Organised retailers fret talent shortage

With the available manpower pool nearing exhaustion, future growth may be in jeopardy.

The India Retail Report 2007 forecasts that 2.2 million jobs will be created in India's organised retail sector in 2010, by when the industry is expected to touch $440 billion, with the organised retail component doubling to $21.5 billion. But there is concern that the trained manpower needed to make this growth possible is not available (modern format retail is manpower-intensive).

Tens of thousands of youngsters graduate out of Indian colleges every year, but they are not considered right for the jobs on offer"" "they lack the required competencies," says Rituparna Chakravarty, vice-president (north) of TeamLease Services.

Organised retail players find that either there is no qualified talent, or the talent that is there has so many job options that it has priced itself out of the market, and companies cannot afford them.

The immediate requirement of most players is sheer numbers of people"" to match the scope of their rollout plans. Nobody is spending time investing in seeing whether they are worth keeping.

All retailers want to make a mark before the others, and their ambitious rollout plans require large numbers of employees. So most players are grabbing whatever manpower exists at whatever cost it is available.

This increases their costs, while organised retailing thrives on being able to sell at prices lower than those of mom and pop stores. Organised retail also says it will give customers better service and a good buying experience.

But without trained talent they cannot. The Retailers'Association of India is working in conjunction with some of its members to persuade some B-schools to start some courses.

A KPMG report points out that there are skill-set gaps in those manning the floors, but the shortfall in the managerial cadre is not so serious because managers from industries such as FMCG are able to quickly learn and adapt to the demands of retailing. There are also competency gaps in supply chain management, vendor development and customer relations management.

Nor are there vocational training institutes where students can be trained for entry-level positions. Most retailers in India therefore depend on in-house training. The RPG Group has set up its own retail management institute and a few have made arrangements with B-schools to develop training programmes for their employees.

The Future Group has a tie-up with K J Somaiah Institute of Management, among others. The Retailers'Association of India runs courses, and is also working with its members to persuade B-schools to run more courses.

Since the retail sector has similarities with BPOs and hospitality, companies are sourcing people from these sectors. But this will only bid salaries upward and lead to high manpower costs. So this is at best an interim solution, retail experts say. Training expenses also add to costs.

With modern format retail at a nascent stage in India, attrition is not yet an issue at least at the middle and senior management level. (For front-end staff it is believed to be 25 to 50 per cent.)

However, globally retailing is a high staff turnover industry, with even the larger retailers facing attrition rates of between 40 and 60 per cent a year, according to KPMG.

So, as more players roll out their retail initiatives, observers expect that attrition will rise at the managerial level too"" particularly because retail hires from the same talent pool as other fast growing sectors such as hospitality, telecom, insurance and ITeS/BPO.

Clearly, the scramble for talent between modern format retailers will be as fierce as their battle for customers.