug category is roughly in line with the broader retail space, as about 10% of their boards are comprised of directors with digital experience. Laggards in the category were 7-Eleven and Rite Aid, both with no digitally-experienced directors. Drug chains CVS and Walgreens led the category with board members such as CVS’s David Dorman (Prior AT&T Corp CEO) and Mary Schapiro (NASDAQ).

Convenience / Drug Leaderboard

Source: CapIQ
1) National Retail Federation
https://nrf.com/resources/retail-library/the-state-of-retailing-online-2017-key-metrics-business-objectives-and

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