When will EDI (Employers Direct Investment) happen in Retail?

FDI in retail is now permitted in India, which may boost the sector, but when will EDI (Employers Direct Investment) happen to create the talent pool for the Retail sector, which will be essential for this growth. The foreign retailers will bring in Processes, systems, logistics, operational efficiency, money, but what about the talent. Retail being a people intensive sector, every investment in this sector will fail, if not supported by proper investment in people to convert them to Retail Talent.

We are one of the biggest retail markets in the world, considering the huge consumer base of our country. Industry figures suggest that we are a whopping $450 billion Retail Market, thereby placing us in the top five retail markets in the world. The Indian retail market stood at $396 billion in 2011, according to a study done by the consulting firm Deloitte.

The journey has not been smooth. From shopping at our local Kirana store to picking up our daily requirements from the nearest Mall has been quick journey albeit bumpy. But what we have achieved as an industry in a short span of time is commendable.

Consider this: Organized Retail market is just 4% of the entire retail market in India, which means our Baniya stores / unorganized sector, still calls for shots in the industry. But that said we are seeing a change. Larger formats, convenient store, super markets and hypermarket structures are evolving. They are changing their outlook to suit the Indian requirements and mindset.

The glory of the Indian retail sector lies in the hands of people/Talent who man it. You have the likes of Mr. Kishore Biyani, Mr. B.S. Nagesh, Raj Jain, who have converted the Retail sector into a professionally managed Industry. It is their great leadership and revolutionary thoughts that lead to the big Indian retail story. Our country will need many more such retail entrepreneurs / professionals, who can make significant changes to this emerging sector.

Unfortunately, the leadership qualities are not trickling down to the grass roots levels. While on one hand organized retail which constitutes a small four per cent of total retail sector is growing at a much faster pace of 45-50% per annum and quadruples its share in total retail trade to 16% in the coming years as per a study done Corporate Catalyst India, a market consulting firm. “The organized retail segment expected to be 9% of total retail market by 2015 and 20% by 2020,” said Deloitte report, adding that semi-urban and rural segments are growing at a rapid pace, currently accounting for 33 % of revenues in 2011.

Recent announcement by government on FDI in India is only expected to push this growth even further. But is the industry ready to take that kind of a growth? Are we ready to open up so many more stores that comes with the growth? When I look at it from a Retail Talent angle, the growth almost seems a “Rasta Roko” because we simply do not have enough Talent to man our stores.

I am not talking about mid level and senior level employees. Not that we have them in abundance, but we could at least get them to join us from other sectors because convincing the candidates and the retail companies who hire them is achievable. My point here is, there is terrible shortage of floor level staff. Nobody wants to see themselves as “someone selling things.” It is not considered attractive. It is frowned upon and considered a lowly profile. Retail sector is one of the largest employers in the country. About 70% of the people employed in the retail sector are junior level employees. A 2011 report on retail sector compiled by research consulting firm Technopak rightly highlighted the fact that there is shortage of trained manpower in Retail sector.

In the initial phase of retail growth every body were new to these concepts. Most companies had to expand quickly to make their presence felt so they just hired in bulk not really looking into the quality of the employees. I am not talking about luxury retailers here. They are exceptionally good and extremely picky in their candidates. But I am talking about value segment. There was no method in hiring. Most of the retailers, are relying upon the bigger players to invest in training & development, which is why the industry has huge attrition. The Challenge for every retailer now would be to invest hugely & wisely on Human resources, which will get converted into Retail Talent.

But the scene is changing now. With the Indian government approving 51% foreign direct investment in multi-brand retail chains, things are set to change (at present foreign investors can hold up to 24%, but FDI is not allowed), “Nine states and three union territories have shown interest for opening retail to FDI,” said a recent study done by Edelweiss. To compete with the foreign brands it is very important for Indian retail companies to become more competent in the way they hire.

The Big Hurdles:

Lack of information: In my effort to find any study done on retail sector from an HR perspective turned futile. Whatever little was available did not talk about ground level staff. This could because the companies may not want to share information on floor staff to prevent poaching and making their pay scale public. This calls for more clarity and transparency in hiring process.

