Retail talent crunch

“Talent is like electricity. We don’t understand electricity. We use it.” This famous quote by Maya Angelou best sums up the dilemma the retail sector is facing at present.

With the speculation of retail industry being the next sunrise sector, after telecom, no one wants to miss the bandwagon this time. Professionals like bankers, FMCG experts and consultants also also becoming retail professionals to bite into the pie of success.

Considering the phenomenal growth of retail in India, our expectation is galloping forward for a brighter future for the promising industry, which will be a messiah for job-starved Indians.

Lots have been talked about this industry and lately, the segment has managed to stay in the news for the business readers. With the corporates entering into the segment, a new twist has been given to the segment and business investors are taking a serious thought to reap the new opportunities.

It is a couple of years since the likes of Reliance, RPG and Aditya Birla Group took the plunge in the so far unorganised sector to endow “organised” tag to it. The announcement of an alliance between Bharti Retail and the US retail giant Wal Mart took place amidst much fanfare that raised the hope of seeing a new vista of retail landscape.

However, like any other activity, retail too sometimes is in the news for all the wrong reasons, the most serious being lack of talented professionals coupled with rising problem of attrition.

It is now time to take a serious look at the whole structure of the industry to find out what has gone wrong and where lies the fault.

 

Too much at stake

The retail professionals who are at the helm are under tremendous pressure. The corporate houses are playing big with a lot of money involved in their retail business plans. A fairly newcomer in this sector, they are bogged down by the responsibility to produce results, which is not always satisfactory since the industry is reeling under all the trouble syndromes of the initial phase. “Retail itself is a thin-margin business, whereas expectation from the industry is too high. So, the retail professionals in this segment have to focus on effective management of profitability. The business operation depends heavily on vendors, logistics, etc. It’s a real challenge to coordinate with so many players,” acknowledges R.V. Bala Iyer, VP – Training, RelianceDigital Retail Ltd.

In the same tone, Tanaya Mishra, HR – Head of Shoppers Stop, explains, “Retail, though a buzzword, has numerous challenges for professionals in the field. For front-end professionals, long work hours, working on weekends, rude customer behavior etc can lead to a lot of stress, not to mention the sales pressure. For back-end professionals, especially buying and merchandising, negotiating with vendor partners, constant monitoring of fills, planning of range presentations for the seasons etc do take its toll.”

Priya Dilip, Head – Retail HR, Madura Garments Lifestyle Brands, opines, “Being a virtually sunrise industry in India, there is no precedent and yardsticks to work with.”

Unrealistic expectations by employers coupled with inadequate training and long work hours leading to unsatisfactory worklife balance are some of the factors mounting up pressure on the retail professionals.

 

Organised retail yet to catch up

Consumers in India are yet to overcome the hangover of a friendly kirana or neighbourhood shops. The modern format of retailing, though well accepted all across India, is still competing hard with traditional retailers in the space of selling daily needs. And it is because of the Indian consumers’ mindset, who believe that what is modern is expensive.

Also, our habit of eating fresh and common abhorrence towards processed foods, what an organised retailer stocks a lot, have put the fresh food vendors ahead of the organised counterparts.

There’s no doubt that the organised retail is growing at the rate of 35-40 per cent. The business houses are rolling out new expansion plans that have transcended the territory of metros to enter tier-II and tier-III cities. The manufacturing houses are themselves taking on the mantle of retailing. But the question is how far are they doing it successfully? The financial reports have shown that the industry is making gain in topline sales, but what about the bottomline profitability?

We have to admit, it’s a dismal picture. The rising operational costs and high property rentals are hitting the profit margin. The situation is driving retailers to wrack their brains to increase the sale volume. It’s a bottleneck situation, which no one can evade in the present economic context. Adding to these woes is the inflation that is tightening the consumers’ budget, affecting the retailers worst. It is a tough task for the man heading a retail organisation to sail through smoothly, for there are enough of nightmares and dissatisfaction forcing them to relinquish retail dream.

 

Cutting down on expenditure

To combat the aftermath of ever-spiralling inflation rate, which is fast reducing profit margins, some retailers are now trimming the manpower. It is reported that the retail arm of India Bulls, India Bulls Wholesale Services, the present owner of Pyramid Retail, has sacked 15 mid and senior-level executives. Since the December quarter of 2007, high manpower costs are adversely affecting the profit margin of retailers. A pall of caution envelopes business operation of Reliance Retail, as the organisation undergoes severe cost-cutting ecercise.

