With the opening up of organized retail in India on a huge scale, the corporate India and the global giants are vying with each other for a sizeable pie. The retail boom is likely to accelerate the growth of many other sectors as well. Notwithstanding some stumbling blocks the retail industry is poised to follow the IT industry route by generating more jobs.
India’s retail industry has come of age. The buzzing activities in the retail sphere has put India on the radar of global giants The booming retail sector has emerged as the fastest growing sector in the recent years following IT industry which put India on the international map and showcasing India’s prowess in technology. But unlike the IT boom which touched upon millions of India’s educated mass, the retail boom is likely to impact the common man in one way or other.
With the Indian retail industry undergoing a major paradigm shift, the mood over the retail industry is upbeat. According to a report titled ‘Retailing in India: The Emerging Revolution’ by McKinsey, the retailing industry in India is likely to grow to around US $ 350 billion by 2010. With the organized retail segment growing at a phenomenal rate of 25-30 per cent annually, revenues from the sector are expected to triple from the current US$ 7.7 billion to US$ 24 billion by 2010. Organized retail market boom is expected to create huge employment opportunities.
India’s consumer class has also evolved. The international exposure, rising affluence levels of life style and the availability of wider range of international brands are some of the factors that are driving the retail in India. Today Indians are exposed to a new kind of shopping experience with the proliferation of malls, multiplexes, and hypermarkets. Truly the whole concept of shopping has been redefined. With the rapid transformation even the neighbourhood grocery stores are getting upgraded as a supermarket. The concept of hyper markets and the supermarkets have gained momentum.
With India Inc. attracting global giants through local partnerships, it is estimated that the doors will be open for over 2 million employment opportunities across the country by 2010. “The boom spells immense potential in terms of business as well as career opportunities. The sector is all set towitness a growing amount of professionalism and improved management”, says Pattabhi Rama Rao, President, Australian Foods India Pvt. Ltd., makers of Cookieman branded fresh baked Australian cookies. Currently the company is operating in 10 major cities in India and proposes to launch in 4 more cities shortly.
Acknowledging the growth, Jamaluddin Khiljee, General Manager -Human Resource & Administration, Odyssey India Ltd, says, “This is just the beginning. Since such an exponential growth has happened in a very small time frame, the industry is still evolving in terms of establishing norms and systems”. Today Odyssey, predominately a book store, also has a vast collection of gifts, toys, music and other stationery goods, operates through 17 stores in 10 cities.
The trend is not only visible in urban up-markets, even the rural areas are witnessing a boom. All the major business houses are vying for a pie formulating strategies with significant investments. It is estimated that the India’s industry leaders, the Tatas, the Birlas, the Ambanis, the Godrejs, the Bhartis, the Mahindras, the Biyanis, the Wadias and a horde of others business conglomerates like ITC are likely to pump in close to Rs. 1 lakh crore in the business of retail over the next five years. As a consequence of such huge investments a host of retail-related activities such as cold chains, food processing, retail supply logistics, warehousing, sourcing and merchandising and many other sectors like infrastructure, real estate, banking, tourism and IT are also likely to benefit immensely. The impact would result in accelerating the overall economic growth.
But some players are not looking at the opportunity entirely as a boon. While some of them are in a state of dilemma others are skeptic. Says R.Kiron, Managing Director, Hi-Style, “The industry has undergone a sea change. But players like us are caught in the swirl and contemplating whether to surge ahead or remain stay-put. We would like to tread a middle path”. The Chennai based MBO which operates 6 stores in Chennai has planned to add another 6 by 2008. But R. Aravind, Managing Director, Naidu Hall, the 65 year old Chennai based textile showroom which has evolved over the years as a reputed MBO, is not at all convinced about the ongoing boom. Aravind says candidly, “The boom is not real and couple of bigwigs in the market is creating an artificial boom. The big wigs are claiming it as 1,00,000 cr market rather than pumping their money they choosing franchisee route”. Though sounding not to be swayed by the boom, Naidu Hall is gearing up to open another 40 stores, all within Tamil Nadu, by 2010. Naidu Hall currently operates 8 stores in Tamil Nadu with 6 of them functioning in Chennai alone.