Mandatory to work on holidays: This is in my opinion the second biggest hurdle. A floor level staff has to work on weekends, public holidays and festivals. Understandably, that is the time when a store gets maximum footfalls. It is the common complaint among the floor level staff, “When the whole world is holidaying and having fun, I am slogging.”

Well it’s a different thing that they get a lot of incentives, but people outside the retail sector are not aware of it.

Sales job not something to aspire for: There is growing dislike among people for sales job. I have even seen many candidates frowning at it the minute we mention that it is a sales job. Yes, it is stressful and constant worry to meet milestones and targets may bog you down. But at the same time it is also rewarding. For every target achieved they get hefty bonuses and pay packets. It also rewards you in other ways as to you constantly get to meet new people.

Absence of soft skills: Indian education system does not give scope for a student to develop good communication and soft skills. It’s very easy to find someone who can show a certificate to prove his or her knowledge of English. But get them to speak to you in English, that’s where they fail. Moreover, the next wave of retail growth is expected to come from tier-II and tier-III cities. The level of language skills in these towns and cities is even lower than metros.

Career growth not evident: one does not require a post graduate degree to become a floor level employee. Companies usually hire 12 standard passing students. But that said there is a defined career path which people outside the industry are not aware. One can slowly grow in the company to senior level positions.

High attrition: Retail sector in India is plagued by high attrition. “High employee turnover in this sector has made Engaging and Retaining talent a perennial burning priority in this sector,” said Deloitte report.

Considering the growth potential the Indian retail sector offers it does not harm to working towards a solution for the problems. It is up to the us, the industry stakeholders, to sit back and give a serious thought at improve the quality of our manpower and in my opinion, the quantity will follow. Some immediate solutions to the above-mentioned problems are as follows:

Need for a retail finishing school:  There is badly a need for retail finishing school. Although there are a couple of such schools, they just train candidates with basic skills. A candidate needs good communication skills, ability to convince, ability to present themselves formally, product knowledge and above the candidate should be able to seamlessly switch between all the departments of a particular store. There is no such finishing school in our country today. I call for a serious consideration to set up many such schools and they should not just be in metros, but should be present in tier-II and tier-III cities.

Build awareness: many people are not aware of the fact that these employees get bonuses and incentives. Retail companies and mall owners should put an effort to let people know that these are the benefits of working in retail industry. While most of the companies have a variable pay plan for corporate and support staff, attractive sales incentive schemes is a common practice for the front line sales force to motivate them to exceed expectations. Monthly/Quarterly/Biannual incentive based payments against annual payments is gaining popularity in this sector, considered effective to motivate people in a high turnover sector like retail.

Invest in an employee: I agree that attrition is high and it is something that stops companies from investing on employees. But in the long run, investing in an employee is what pays off. Not all employees quit a job just for money, or even if they do so today, they may regret later. So it is good to have extensive training program for employees. Get them aware of all departments at all levels in a store. Move them from supply chain to sales to handling cash and payments. Even your consumers might like to see new faces every now then. We are in a sector where it is very important to keep our customers happy and for that training has become very critical.

Also retaining a good employee has could reduce costs for a retail company, because it is important to note that even hiring a new employee comes at a cost. Shoppers’ Stop, is one such organisation, which invested very high on Retail talent, & today it is clear the Shoppers’ Stop has been a Retail School for the industry. You will hardly find any retailer worth its while, who does not have the ex-employees of Shoppers’ Stop. With the opening of the sector, the only way the retailer can sustain is by investing on its people (EDI), which will ease the demand in the sector, as more talent will be generated.

  

Hence, while the foreign retailers, will now queue-up to come to this huge market, what every retailer will have to look for is to create a talent pool, domestically. Also there is a huge population of Indian people across the globe, working in the retail sector, which will eventually want to come back to India. This is another ready made retail talent, which the industry can benefit from. All said, in Retail “Dikhta hai, toh biktha hai”, so will the retail talent. If you invest in retail talent, it will pay off.

 Note: This article was published in Retail Today magazine, October 2012 issue.