 

Need for specialised training

Generally, retail hires the talented management professionals, who have proved their skills in other sectors such as finance, FMCG, telecom etc.

With the advent of organised retail, the corporate houses turned to these management professionals to take up the challenge. Despite their acumen in management, they flounder to cope with several adverse factors associated with the organised retail, which is new to the Indian retail professionals. In this respect, we should remember Indians have proved to be discerning consumers, but not inspiring spenders. Since these professionals are not just equipped with specialised training in retail and have prior experience in other industry, they revert to their known zone when things do not seem to work.

 

Dearth of skilled professionals

The industry is also groping with the problem of slimited supply of retail professionals. The supply of talent is outpaced by the growth of organised retail. A survey reveals that 25 lakh jobs will be created in the sector by 2010, but for the talent shortage, there will be a huge shortfall of 10 lakh in the next four to five years. The scarcity of retail skill forces many retail companies to shelve their business plans. It is this limited bunch of professionals, who are monitoring the entire industry. It is the same talent pool that various big retailers are using in different capacities. This results in poaching of retail professionals, who are lured by hefty pay packages and switch over from one retail organisation to another. It is also noted that exit of a top retail honcho leads to the exodus of a bunch of skilled professionals, who have worked under him/ her.

This causes instability at the middle level too and hampers the progress of business plan mooted by that team of professionals, though their departure does not lead to a loss of trade secret.

Dilip states, “The burgeoning retail industry in India has led to dearth of talent at the top and competition ensures that top management always get better offers.”

It is because of this that for the top-level management, retailers are cashing in more on expats to head the business operation. These expats bring in expertise and experience, especially in the areas of supply chain management and merchandise arrangement. But, are we able to utilise their knowledge for a considerable time?

Not exactly. Andrew Denby quit More, a retail venture from Aditya Birla Group, after serving for about a year, followed by Andrew Levermore of HyperCity. Acknowledging their expertise, a point still continues to itch that how good are they at understanding the consumer trend in India?

Admitting the problem, Iyer differed on the issue, pointing out that they are not working in isolation and have the support of a team of experts who are well aware of the indigenous factors. Also, Dilip does not consider it as a big issue, as she feels that lack of knowledge about Indian consumers can be overcome by proper orientation.

 

Where is the retail skill?

Despite these hurdles, retailers are going ahead with their expansion plans, but where is the enough retail skill to manage stores?

The dearth of skilled professionals is also haunting the store-level management. Retail being the second largest employment provider in India, only after agriculture, has created a wide vacuum to be filled up. The paucity of the retail skill is also affecting store-level profitability.

 

24x7 retail format

Extension of work hours for the working couple is a natural solution for the retailers, which can be utilised to increase sale volume by making the sector a more lucrative option for the professionals. The policy can be implemented only when the retailer has the assured footfalls.

Though 24x7 retail format is prevalent in the retail scenario of the US and Europe, in India, the format can be successful in some selected areas only, depending on the nature of demography, acknowledges Iyer.

To run this retail format, salespersons need to work in three shifts, whereas in India, two-shift system is more common.

In this respect, cautions Dilip, “The staff should be adequately turned over with a proper relief system. This would optimise business efficiencies while meeting consumer needs.”

Also, retailers can provide cab for pick-and-drop facility for the store staff, who works till the wee hours.

 

Attrition makes it worse

The organised retail itself is a capital intensive business that requires some time to break even. The sector cannot prosper until and unless a dedicated team of professionals vow their commitment and show some patience to withstand the downturn of events. The attrition, in this case, can only stretch the gestation period. They should understand that the industry is evolving through experimental phases. The industry is yet to grow in terms of well-planned policies and understanding the Indian consumers. But, why this attrition? Explains Iyer, “There is severe crunch of experienced professionals, which has resulted in poaching. Also, the grass is greener on other side mindset is driving the professionals to hop job.”

Citing the reason behind attrition at store level, Mishra says, “Money is the driving factor. Store staff does not even bat an eyelid to join somewhere else for a paltry raise.” The question naturally rises – what is actually bothering top retail professionals?

Mishra explains, “There is a high degree of burnout as retail is a very here-and-now business. Also there is little room for strategising on a long-term basis, as it is dynamic and trends change on a daily, weekly, monthly and yearly basis. Today’s performance is history tomorrow, and the benchmark targets are always on the upward swing. Target achievements are difficult, as there is a constant dip in the customer entry with the number of malls increasing. So the pressure is on conversions and ticket size.”

