The HR Side of FDI

There is no denying the fact that we need to polish our domestic staffing in retail outlets, especially considering the fact that international players bring foreign experience to our country satisfying the end consumers. The main concern is whether the industry is prepared to cope with the demands and challenges which retail would bring with global expansion.

Professional retailing is a relatively new industry in India. This means that the demand for experienced retail professionals is high. However, many business professionals do have good knowledge of consumers and consumption patterns in India. “The clause of only 51 per cent for FDI would forge alliances between international and Indian companies. This will also create a good amalgamation of international retail experience along with national consumer governance knowledge brought in by Indian professionals,” says Kumar Rajagopalan, CEO, Retailers Association of India.

Bustle of retail activities

The FDI approval in retail will create and increase employment across various streams like in-store jobs, customer service, back-end warehousing and logistics. To fulfil the near term requirements, there will be a demand for talent from adjacent sectors like hospitality, transportation and logistics to bridge the gap. There will also be talent migration from tier II cities and growth in “part-time” employment.

“The training and development teams in retail companies will have to gear up to play a stronger role to cross-train and create ‘retail ready executives,” says Aditya Narayan Mishra, President-Staffing and Director-Marketing Randstad India.

FDI in multi-brand retail is seen as a very important reform to revive the economy and it will ease supply side pressures and mitigate inflation and benefit, especially, the small and medium enterprises by way of greater market access and higher profit margins.

As per Nitin Bahl, Country Manager, Natuzzi Group, overseas investments will not only boost business confidence in the Indian economy but it would infuse technological advancement on the supply chain side, enhancing production possibilities and inducing capital flows, which would help in maintaining general macro-economic stability.

The steep demand

Ranstad estimates that for every 1000 sq ft of organised retail space, three to four jobs will be created. At present, we are not ready with necessary infrastructure. The current training infrastructure for retail management cannot service the burst in demand that is expected to happen. It is imperative for retail companies to take the lead and work with academia and the government to create the training infrastructure for the long term.

There will be a spurt in setting up niche training institutes focused on retail functions and B-Schools and graduate colleges too will look at leveraging this huge business opportunity with specialised courses.

“There needs to be a concerted joint effort between the government, the industry and ISF  (Indian Staffing Federation) to build an ecosystem through which supply matches with demand – be it in quantity or in quality. We need to invest in creating low cost access to skill development for retail across the country. That can be in the form of vocational training hubs like ITIs, but of course, more efficient, where employers’ needs are at heart of the curriculum. While these need not be exclusively for retail, they can be focussed around multiple industries and skills,” says Rituparna Chakraborty, Vice President, Indian Staffing Federation.

“There are training institutes in India for retail. However, the big challenge has been to create the right level of learning initiative since there are not enough teachers with practical understanding of retail. This can be taken care of by retail schools hiring part time high standard retail professionals and also getting professors and teachers to get exposed to practical retailing,” says Rajagopalan.

Retail companies should set up centres of excellence to build relevant HR strategies. Also, collaboration with academia and government will be important to bridge the talent gap.

The leading HR services companies in India have access to global HR best practices this will be the key for Indian retail brands to engage with such companies to leverage their HR expertise. Concepts like Recruitment Process Outsourcing and having HR vendor partners onsite will help retail companies to strengthen the quality of HR.

Vibrant tomorrow

Considering the kind of clauses that have been added to FDI in retail, international retailers would not be setting up their businesses in a rapid pace. This is, therefore, going to be evolutionary rather than revolutionary. There is a possible time frame of around three to five years for retailers in India to completely professionalise their businesses to high standards of retail. The call currently would be for them to be completely focused on all forms and means of learning high standard retail.