About the author:

Barkat Charania, is the Chief Executive Officer of a speciality Retail Recruitment Company “Beyond Talent”, founded by an industry stalwart, Mr. Susil S. Dungarwal.  Barkat has over a decade’s experience in placements & Head hunting, and has been an avid follower of the Retail sector. Beyond Talent Management Pvt. Ltd. currently, works with many leading retailers, for fulfilling the talent crunch across various verticals of Retail on a pan India basis.

Social Media impact on your career

If you think that the “Likes” & “comments” on your Facebook, are privy to your friends, then you better stand corrected. Or if you feel that your profile on LinkedIn or Facebook or any other social sites is only seen by your connections, then you may be in complete dark of the situation. Today, most recruiters / employers, “peep” into your social media profiles to understand your lifestyle, attitude, network, etc. to analyse your candidature. With social media becoming a norm of our “Neo-Generation Lifestyle”, where we express our mind or even “Share” a comment of something we like or dislike, this is being seen, watched and observed with great detail by many professional connects & your prospective “Employer”.

Your behaviour on these social sites is perceived by the prospective employers & helps them to make the decision to hire you or reject your candidature. Recently, one of our good clients, rejected a candidate after giving him an offer letter because the candidate was jobless since 3 months, but had his current status as working with the previous employer. The employer noticed this & immediately withdrew the offer, stating that he has lied to the organisation & misinformed them. While many of us take updating of our profiles lightly on various social sites, more n more employers rely on the social network to know about the candidate.

So, your social media network shall henceforth be faces of your candidature, hence don’t take it lightly. 

The retail sector in India is said to be one of the largest employers and expected to grow three fold in the coming few years with the expansion of organized retail. What could be the driving factor to fill the manpower requirements for such a mammoth expansion? With the growing expansion, opportunities for front-end jobs, store management jobs, Accounts & Finance, merchandising, etc. will be in its full swing. Employers will look at cross – industry verticals for middle management roles, but where will the supply come for the junior management and entry level jobs.

The Retail Job scenario in India is very good and looking at the FDI and the growth factor, the need is clear and transparent. The scope for a retail career seems to be easy for the population since Retailers are looking for fresh candidates rather than any educational qualification or prior experience. Retailers are eyeing for candidates equipped with problem-solving approach and should be a team player. He/she should be able to manage group of people and connect with associates. Hence it is important to recruit resources with an attitude to service customers and people-oriented. And, there is no pre-qualification for this ability, except for high-end luxury retail brands that look out for polished candidates with excellent communication and presentation skills.

Traditionally it were employers who had to make themselves visible when looking to fill positions by posting adverts in the press, then choosing a pool of candidates from a veritable tsunami of applicants. But with the rise of social media and social networking sites, its very easy for a potential candidate to draw employers attention towards their profiles through various social media’s other than traditional job boards since 40% of the young HR’s use social media to filter their candidates.

Social media is making it easier to find the right jobs for potential job seekers and to connect to the right people that can help them get those jobs. Many job seekers are still using traditional job search methods that are yielding poor results. Though traditional job boards still count as a major source of recruitment, still new age recruiters depend on social media either to source the candidates or to get relevant information about them. Given an instance, few of our clients check candidates’ Facebook, LinkedIn and twitter accounts before interviewing them. Being in the retail industry, they make sure about a candidates behavioral pattern through these social sites. They see their photos, their social nature, and their command over language through the postings on their walls, their habits, etc. It’s almost like viewing a profile from matrimonial site or through reference, than digging out information about that person before meeting them. People think that these social networking sites are just a tool for passing time, meeting friends, networking, etc. But they are not aware that these are the ones that open up their entire life history in front of a stranger. A classic example for such an incident happened when an offer was revoked for a very senior candidate when he tweeted “3 offers in 7 days, which one do I accept”. It clearly described his behavior and non-serious attitude towards a job change and that he was“shopping”.

