Strategic Clarity in CPG & Retail Leadership

Discussion with Paul Gerner

Consumer packaged goods (CPG) and retail companies face a challenging path to achieving sustainable growth and profitability. Paul Gerner brings decades of leadership experience and a proven track record of success to this complex landscape. Starting as a Marine Corps officer, Gerner honed a disciplined approach to problem-solving before transitioning to transformative roles at Nestlé and H-E-B. This conversation delves into the pressing issues facing CPG and retail companies, offering actionable strategies for overcoming challenges such as cost management, cultural alignment, and supply chain optimization. Drawing from his extensive experience, Gerner emphasizes a comprehensive approach that balances short-term gains with long-term success, providing executives with insights to thrive in a rapidly evolving marketplace.

Balancing Cost Management and Profitability in Retail

Retailers face perennial pressure to manage costs and achieve profitability, particularly in the food and drug sectors where margins are razor-thin. Gerner emphasizes that effective cost management must align with strategic investment priorities. “Managing costs, knowing how to invest, and ensuring a quick return on investment is a critical challenge”, he explains.

A major shift in retail has been the integration of e-commerce alongside traditional brick-and-mortar operations. However, achieving profitability in e-commerce remains elusive for many. “Pure e-commerce players often struggle with net profitability despite ample investment capital”, says Gerner. Among delivery models, curbside pickup emerges as a relatively viable option, yet it still struggles to turn a profit.

Labor also presents a significant challenge. Retail labor is predominantly hourly, and retaining quality employees in a demanding work environment is increasingly difficult. As Gerner notes, “Retail is not always the first choice for many workers, making it crucial to create a positive experience to attract and retain talent”.

Understanding Company Culture to Drive Operational Excellence

One of Gerner’s core strategies when consulting for CPG or retail clients is to begin with an in-depth analysis of company culture. “You have to ask, where is the power in the organization?” he advises. Understanding how culture, priorities, and strategies align with business objectives is critical. Often, there is a disconnect between stated goals and the actual activities consuming employees’ time, which can lead to inefficiencies and missed opportunities for growth.

Employee loyalty, leadership openness, and accountability are key cultural elements Gerner evaluates. He emphasizes the importance of leadership fostering an environment where feedback is encouraged and acted upon. He recalls a mentor who exemplified great leadership: “He was the smartest human being I’ve ever known, yet he was always more concerned about what he didn’t know. That curiosity fostered a culture of empowerment and continuous improvement”. Such a culture not only boosts employee morale but also drives innovation and collaboration across teams.

For organizations to succeed, leaders must cultivate a culture where employees feel valued and aligned with the company’s mission. This involves clear communication of goals, recognition of achievements, and an unwavering focus on removing barriers to employee success. “A culture misaligned with objectives is a quick recipe for compromised business results”, he warns, underscoring the direct link between cultural health and organizational performance.

Achieving Quick Wins While Focusing on Long-Term Goals

Balancing immediate operational fixes with long-term improvements requires thoughtful planning and execution. Gerner emphasizes the critical need for strategic alignment throughout the organization. “Many senior leaders believe their strategies are understood, but too often they get lost in translation”, he observes. Miscommunication or misalignment can lead to inefficiencies that hinder both short-term objectives and future growth potential.

To address this, Gerner recommends focusing on financial priorities that align with broader business goals rather than becoming bogged down in overly granular details. Striking a balance between operational efficiency and customer-centric strategies is key. Ensuring that customer needs remain at the forefront while maintaining cost efficiency can drive both immediate and sustainable success.

Additionally, fostering open communication across all organizational levels is crucial. “Conversations with frontline employees can reveal whether strategic goals resonate throughout the company”, Gerner explains. Such interactions not only help identify gaps in understanding but also cultivate a sense of shared purpose. This ensures that short-term fixes are not isolated measures, but rather integral steps toward achieving cohesive, long-term objectives.

Optimizing Supply Chain Operations for Scalability

Supply chain optimization is a cornerstone of scalability for CPG and retail companies, where the stakes are high and the margins tight. “While supply chain costs must be controlled, the ultimate priority must be serving the end customer”, Gerner advises. Companies should focus on identifying three to four critical metrics—such as on-time delivery, cost per unit, and productivity metrics—and pursue them with unwavering dedication. These metrics form the backbone of efficient supply chain management and directly impact customer satisfaction and operational efficiency.

Gerner underscores the importance of clarity and alignment around these metrics. “From the top executives to the warehouse staff, everyone should know and prioritize these key metrics”, he asserts. Such cohesion ensures that decision-making is consistent across all levels and that every stakeholder understands how their role contributes to the larger goals. Establishing cause-and-effect relationships between decisions and outcomes further strengthens this alignment, enabling companies to make data-driven adjustments that enhance supply chain performance.

Achieving scalability also requires a proactive approach to challenges. Gerner suggests that companies regularly evaluate their supply chain frameworks to identify bottlenecks and inefficiencies. By leveraging cross-functional collaboration and innovative practices, businesses can create more adaptable and resilient systems. This iterative process not only improves cost efficiency but also enhances the ability to scale operations seamlessly in response to market demands.

Leveraging Data and Technology to Transform Operations

Data integrity and accessibility are foundational to operational success. However, barriers such as data overload and misaligned metrics can hinder progress. “Too often, decision-makers suffer from analysis paralysis”, says Gerner. The solution lies in focusing on the most critical metrics and ensuring that decision-makers at all levels have access to reliable data.

When integrating new technologies like AI and ERP systems, companies must adhere to timeless principles. “Technology should serve business objectives, not the other way around”, he emphasizes. Ensuring end-user relevance, aligning with business goals, and maintaining centralized development, are crucial for successful implementation.

Moreover, Gerner highlights the importance of fostering technological adoption across the organization. Companies must provide adequate training and resources to empower employees to leverage these tools effectively. This includes establishing feedback loops to ensure the technology continues to meet business needs and adapts to evolving challenges. By embedding technology as an enabler rather than a standalone solution, organizations can unlock new efficiencies and drive sustainable growth.

Operational improvements must transcend paper plans to become ingrained in a company’s fabric. Gerner underscores the importance of leadership in driving these changes: “Good leaders are servants to their people, ensuring alignment from frontline employees to senior executives”.

He advocates for a culture of continuous improvement and entrepreneurship, driven by leaders who understand the challenges at every organizational level. “People don’t care how much you know, until they know how much you care”, he reflects, highlighting the human element in organizational success.

Leadership also plays a pivotal role in maintaining momentum for change. By setting clear expectations, celebrating achievements, and addressing resistance proactively, leaders can ensure that improvements are embraced throughout the organization. This fosters a culture where innovation thrives, and operational excellence becomes a shared commitment.

Key Takeaways for Executives

Reflecting on his extensive experience, Gerner offers three guiding principles for executives:

These timeless principles, coupled with Gerner’s operational strategies, provide a blueprint for navigating the evolving challenges of the CPG and retail industries. For executives aiming to scale sustainably, the key lies in aligning culture, strategy, and execution with unwavering clarity and purpose.