The retail industry is currently navigating a profound transformation as it races to respond to growing consumer power and ongoing technological breakthroughs.
America@250, a multiyear research initiative and national dialogue launched by A.T. Kearney, looks ahead to what America may be like in 2026, when the nation will celebrate its 250th birthday. This ongoing inquiry includes Retail@250, a study of the immediate future of retail. In partnership with The Wall Street Journal, the NPD Group and The Robin Report, we’re interviewing dozens of current and former CEOs across retail sectors, as well as consumers, academics, economists and more.
The goal of Retail@250 is two-fold:
- Clarify what’s driving the most significant changes unfolding in our industry.
- Surface useful, applicable insights into how winners will prepare for Retail@250.
For The Children’s Place, the most recent Q4 was a strong validation of the company’s multi-faceted turnaround, with a seven percent increase in Q4 revenues and an increase in EPS guidance that the company pre-announced in January, ahead of the ICR conference. This was a clear affirmation of the five-year plan that CEO Jane Elfers launched shortly after taking charge in 2010. The Q4 results posted by The Children’s Place are even more impressive in light of the difficult holiday season most retailers experienced. Investors are reaping the benefit of the strategy with the company’s stock up over 17 percent this year alone, while the majority of specialty retail has been in the red.
Despite her admirable track record, Jane shows no signs of complacency. Her focus is clearly on the future. We began with a topic that is among the most crucial, in Jane’s opinion: How to lead and manage in the digital age. “I think there will always be this constant change.
I’m sure you will devote a large part of your study to omnichannel retail and digital disruption, and how that’s going to change the face of shopping. I’ve been thinking a lot about that. And when I think about what’s going to be most different in 2026, I go immediately to the people side. I have such a strong belief that part of the reason retail has struggled so much, and continues to struggle, is the talent aspect of it. There aren’t enough young, smart, motivated and energized people coming into our industry.”
Being based in San Francisco, I (Michael Dart) could immediately relate to the gravitational pull of the technology world and the romantic notion that your start-up that could suddenly go “Gangnam Style” and be a big hit around the world – even if the business model itself had no more staying power than the song. Traditional retailers have struggled to attract and retain younger, technologically savvy employees and provide them with cogent career paths. The challenge will increase as more companies embark upon major technological investments. Recent studies show that the average time of an IT project has slowed in the last five years, from taking eight months to complete to now nearly 10 months.
Leaders of Tomorrow
“What makes me happy about what could be the scenario in 2026 is this technological revolution and disruption may finally break the traditional mindset of retail, the old paradigm, that hinders our industry’s ability to achieve,” Jane observed. “We need to get younger people into management positions now. It’s not going to be the merchant prince and princess who lead this industry into the future. Merchants are still vitally important and product will ultimately define success for any retailer, but it’s going to be the strategist, it’s going to be the marketer, it’s going to be the omnichannel brander who understands how to operate across all these channels who will be the leaders of tomorrow. We are working very hard to attract a younger generation who understand this.”
An obvious implication from Jane’s comment is that an industry that has typically not been very diverse in attracting talent will have to change. The classes we teach on retail in business schools will need to evolve. And the metrics and management practices inside organizations will need to be redefined.
Jane stressed how important it is to “…understand the need to drive innovation and youth and excitement. If you didn’t grow up like they are, then you don’t know how they shop. So if you don’t know how to shape the culture of your company into one that embraces and nurtures young talent, then you are not going to be here in 2026. You can read the latest articles. You can talk to lots of technologically savvy people. They will all tell you that this generation doesn’t have the patience to wait for a retailer’s technology to catch up to them. They have too many other choices. They move on.”
Maybe the biggest realization that came from our conversation with Jane is that when it comes understanding everything digital, the new technologies streaming forward on a daily basis, and allowing disruptive ideas to grow, retailers cannot succeed by driving it all from the top down. “Parents have always said kids today are different, but this time it’s true,” Jane said. “The parallel to retail is: Parents don’t know their kids’ digital world, and the old guard doesn’t know the new customer’s world or what she’s up to.”
Going forward, CEOs will need to let go of the idea that they can control everything, because the new generation has a different experience base and its own relationship to technology. “For example, from my personal history and my knowledge base, I can’t create an omnichannel experience for a 28-year-old mom shopping in The Children’s Place by myself,” Jane noted. “I don’t know what digital experience is best for her. I’m not from her world. No matter how much I go to school on that, I’m not going to be the best person in our organization to architect that journey. Five years from now, our mom is going to be exponentially more tech-driven.”