But you don’t have to end up like these professionals!!! By understanding who you are, what differentiates you in the job market and establishing your personal branding online, you can compete in the new talent marketplace. Once you have built your own social network profiles, you are ready to start leveraging your relationships and talents to get the job of your dream. By creating a good network and clean image on social site, you can increase your chances of getting the desired job. Every tweet, every post on social sites can be taken as a reference to judge you. So be aware of what you want to show to people. It’s not only your friends who will see all these but your potential employers as well. Few things to really take care of while using social sites are:

1)     Be very specific about your privacy settings and adding connections. If you suggest to show all your posts hidden to public and visible only to your connection, but than you add everyone as a connection. The purpose is still not served. You are still like an open book, which can be read by anyone. So be very specific about your privacy settings and adding people in your network.

2)    Improve your personal Branding: Make an impressive profile by gathering lot of relevant but true data. Add as many connections that you know. Add in your full information, key skills, education, etc. so that employers can know about you. Recommendations from superiors or clients will always work for you.

3)   Don’t reveal your Urge for a Change: Easiest method to publicize your urgency is by publishing few posts like “Urgently looking for a Job”, or “Please help me with…” etc. But do not forget that your current employers can also view the same. Rather publish some relevant contents in job sections and be visible.

4)     Check what you publish: A person was sacked from his office because he messaged his boss that he wants a leave as his parents were not well and everyone was shocked to see that. Later it was revealed that at 4 in the morning he posted on his wall in a drunken stage that he had partied whole night. So every word that you write consciously or unconsciously, but it counts. So beware of what you post on social sites, it can go against you many a times.

5)     Join various groups: All networking sites have different group, which are either skill specific or industry specific. These groups are formed by individuals to share knowledge, but than these are the best hunting grounds for recruiters. Many such groups are formed by headhunting firms as well to attract similar job hunters. Your visibility in these groups keeps you updated of the various openings available in the market for your kind of skills and also makes your profile visible to hundreds of recruiters.

Now its up to the candidates to capitalize on the opportunities and make their presence felt to the recruiters. Industry demands are huge and will grow more and more within the coming few years. It’s a golden opportunity for graduates and postgraduate fresher’s to give a fresh start to their careers for an organized growing industry. Start doing your research today. See where you fit in the retail industry, what suits you and what you think you can be best at. Currently the needs are clear and hiring is on its best. Soon these requirements will become complex and clients will be choosy. So it’s right time to hit the right industry and make a mark in it before it becomes completely organized..

Note, your social media network communicates more to the prospective employer, than your resume. So, the best way is to keep an eye on your “likes”, “Comments” & “Share” and most importantly, keep your profiles across all social websites, updated.

Note: This article was published in Retail Today magazine, March 2013 issue.

About the author:

Barkat Charania, is the Chief Executive Officer of a specialty Retail Executive Search Firm “Beyond Talent”, founded by retail industry stalwart, Mr. Susil S. Dungarwal.  Barkat has over a decade’s experience in placements & Head hunting, and has been an avid follower of the Retail sector. Beyond Talent Management Pvt. Ltd. currently, works with many leading retailers, for fulfilling the talent crunch across various verticals of Retail on a pan India basis.

Post FDI: Impact on Manning Modern Retail

With the recent announcement of the government of India to allow FDI in Retail, there would be a burst of investment in the sector, thereby igniting a humungous growth in the sector. The first impact of this growth will be visible in the need of the Retail Talent, which is also under-supplied as of now. Over the last few years, the world of work has changed dramatically due to globalization, with organizations being assessed against international standards and best practices Retail has never been a first choice of sector to most qualified MBA’s; it is mostly on the bottom of the priority list for them. Youngsters join the retail industry at lower salaries, get some experience and then move on to better jobs or back to education. The work pattern of retail industry requires employees to put in long hours of work which generally cause fatigue and lower motivation among employees But with FDI now allowed the pressure on the Talent pool of this sector will be on raise.

A recent comment by Planning commission, Deputy Chairman Mr. Montek Singh Ahluwalia is something noteworthy. He said, “Modern retail produces better quality of jobs.” He was talking about the alleged criticism that modern retail after government’s decision to increase foreign direct investment would render many people jobless.

