News: Indian retail talent hunt
(RetailBiz 05/01/2006) Mumbai - There is an acute 'shortage of talent' in the Indian retail industry, says Sonny Iqbal. The industry needs to prepare executives for critical roles if they have to compete with MNCs.
Today, the rising star of the Indian economy is the retail industry. India is amongst the top five global destinations for retail investment, which employs more than 21 million people and contributes 13 per cent to the country's GDP. The ongoing retail boom is expected to translate into eight million new jobs over 5-6 years. This is in addition to the 21 million jobs already generated and sustained by retailers, including 'mom & pop' stores. The industry has highlighted India's potential as a consumer economy and demonstrated the sheer consuming power of the urban Indian populace.
Exponential growth is expected with the opening up of Foreign Direct Investment (FDI). Though, at present, most of the retailers are Indian companies, multinationals are beginning to focus seriously on the country in anticipation of friendlier regulation. While this is great news, it also poses several challenges and questions. The most important of these is the accelerating shortage of talent and how companies will overcome this, especially Indian companies, as they prepare to compete with multinationals.
According to an ICICI report, the Indian retail industry (organised and unorganised) is pegged at US$ 286 billion and is expected to grow at 8.3 per cent during 2003-08. Food and beverages followed by apparel and footwear are the largest components and together account for 60 per cent of consumer spending. Although at 12 million retail outlets, India has the largest concentration in the world, its share of organised retailing is a mere two per cent. It compares quite poorly with other countries -US is at around 80 per cent, Brazil is at 40 per cent and China is at around 20 per cent. This however is changing. Driven by changing consumer demographics including a young population, growth in income and consumption, access to low cost consumer credit and increasing literacy levels, the organised retail segment is growing at almost 40 per cent annually. Also the retail boom, 85 per cent of which has so far been concentrated in the metros, is slowly penetrating to smaller cities and towns and the contribution of these tier-II cities to total organised retailing sales is growing.
It is important, however, to look at this growth in the right perspective. Like any other industry, the Indian retail industry comes with its share of challenges.
Today, a real challenge facing Indian retail CEOs is how to deliver true value to the customer, of which service is a crucial component. Service quality standards and brand strength will drive customer loyalty to a large extent. Product and price-based value differentiation in the retailing industry is short lived as it can be replicated quickly. While most of the major Indian retailers are investing in building brands, the brand promise isn't usually translated into service delivery at the shop floor level.
For those who can offer good service, consistency becomes the key challenge and companies get trapped in a vicious circle. Importantly, the international retail majors are likely to come with deeper investment pockets, access to a global supply chain and an experience of a diverse customer base that translates into greater product variety at attractive price points. More significantly, they will come in with invaluable experience of competing with a variety of retail There is an acute 'shortage of talent' in the Indian retail industry, says Sonny Iqbal. The industry needs to prepare executives for critical roles if they have to compete with MNCs chains/formats/brands in the organised retail sector in developed as well as developing markets.
Today, the rising star of the Indian economy is the retail industry. India is amongst the top five global destinations for retail investment, which employs more than 21 million people and contributes 13 per cent to the country's GDP. The ongoing retail boom is expected to translate into eight million new jobs over 5-6 years. This is in addition to the 21 million jobs already generated and sustained by retailers, including 'mom & pop' stores. The industry has highlighted India's potential as a consumer economy and demonstrated the sheer consuming power of the urban Indian populace.
Exponential growth is expected with the opening up of Foreign Direct Investment (FDI). Though, at present, most of the retailers are Indian companies, multinationals are beginning to focus seriously on the country in anticipation of friendlier regulation. While this is great news, it also poses several challenges and questions. The most important of these is the accelerating shortage of talent and how companies will overcome this, especially Indian companies, as they prepare to compete with multinationals.
According to an ICICI report, the Indian retail industry (organised and unorganised) is pegged at US$ 286 billion and is expected to grow at 8.3 per cent during 2003-08. Food and beverages followed by apparel and footwear are the largest components and together account for 60 per cent of consumer spending. Although at 12 million retail outlets, India has the largest concentration in the world, its share of organised retailing is a mere two per cent. It compares quite poorly with other countries -US is at around 80 per cent, Brazil is at 40 per cent and China is at around 20 per cent. This however is changing. Driven by changing consumer demographics including a young population, growth in income and consumption, access to low cost consumer credit and increasing literacy levels, the organised retail segment is growing at almost 40 per cent annually. Also the retail boom, 85 per cent of which has so far been concentrated in the metros, is slowly penetrating to smaller cities and towns and the contribution of these tier-II cities to total organised retailing sales is growing.
It is important, however, to look at this growth in the right perspective. Like any other industry, the Indian retail industry comes with its share of challenges.
Today, a real challenge facing Indian retail CEOs is how to deliver true value to the customer, of which service is a crucial component. Service quality standards and brand strength will drive customer loyalty to a large extent. Product and price-based value differentiation in the retailing industry is short lived as it can be replicated quickly. While most of the major Indian retailers are investing in building brands, the brand promise isn't usually translated into service delivery at the shop floor level.
For those who can offer good service, consistency becomes the key challenge and companies get trapped in a vicious circle. Importantly, the international retail majors are likely to come with deeper investment pockets, access to a global supply chain and an experience of a diverse customer base that translates into greater product variety at attractive price points. More significantly, they will come in with invaluable experience of competing with a variety of retail There is an acute 'shortage of talent' in the Indian retail industry, says Sonny Iqbal. The industry needs to prepare executives for critical roles if they have to compete with MNCs chains/formats/brands in the organised retail sector in developed as well as developing markets.
posted by InCar Group Press Room at 15:23
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