Traditionally the Indian retail sector is dominated by sole proprietorship which is run on old values and principles of business. Most of the established businesses are governed by people who inherit these businesses. Now that perception is changing, albeit for good. As the business transition takes place, the intense competition has forced the proprietors to realise the need for effective management. The retail boom is likely to accelerate the growth of many other sectors like economic growth, exports, education, IT industry, food processing, infrastructure, real estate, logistics, banking, tourism, agriculture, merchandising and management. To substantiate the boom we need skilled people. “The emergence of retail sector has given various new options to consider as a career and the job market is hugely receptive to this growth. Sales and operations are the areas that have the potential to recruit the most number of people”, points out Pattabhi Rama Rao.
The big wigs have already started thinking making big. Not only the companies have commenced the head hunt, some of them are also in the process of roping in overseas talent to beef up its management capabilities on par with the western companies. The role of an HR organization does not end with a mere recruiting process. With the international participation the movement of people across nations the cultural differences in matters like language and etiquette are a cause of concern for the HR organization. This is an area where the expertise of an HR organisation comes in handy as they have to enhance their services with a focused delivery. They must build strategies and adopt practices that are aimed at creating an ambience that attracts people and make them stay with the organisation.
“Increased business opportunities are being translated into increased employment opportunities as well. Job functions and job roles need to be reviewed and adjusted regularly in accordance with constantly evolving business models,” says Jamaluddin Khiljee. He adds that while majority of manpower requirements are at the shop floor operations, there is a great demand for senior management personnel for strategic roles.
But small and medium sized players are not all that gaga about the employment opportunities thrown open to thousands. For them boom has only escalated the costs. Says Kiron,” The investments have gone up almost three times in the last couple of years in terms of salaries, rental and other infrastructure”. “In the name of the boom the investments cost have gone up many folds and banks and financial institutes have also increased the interest rates. Many shopkeepers are paying through their nose, asserts Aravind. He adds that as far as the salaries are concerned people with MNCs background demand more salaries and their expectations are more and beyond the realties of a small and medium sized players. While there is no dearth of people in the lower and middle level, many organizations are struggling to get qualified senior management people. Admitting the trend Kiron says “As it requires lot of planning and analyzing capabilities only experienced people can handle, so poaching is inevitable”.
Riding on the retail boom a number of ancillary sectors are emerging fast to support the retail boom. Training is one such industry. In today’s context eventhe training methods have evolved. The training needs of the modern days revolve around not only to learn the job perfectly but to identifying the needs of organization and grow along with it. The training and development activities should empower the employees to understand the business philosophy of the organization and empowered to handle the challenges ahead.
The new challenges of the retail boom has forced the HR managers to reassess their roles in the organizations and chalk out new plans in order to enable an organisation fit to take on the ruthless challenges of hectic competition. HR companies are gearing up to expand their portfolio of services to meet the demand. Since the knowledge and experience of employees would be the core assets of organisations, the search for people with the proper experience would be the primary focus of HR people. HR people must adopt a balancing approach between talent and performance. Identifying the right talent alone will not serve the purpose. The key lies in the abilities of HR to manage the performances of the employees to optimum. Says Pattabhi Rama Rao, “At present India is facing a shortage in skilled personnel but adequate training within the organizations can solve this problem. Overall HR planning and management in the retail sector is going to be a challenge”.
Non-availability of trained manpower is definitely a barrier towards growth of the sector. But a number of institutes, recognising the needs of the retailers, have begun offering specialised courses in the various aspects of retailing. Several business schools have embarked on retail management to suit the future needs of this sector. “ With more business schools focusing on the sector and large retailers setting up retailing academies, the retail sector is soon going to be challenging the IT services sector for the best of class recruits” asserts Pattabhi Rama Rao.
