The Evolving Role of the Merchant

Merchants were once the only critical players in the retail industry. Their ability to drive the business by understanding the customer and predicting customer behavior made them invaluable to their organizations. However, now that “omnichannel” retailing is the new reality, the merchant’s role is rapidly changing. A merchant must now also be able to absorb enhanced analytics and work even more closely with design and marketing applications to understand and adapt to trends that satisfy quickly changing customer tastes.

Executives and HR leaders at retail companies are now asking themselves, "What does it mean to be a strong merchant, and how we can ensure that we retain and develop top merchants into future leaders?" Until recently, most retail CEOs or CHROs thought that augmenting a merchant’s skill set with leadership training was sufficient. Through informal programs — e.g., internal mentoring, coaching, etc. — they helped their merchants develop the capabilities necessary to lead a team of people.

However, in a rapidly transforming retail market, simply leading a team is no longer enough. Now, a merchant must embody a number of additional mission-critical competencies:

• Actively developing future talent: Since the retail industry is evolving so rapidly, retailers must be constantly prepared for change and upheaval. As a result, retailers are increasingly focused on cultivating a pipeline of up-and-coming leaders while simultaneously recruiting proven industry superstars. The goal is to have a deep bench of talent that can manage the business as it is and transform it from within. To achieve this, merchants must be prepared to retain and develop teams — not simply oversee them.
• A more complex understanding of the customer: Until recently, a merchant’s success was based on his or her ability to forecast trends, select or develop products, and profitably manage a business. These responsibilities obviously required a clear understanding of the customer. However, understanding the customer has become exponentially more complex in recent times. Merchants must now evaluate data analytics, patterns in online shopping behavior, and fluid pop culture and entertainment trends. They must also gauge the impact of macroeconomic conditions on consumption habits. Then merchants must integrate all of these data points with their own customer experience to make the most impactful business decisions that affect company direction.
• Multidisciplinary experience: A key merchant, in order to become a successful future leader, must now have experience in at least one or more related but separate disciplines (e.g., e-commerce, marketing, design, systems and planning). They must also leverage this experience in order to collaborate cross-departmentally, particularly with the marketing and design teams.

The changing nature of the merchant role calls for a re-evaluation of the criteria for recruiting and assessing merchants. Assessing the nonmerchandising abilities of a senior merchant is just as important as understanding customer tastes and moods. When assessing potential merchants, companies should be prepared to gauge the following:

• experience outside of merchandising;
• understanding of branding, marketing and customer analytics, and newly developed technology that tracks customer behavior;
• ability to work with multiple, inter-related customer profiles (as opposed to a single customer profile); and
• ability to influence other parts of the organization (e.g., marketing, customer experience and strategic planning)

As a result of these market developments — a transformed retail market, a redefined merchant role and new criteria for assessing that role — skilled merchants are in high demand and recruiting them requires far more time and resources than in the past. Many companies have developed hybrid recruiting strategies, using search partners for longer-term external merchant recruitment and relying on in-house teams to identify internal high-potential talent. This strategic partnership is the most efficient way to ensure that both of these critical initiatives are proactively managed.

Frederick Lamster is Partner at executive search firm Battalia Winston.