 

Negative govt role

Considering the potential of retail sector, the Government of India permitted 51 per cent FDI in single brand retailing, but is still keeping mum on the issue of multi-brand retailing. The action is not sending a positive message across retail professionals. Several global business plans are now on tenterhooks due to the uncertainty. Also, despite its remarkable growth rate of about 35 per cent, the government is taking time to grant industry status to the organised retail sector.

This negative attitude from law-makers along with other problems is adding more discomfort to retail professionals rather than enthusiasm.

 

Retaining employees

Though attrition at the initial stage of any industry is quite natural and employers should not wreck their brains to retain employees, the compensation should be planned to allay the fear of insecurity from the mind of professionals, involved with this evolving industry, believes Sanjay Jog, Chief People Officer, Future Group.

Compensation should be seen as a means for development. To encourage living healthy, Future Group has initiated a health club for the employee and spouse. To build a stronger relationship, the group has introduced Life Security Plan. This plan ensures that if an employee meets an untimely death during his service, his family is entitled to get the amount that the employee took as the last salary. Both Mishra and Dilip admit that compensation alone cannot help retain talent.

Explains Mishra, “Compensation is a hygiene factor, but not the only factor. More than often the supervisor/manager plays a key role in attrition. Leadership is the key in driving and motivating staff. Recognition of efforts and rewarding such behaviour is also the key. Growth is another factor that helps to retain staff.”

Dilip thinks companies need to have the perfect balance of compensation, benefits and healthy work atmosphere with adequate growth prospects for retention of talent.

Training is another key area that needs to be addressed. A proper training guidance empowers a retail professional at the store level to hone his skills. This gives birth to a contingent of experienced employees with ability. Care has to be taken to select the right candidate. For a shop like Reliance Hypermarket, a saleperson should have the mix of cultural education with the retail expertise. A skilled salesperson should know how to create a shopping experience.

“We, at Reliance, believe in the saying, ‘Grahaka deva bhava’, i.e. consumer is like God, and instill this motto to our store personnel to generate utmost satisfaction of the consumers. It can only increase sale, giving boost to the retail business,” says Bala Iyer of RelianceDigital.

A store’s success can be measured by the performance of its salespersons or how much do they sale. So in this case, incentives and variable pay structure should be introduced. It is all a team effort and recognition of achievement should not be restricted to the store manager, but passed on to those working under him. The training model at Reliance Retail is basically based on 3Ps, i.e. Product training (of knowing product, not in terms of pricing but also product benefits to guide customers to make the right choice); Processes that govern the store operation; and lastly how to handle People – customers, colleagues and the boss, reveals Bala Iyer.

Mishra opines, “Training is imparted as per the employee’s level and as per his or her training need. For store professionals, product understanding, retail selling skills and customer service are key areas. For management staff, there are soft skills and technical skills to be learnt. Also retail professionals are trained as per the competencies identified in potential development centres and appraisals.”

As part of retail training, Madura Garments Lifestyle Brands conduct programmes on customer-service orientation, product knowledge and visual merchandising, informs Dilip.

 

A way out

First and foremost, we have to create skilled professionals, who are specialised in retail. With over one billion population, India has no dearth of talents. This can be only achieved by including retail management in curriculum at all premium management schools. Retailers should put their best foot forward to groom the professionals. The training programmes conducted by the retailers should incubate the necessary skill. Also, retailers should understand that India is a diverse country with multi-culture, so demography plays a major role. There cannot be a fixed business model in this country and we should not follow blindly the models which are predominant in western countries.

To capture the Indian market, a bit of customisation is required with innovation in the retail mix.

To fill the void, part-time employment should be introduced in the retail segment. The students who are doing part-time courses in retailing can work in this space to earn on-the-job experience. Also, women should be encouraged to join retail at the store level since most of the shopping decisions at the household are made by them. They are more likely to understand the consumers’ preference and the recent tend more than their male counterparts.

The time has come to think about the means to produce enough skilled professionals to catch up with the pace of fast-evolving sector and at the same time, motivate them to steadfastly propel the growth drive, withstanding all hurdles. The onus is on both the employees as well as employers. It is also expected that the government should show a soft attitude towards this promising segment by directing laws to create a conducive atmosphere to retain talents. Retail has now acquired a large dimension like any other big industry. The large customer base is luring global retailers, besides domestic corporate giants, and we should not allow the opportunity to escape.