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Retail chains give discounts, perks to lower attrition rates

Retail chains give discounts, perks to lower attrition rates
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First Published: Tue, May 01 2007. 12 04 AM IST
Updated: Tue, May 01 2007. 12 04 AM IST
Discount deals at Big Bazaar, India’s largest supermarket chain, are known to cause the occasional stampede or two. But Big Bazaar doesn’t come close to matching discounts at Mera Bazar, an internal company website that offers deals to employees of Big Bazaar’s parent Pantaloon Retail (India) Ltd.
These deals help employees at Pantaloon, India’s largest retailer, buy gold for Akshay Tritiya in Karnataka; clothes, food and electronics around Durga Puja in West Bengal; or loans to buy mobile phones—all from other Pantaloon group companies, of course. Pantaloon isn’t trying to drum up retail sales from its employees. The steep discounts are being doled out as perks to retain and incentivize employees in what has become one of India’s fastest-growing industries: retail.
With India’s approximately $7 billion (Rs28,700 crore) organized retail sector expected to grow at more than 30% over the next few years, jobs are getting created a lot faster than they can be filled. Apart from existing players, such as Pantaloon, which is also in a big expansion mode, large firms, such as Reliance Industries Ltd, Bharti Enterprises and the Aditya Birla Group, are all getting into the sector with plans for hundreds of stores all over the country. The retail sector saw the second-highest salary hikes, along with telecom and after the IT sector, according to estimates by industry body, Retailers Association of India.
Rapid expansion and salary hikes meant Pantaloon’s salary costs ballooned to Rs148.19 crore for the nine months ended 31 March, up from Rs67.48 crore for the same period, last year. At Shoppers’ Stop Ltd, which runs supermarkets, department and book stores, salary costs went up by 45% during the same quarter, with average salary hikes at 25%.
Across the retail industry, salaries went up between 18% and 25% compared with 12-14% salary hikes in other sectors, according to Watson Wyatt India, a human resources consulting company.
Meanwhile, poaching and fairly long work hours have led to about 40% attrition rates for some retailers. As a result, some retailers are trying to become employers of choice.
Apart from competitive salaries, retailers are now offering better hours, more stock options, paid leave for education, and training programmes to try and hang on to employees for as long as they can. While stock options are becoming commonplace—Pantaloons, Shoppers’ Stop, Trent and Subhiksha offer them—other perks and financial incentives are also becoming popular.
At Subhiksha Trading Services Ltd, which runs more than 700 neighbourhood grocery and pharmacy stores across India, if stores exceed monthly targets for sales, profitability or customer acquisition, they get a percentage of the excess revenues generated. With average job tenures of two years and loyalty bonuses paid from as little as six months onwards, Subhiksha prefers short-term goals to long-term ones, says Subhiksha managing director R. Subramanian.
While the retail industry is India’s second-largest employer, after agriculture, most of the 15 million jobs are in the unorganized segment. “The retail industry also has a mindset problem,” says Shruti Ambegaonkar, principal consultant at Watson Wyatt India.
“People do associate it with offering salespersons jobs. So, it will be a challenge to upgrade people as the industry evolves.”
The industry says it is finding that a good way to try and ensure a steady supply of trained staff is to provide continuing education. Subhiksha, which has 18,000 employees, runs internal training schools for its staff in Hyderabad, Vijayawada, Chennai, Mumbai and Delhi. Shoppers’ Stop has a tie-up with Manipal University to provide courses in retail. At Pantaloon, which employs 17,000 people, employees who have worked for two years are eligible for a fully paid two-year business school education.
“I have had parents asking me to employ their children because they have not made it through MBA tests, and this is a good opportunity for them,” says Pantaloon’s head of HR Sanjay Jog.
Two years, however, can seem like a lifetime in the sector.
“Retention of employees in the retail sector is a challenge on account of the fairly unique workplace conditions and circumstances. For instance, there is a tendency to work 10-hour shifts as opposed to the regular eight-hour shifts,” says Monisha Advani, who heads Emmay Human Resources, a Mumbai-based consulting firm.
Some retailers are acknowledging that issue. Shoppers’ Stop, for instance, reorganized its schedules allowing flexible timings in March. Its employees can now come in at various times in the mornings and work for nine hours. Store managers can choose their weekly off-days and women have more flexibility in choosing their shifts.
“It has involved a fair amount of reorganization, but employees are happy with how it’s working,” says C.B. Navalkar, group chief financial officer at Shoppers’ Stop.
Some retailers say the best way to get around the crunch for experienced retail executives is to hire from outside this limited pool.
“We don’t hire from the retail industry at all. It has a shallow well of talent and we don’t want to dry it,” says Subhiksha’s Subramanian. “Anyone who has worked in retail for three months thinks she is an expert.”
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First Published: Tue, May 01 2007. 12 04 AM IST
More Topics: Corporate News | Sector Spotlight |