Retail runs into talent hurdle

TRENDS: India's retail wars are poised to get underway, but there's a worrying shortage of the right skill-sets.

The numbers say it all in India's newly energised retail sector. Reliance Retail, which opened as many as nine Reliance Fresh food and grocery stores on a single day (Monday) in the National Capital Region, has planned for 1,000 Reliance Fresh outlets countrywide by the end of this calendar year.

Then there will be specialty formats and hypermarkets. Add to this the plans of Bharti-Wal-Mart, Aditya Birla Group (which recently acquired Trinethra), Future Group, Tesco of the UK, Carrefour of France, Spencer's, discount chain Subhiksha and Foodworld, and you get an idea of the retail sector's talent needs.

Retailing is manpower-intensive"" especially modern format retail. An official of TeamLease Services points out that the anticipated growth of the retail sector in India by 2010 will generate a need for well over two million people.

The worrying question is: will manpower availability stymie the growth of Indian retail? Given that traditional mom and pop kirana stores are poles apart from modern format retail, there is a shortage of people with the right skill-sets such as customer-orientation and servicing.

According to a KPMG report on retail points out that there are gaps in both in-store and non-store manpower, 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, but some degree of expertise is available in branding and marketing"" it can be enticed away from industries such as consumer goods.

Nor, unlike manufacturing, are there vocational training institutes where students can be trained for entry-level positions, points out an official of PricewaterhouseCoopers. Most retailers in India therefore depend on in-house training.

The RPG Group has set up the RPG Institute of Retail Management and a few have even made arrangements with management institutes to develop training programmes for their employees.

The Future Group has a tie-up with K J Somaiah Institute of Management, which offers its employees specialised courses in retail management. Carrefour, which is eyeing an entry into India, is reported to be talking to the IIMs for the same purpose.

Retail companies are worried that they will not be able to find the large numbers of pre-skilled people they need. 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

TeamLease sources 'associates' needed for six to eight months from part-time colleges and vocational training institutes, and when it needs people with experience of two years or more, it turns to the unorganised sector.

It has supplied close to 5,000 associates spread across profiles such as counter sales, logistics, supply chains, merchandising, cashiers and pricing and tagging. As a rule it does not provide its clients pre-trained clients, but is doing it experimentally for a few.

The company is holding talks with training organisations to roll out its own training initiatives, and expects to have concrete plans ready in six months.

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 attrition to rise among managers too"" particularly because retail hires from the same talent pool as other sectors such as hospitality, telecom, insurance and ITeS/BPO.

As the KPMG report notes, "Understanding service expectations and managing customers are skills highly valued both by the ITeS industry and retailers, making retail front-end personnel an attractive hunting ground for ITeS." The higher salaries in ITeS firms are an added draw for retail staff.

As India's retail wars start playing out, the scramble for talent will be at least as interesting as that for customers.