News: Wanted - 2.5 million pairs of hands

(DNA 28/11/2006) Mumbai - Sunanda Saini (name changed), is an architect with over a decade’s experience with a leading retail chain. She has designed and developed over a dozen projects from scratch in almost as many cities in India. And that’s what makes her invaluable to her employers and worth her weight in gold for her employers’ competitors.

“Not a week passes by when I am not offered twice to thrice my existing salary by consultants,” she says.

Welcome to the real world of retail, where talent shortage is as real as the potential of the sector.

According to a KPMG survey last year, 55% of the respondents said there is ‘significant shortage’ of retail managerial skillsets in India.

A couple of generation of youngsters, therefore, can safely bet on a career in the sector.

Consultant Technopak says 750 million square feet of additional organised retail space would come up in India over the next five years. At one employee for every 300 square feet of space, it translates into an incremental demand of 2.5 million pairs of hands.

No wonder, Pantaloon Retail honcho Kishore Biyani says organised retail can be a bigger employment generator, potentially employing 10-20 times what IT does. And this is where retail is getting hit by the strange paradox of not finding people, trained people to be exact, in the world’s second most populous nation.

“There is no supply pipeline for senior positions. They need to be headhunted and poached from competitors or other industries,” says Virendra Rastogi, managing director of placement consultancy Clarendon Parker Asia.

Dearth of trained employees means the salary levels have zoomed over the last two years, with the salaries of some of the vertical heads resembling the GDP of a small nation. At the corporate office level, a five-seven year retail stint could move you into the Rs 40-50 lakh per annum bracket. Did someone say IT pays better?

“The price of dynamism and high growth has been a dearth of professionals in the business today. Areas that are becoming critical and where the shortage is most acute are in the fields of technology, supply chain, marketing and operations,” says Neeti Chopra, head, marketing, Trent Ltd, the Tata retail arm.

And this has lead to analysts worrying. “Staff cost to sales ratio has moved up to 7% from 6% in just a quarter and it is inching towards 7.5% to 8%. I’d be worried for any figure over 5%,” said a retail analyst with a foreign brokerage.

KPMG estimates overall attrition at 40-60% with that at senior and middle level at 10-15%.

“However, at Rs 4,000-5,000 per month, salaries at the shop floor level haven’t changed much. It is the back operations like merchandising, category manager, logistics manager etc where salaries have moved up by 1.5 to two times in the last one year,” says Rastogi. But the industry cannot expect any respite in the near to medium-term.

“I have a tough time retaining my people. Retail is still not seen as a long term career option and with BPOs paying twice for almost the same skills-English speaking, good communication skills, and the ability thinking on your feet- and lesser hardship, churn at my shopfloor level is high,” says the floor manager of a retail chain.

And with the entry of bigwigs, the talent crunch is going to get even more acute.