Now what does this mean to the retail sector? It is going to benefit both Indian retail and foreign companies like Wal-Mart, Carrefour, Tesco and many such companies who want to enter the Indian retail sector or expand their foothold in the country. India with its 110+ billion population is too huge a market for any foreign company to ignore. In fact many retail players from various countries have initiated their entry plans in Indian markets with a prior focus on manning their stores with the right talent for their brands.

Our estimates show that Indian retail sector stands at a $450 billion in size, which gives it the coveted position of being among top five retail markets in the world. But unfortunately organized retail sector constitutes a meager 4 per cent of the entire market. The good news however is that it is expected be 9% of the total retail market by 2015 and 20% by 2020.

Despite the retail sector being around for over 2 decades, a local Baniya store still calls the shots in the retail sector simply because of their numbers. So it makes me wonder about all the concerns that increase in FDI in retail sector would render many people jobless and would lead to shutting of many Kirana stores. Indian retail sector is the second biggest employer in India after Agriculture.

With the increase in FDI and the subsequent increase in the flow of funds, all the retail companies will get into an expansion mode. This would require them to increase their manpower tremendously. We are not able to find suitable candidates for existing positions in the sector at ease. What is going to happen when companies expand? Who is going to man our stores? Where is the manpower going to come from? Are we really equipped with retail talent to man our stores post FDI?

It is anybody’s guess. People are going to poach from competitors. This will lead to madness because companies will have to increase the pay of the new joinees to make the offer attractive and to motivate the candidates to join them. This seems to be the only option left. We saw that happen in 2006 when new companies such as Aditya Birla, Reliance Retail, ITC, etc. entered the retail sector, the salaries rose around 200-400 per cent. This is because experienced people in this nascent sector are very less. Companies starting their operations on a massive scale needed experienced & expert retail professionals; to man their mammoth growth plans. So picking up available talent from the existing available pool at higher than market price was easier than creating talent, by investing in training & exposure. The same scene might be repeated since the expected expansions would be really huge and the experienced manpower count is comparatively scarce.

In the last decade, the cost of employment has already reached to about 6% from an earlier 3.5% of the turnover, which the razor thin margin retail sector, is already grappling with. Also adding to the problem is the fact that we have many e-tailing companies opening shops almost every other day. India has the 3rd largest number of Facebook subscribers in the world with 53 million subscribers in August 2012 and provides a very easy and targeted audience for these websites. Industry estimates show that the e-commerce market in India for 2012 is estimated to around $10 billion and expected to grow at the rate 45% to reach $200 billion by 2020.

Now these companies too have become attractive for investors and they come with heavy investor backing. They are also going to need merchandisers and category managers and many senior people with retail knowledge. The manpower requirements of these companies are almost similar to a retail company’s requirements except for the frontline sale people since they sell online. But few of these ecommerce companies are opening up their stores as well. Other than these e-tailing companies, every retail chain is also having an ecommerce site of their own to sell their products. So they are going to need more people to man them. With such a restricted talent pool its mind boggling to even think that we will be able supply all the required talent for future expansion plans of retail companies.

While increase in pay scale is a welcome change for an employee, it would become a huge challenge for the retailers to sustain their business, as the cost of employment will increase drastically. It is important for employees also to understand the larger issues in sudden raise in pay scale. It would increase the spending power by employees thereby adding to the inflationary pressures on the economy. So, while on one hand the employees may get a lot more, as salary, when compared to times before, but they will be spending much more than they did earlier because of inflation. So a controlled and gradual rise in income is the only solution to resolve this issue. Retaining the retail talent will become a big task for all existing players, who will have to entice the talent to stay back.

So are we going to let market forces take its own course and shoot up the salaries to an extent that the companies HR expenses become unmanageable? Is there anything else we could do to avoid the rush and poaching exercises?

There are many solutions to these problems:

Importance of training: It is a known fact that, there is no specialized finishing school for retail sector. A recent government estimate shows that India has 567 universities attached to it and industry estimates suggest that India produces around 3-5 million graduates every year. A vast majority of them are unemployable because they lack communication skills. Communication or soft skills are very important skill in the retail sector. If the retail sector had a finishing school we could get these candidates to be trained in these schools and they become employable. Also, the retail companies should constantly invest time and energy on training its employees, so that they could take them to a next level in the company. We are in a knowledge economy; no amount of training will ever go waste.