The boom has also opened the gates of employment opportunities for thousands of unskilled labourers. While skill enhancements are happening at the potential employee level, especially in the middle and senior level, the same can not be said about the unskilled labour class. Traditionally the employment opportunities for the unskilled work force remains unorganized, especially in the retail sector it is very apparent. Factors like low wages and lack of proper training have always ended in high turnover.
But with the boom in full swing and competition heating up for all corners the retail companies can not afford to remain complacent. The growing demands of the retail sector require the salesperson to interact with customers constantly and it has been proved that service to the customers is the single most crucial factor that determines the success of a retailer. Jamaluddin Khiljee aptly puts, “since majority of business operations are at the front end the thrust is more on attitude and aptitude rather than qualification alone”. So it is imperative for the organizations to ensure that the personnel are well educated and presentable for the simple reason that these factors have ultimately led to customer dissatisfaction and loss of sales.
It is time that both the HR organisations as well as the retail companies concentrate on specific service requirements of the consumers and empower these unskilled employees to stay alive in the race. By stressing on the need personalised attention to customers, the retailer can be assured of customer satisfaction and thereby building long-term relationship with them.
Today’s employees are extremely ambitious and expect rapid growth. So it becomes all the more an essential part of an organization to keep the employees interested and engaged at the work place. “We follow a well-defined training program that empowers all our employees with the requisite process training and customer orientation to ensure they meet our servicing requirements” says Pattabhi Rama Rao.
According to the sources from Retailers Association of India attrition level is as high as 80% among the front-end executives and gradually drops as the hierarchy goes up. The sources points out that the attrition level is only 10-12 % among the managers. So, it clearly emphasises the need for proper orientation at the entry level. The retailers should also start focusing on the welfare activities as a whole. They will have to devise various incentive schemes linked with performance to control the growing attrition.
Some of them have already chalked out their plans. One of the most common reasons for quitting is boredom or monotonous job handling, some of the big retailers shuffle their staff to work in different group companies. Lifestyle, even recommends its top employees for transfers to its parent organisation, the Dubai-based Landmark group to keep their level motivation to work high. Some even pay 20-25% higher salaries and some groups are motivating their front-end staffs to pursue their studies and sponsor for certificate courses in retail selling to keep the attrition level to the minimum. “We have a strong performance driven incentive program and a well-defined career progression plan for all employees that gives them an idea of how they can grow within the organization, says Pattabhi Rama Rao. All these growth oriented initiatives are adding up to the HR tasks. To cope up with the current boom, HR people must develop a credible knowledge base on various issues governing both the industry as well as the organisation.
Sustaining the growth path
Larger retailers companies always devise plans to attract talents. Generally it is the medium and small players who are always caught in conundrum of industry dynamics. In today’s competitive scenario it is becoming crucial for organizations to have a well thought out recruitment, training and HR management plans to sustain their growth. “We have a strong performance driven incentive program and a well-defined career progression plan for all employees that gives them an idea of how they can grow within the organization” says Pattabhi Rama Rao. “It is the motivation factor of an organization that attracts talented employees. It is not the size or the name of the company alone that is always attracting the best talent – it is the value proposition for a talented candidate that attracts him/her” asserts Jamaluddin Khiljee.
Though some of the larger players are already in to launching retail programs in partnership with various educational institutes of repute, we need to enhance our training in the areas of basics of retail operations, customer service, analytical ability, leadership and soft skills as we are facing a dearth of skilled workforce. “Seizing the opportunity, even the government would do well to establish Retail Management Schools along the lines of so many Hotel Management Institutes that government is running across the country – especially when employment opportunities in retail are much higher than Hospitality Industry”, points out Jamaluddin Khiljee. With many other sectors like economic growth, exports, education, IT industry, food processing, infrastructure, real estate, banking, tourism, agriculture, merchandising and management are also likely to benefit immensely by the retail explosion, coming out with a workable solutions that bridges the gap in demand and supply in skilled manpower to support retail operations is the need of the hour,
- M D Sridharan