Bern — Nestlé’s new chair, Pablo Isla, helped to turn Zara owner Inditex into a world-leading fast-fashion retailer and can now use his expertise in logistics, e-commerce and consumer trends to try to revitalise the Swiss food company.
His jump from dresses and jeans to coffee and KitKats does not seem an obvious move, but Isla’s track record at Zara of speedy product launches, appealing to younger consumers and digital know-how stands him in good stead for the challenge, Nestlé investors and a source at the company told Reuters.
The 61-year-old Spaniard, who spent 17 years at Inditex as CEO and executive chair, will take up his role at Nestlé half a year ahead of schedule on October 1, the company said on Tuesday, replacing Nestlé veteran Paul Bulcke.
Firing
The decision comes just over two weeks after Laurent Freixe was fired as CEO over an undisclosed relationship with a subordinate, and amid rising investor pressure over declining sales and profit.
Investors are looking to Isla — the first Nestlé chair in 25 years to come from outside the company — to initiate rapid change, alongside newly appointed CEO Philipp Navratil, who previously led Nespresso.
“Philipp Navratil together with Pablo Isla bring expertise to drive the digital agenda of Nestlé,” a person close to Isla told Reuters.
“Pablo was involved in bringing the digital and shop world together at Inditex and this expertise will drive Nestlé’s digital efforts in future,” the person said, adding that Isla was impressed with Nespresso’s digital capabilities.
At Inditex, Isla drove rapid global expansion, lifting sales from €6.7bn in 2005 to €27.7bn in 2021 and boosting the Spanish company’s share price eight-fold.
Nestlé’s shares are trading at their lowest since end-2016 and have underperformed rivals Unilever and Danone. While Nestlé shares have lost 33% over the past three years, Unilever has gained 15% and Danone stock is 52% higher.
Retail experience
When Isla joined the board in 2018, Nestlé highlighted his extensive retail experience, with expertise in e-commerce and innovative supply chain models. At Inditex, Isla opened thousands of stores worldwide and rolled out new technologies to streamline its logistics and bring products into stores more quickly, a competitive advantage for a fast-fashion business.
One major innovation was integrating radio frequency identification tags in each garment, enabling the business to track in real time what was selling well, to see what sizes and styles were running low, and to fulfil online orders directly from stores.
His legacy was integrated digital and physical channels that helped Zara gain from consumers’ shift towards online shopping, and a supply chain so efficient that Inditex investors call it a logistics company masquerading as a retailer.
Nestlé has been making progress with e-commerce in the past few years, a trend that is expected to continue with Isla’s appointment.
The Nestlé source said the company aims to use AI to improve its supply chain, sales and production.
A Nestlé spokesperson said the company “has more than doubled the percentage of sales from online in the last five years … Nestlé now achieves 20.2% of total sales from online, ahead of most key competitors.”
Hands-on
Isla’s track record makes him a strong fit as Nestlé chair, said Guido Stein, who teaches corporate leadership at the IESE business school in Madrid, who anticipates Isla will be a fairly hands-on “executive” chair. “He has a personal style that translates into leadership skills, as he is friendly, demanding and kind. And he leaves room for his colleagues to grow and do their work,” Stein said.
Isla, named the world’s best CEO by the Harvard Business Review in 2017 and 2018, is also no stranger to navigating complex management dynamics. At Inditex, Isla took over as chair in 2011 from founder and owner Amancio Ortega, and then passed the position on to Ortega’s daughter Marta in 2022.
At Nestlé, he may have more freedom to make the radical changes investors have said are needed, including restructuring and shedding noncore brands.
In his first public comments since taking over as CEO earlier this month, Navratil said on Thursday he wants the Swiss food company to move fast and be open to fresh ideas.
Isla’s experience as a CEO will help him to guide Navratil, the Nestlé source said. “It’s good when the chair knows what the CEO job involves. I imagine there could be a little bit of mentoring and coaching using the chair as a sounding board, but Navratil will also have the expertise of the rest of the executive board.”
Reuters
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