Training has a few tangible benefits and many more intangible benefits. I have always believed in an observation made by Malcolm Gladwell in one of his bestseller “Outliers”. He said, ““Those three things - autonomy, complexity, and a connection between effort and reward - are, most people will agree, the three qualities that work has to have if it is to be satisfying.” So, Salary, is just one part of the many things that an employee looks for. He needs autonomy and complexity in work. By autonomy it simply means some sort of freedom to the work assigned to him and by complexity it means that an employee has to find it challenging and feeling that he has learnt something new.

So it is important for companies to understand that money is not the only reason why people quit and seek better shores. The companies need to understand an employee’s satisfaction levels and invest in him accordingly. When he feels he is involved in the company intellectually, many of them may not quit even if they were to get better pay. That is the kind of impact high-level training could have on an employee.

To create a balance of high cost of experienced manpower & the low cost of new entrants, retailer will have to invest hugely in training the prospective retail professionals.

Campus selection:

Indian campuses are bountiful. The quantity of students who pass out of campuses every year can be a huge market to pick up for a retail company. While it is true that many of the students in good B - schools always look for the blue chip company offers, we as an industry have to make an impact on this thought process so that students start looking forward to working in retail sector. For that we have to make retail sector attractive enough for them. Retail sector for many students is not a first choice because of three important reasons: mandatory to work during weekends and public holidays, career growth not very evident and finally lack of information or awareness about the sector. Career growth is not very evident because the sector as a whole has not created awareness for the people outside the sector. To get over these problems we have to get out of our old-fashioned thinking and create a professional working environment for all.

Other sectors:

When companies approach us for mid level and senior level employees, many of them ask for candidates with prior experience in retail. For few positions, I have a tough time in convincing them to consider employees in other sector who come up with system knowledge. Yes, it may take them sometime to understand retail sector, because they have no prior experience, but in the long run, you have created a new employee for the sector. That will do well, not just for the company, but also for the sector as a whole. These companies can try imparting new practices, procedures and systems that are successful in other industries through these resources. Also, when you bring in an employee from other established sector, he comes in with some prior knowledge of the sector, hence he could bring in best practices from there that could be adapted in retail sector as well. In my opinion, retail sector should be more open in choosing candidates for their manpower need.

With all the news and fanfare on FDI, what is in store for an employee in the sector?

-          The most obvious benefit is new jobs being created.

-          Secondly, the possibility of a higher pay package that may come with the new job

-          Thirdly an employee may get a quicker recognition, promotion and more responsibilities in terms of work

-          When there are more foreign companies in the domestic market, they come with a lot of established practices. So Indian retail companies who partner with them and also the employees who work for them will get to learn those practices and methods which ease the process of manning these stores. Sam Walton, the founder of Wal-Mart stores in the United States of America summarized the idea of good practices in his observation. He said, “If you get one good idea, that’s one more than you went into the store with, and we must try to incorporate it into our company.”

So its time that retail sector as a whole started thinking out of box. As FDI opens up our minds, pockets and hearts in the sector, teaching us those best practices from our foreign counterparts, when we do our own thinking out-of-the-box, there may be something that India could offer to the global processes in retailing.

Only the future can tell us of whether the FDI is going to be a boon or a bane, as the fight for retail talent will begin now. Lets hope that, we as the custodians of this sector, will take all relevant steps to ensure a sustainable growth to the retail sector. Remember, 6% of your topline is the cost of employment, as against 3.5% earlier.

NOTE: This article was published in Images Retail Magazine, October 2012 issue.

About the author:

Barkat Charania, is the “Chief Executive Officer” of a specialty Retail Executive Search Firm “Beyond Talent”, founded by Retail industry stalwart, Mr. Susil S. Dungarwal.  Barkat has over a decade’s experience in placements & Head hunting, and has been an avid follower of the Retail sector. Beyond Talent Management Pvt. Ltd. currently, works with many leading retailers, for fulfilling the talent crunch across various verticals of Retail on a pan India basis.