We pushed on the ability of companies to manage the change, and questioned whether these changes were truly necessary in a world where technology-related ideas often have no solid fundamental economic grounding. Jane never wavered. She expressed certainty that, for retailers to succeed, there is no choice but to embrace and aggressively manage the technology wave. “To me, a positive about technology is that while it’s often a mystery to those of us who didn’t grow up immersed in it, it’s still very understandable and very measurable. There are so many valuable metrics. Still, as with merchandising or planning and allocation, you need to know how to bundle it. For example, our customer is a young mom. We know how she is shopping. We know when and how she uses her mobile devices. So we can synthesize a lot of facts and information and make a solid business case that, for example, we need to invest X million dollars on mobile architecture over the next few years.
“But if you don’t have someone in your C-suite who’s pushing the edge, if you don’t even have anyone in your marketing staff who is under 25, and if there’s no one on your board who grasps this, then you’re going to stagnate,” Jane warned. “You’ll just have a bunch of people who can’t put it all together. They hear the words, but they don’t necessarily understand how to make it come alive.”
Chief Transformation Officer
We then asked how The Children’s Place is working to clear these hurdles, and were intrigued by Jane’s reply. “We created a new position, Chief Transformation Officer, three years ago and brought in an executive who was from retail. He has a strong background in planning and allocation and technology, but he also has a very strong understanding of the whole business—a true 360-degree view. We have also completely turned over our IT executive team over the past five years. We now have a very strong group with deep digital backgrounds who actively work with the business to solve the technology issues we are all facing today. When it comes to merchandising or SG&A, we know how to control and manage it. But when it comes to how we architect our change paradigm, I’m not going to try to own and control it. Having a strong team who is not only connected and current with the latest technology, but also understands the business and is willing and allowed to take risks and fail and continue to experiment, that is critical to our future success.”
Why would a highly successful, mainstream retail company create a new role with the title Chief Transformation Officer? “By 2026 the digital transformation is going to fundamentally disrupt the characteristics of what makes a good retailer,” Jane explained. “The industry is undergoing a big shakeup, and the executive world has to do more than evolve. It has to blow up in some way. Retailers need to focus on getting more young people, more women, and more diversity into their companies now to help them understand how to better navigate the future, and how to make better decisions around the new digital paradigm.”
The journey ahead demands plenty of fresh thinking. For example: “The head of digital marketing can’t be a traditional marketing executive. What I hear is that no one can find a fully qualified CMO anymore, because now they just don’t exist. You’re talking about Superman or Superwoman. Traditional CMOs are very knowledgeable about print media and signage, while younger marketers are solely focused on digital. You need to figure out how to carve it up. You have to split the roles between digital and traditional, because one person can’t do both. Also, retailers need to figure out where is the best place to find these elusive new digital chiefs. Amazon? Colleges? Other retailers?”
Lest anybody underestimate the obstacles in making this happen, Jane spelled it out for us. “So unless we start making these really significant disruptive jumps in power positions, in whose voices we really listen to, it’s not going to happen. It won’t happen just because you have a marketing guy tweeting. You have to fundamentally change your systems, your model. It’s a bit of a lightning rod subject. It can be polarizing. Think how long it’s taken for retailers to accept metrics and Big Data compared to other industries. Banks have been using data for decades. Think about how long it took for a lot of retailers to adopt and embrace inventory management technology and POS data, both of which are capable of generating outsized returns if used properly. There was too much pushback. ’Oh, it’s art. We’re art. We’re merchant princes.’ One can easily imagine how long it will take for some retailers to embrace the digital aspect of retailing.”
We asked Jane for a tangible example of a major industry disruption she anticipates in the coming decade. “I see the omnichannel model breaking up the traditional management structure of retail, which should alleviate some of the pressure of the hundreds and hundreds of stores with which retail is currently over-saturated. There’s simply too much stuff. Digital is going to put a bright light on those that can make it and those that can’t. It’s putting huge pressure on management by forcing rapid change. But if losing a few thousand stores by 2026 is part of the evolution, that can only be helpful.”
Are You Ready for Retail@250?
Retail@250 is part of a broader research initiative and national dialogue called America@250. Upcoming articles in our Retail@250 series will take a deeper dive into many of the key challenges ahead, including retail-specific posts focused on technology, the new consumer, social responsibility, the future of the store, the role of private equity, and supply chain of the future. Stay tuned!