Pruning staff has been one strategy to cut costs. Scores of youngsters hired as front-line staff in stores have been handed pink slips even as retailers cut back on new recruitments.
“Temping or temporary staffing in the retail sector has indeed declined. The downsizing of temporary staff is more noticeable since a large proportion of the front line in retail comprises temporary staff,” says Rajesh A.R., vice-president, temping, TeamLease Services Pvt. Ltd. “The demand for store supervisors and merchandisers has reduced significantly since retailers have more or less frozen expansion plans.” TeamLease’s losses in the retail business this year are 8-9% of year-on-year revenues.
Recruiters placing candidates in senior positions, too, have been impacted. “Even a couple of months ago, candidates would not even care to return my call and now, on an average, I receive around five-six calls a day from senior retail professionals,” says Vidya Prakash, a principal consultant heading the retail practice at executive search firm Stanton Chase India.
Stanton Chase, which places senior professionals, has seen revenues (from fees) from its retail practice decline by almost 70% in the last three months (August-October) compared to June-August.
“Things have been so bad that now we are looking at any mandate from any sector to offset the dip in revenues,” says Chandan Varan, senior manager, Unison International Consulting Pvt. Ltd, a recruitment firm whose clients include ITC Ltd’s lifestyle retail business Reebok India Co., Nike India Pvt. Ltd and Shoppers Stop. Unison’s revenues have declined by 50% in the last three-four months.
Recruiters say hiring in the retail sector will continue to remain flat in the coming months. Future Group, for instance, stopped hiring—except for front-end staff—for new stores five months ago. “We have attained a size where we do not need any more people in the managerial and senior executive levels,” says Sanjay Jog, chief people officer, Future Group.
Salary hikes are going to be minimal, he says, adding that one can expect salary rationalization of 15-20% on an average in the coming year. Recruiters say salaries have declined by 20-30%, with a higher variable component now. Salary increments in 2009 are expected to hover around 10-15%, against a high of 25% in 2007.
The job losses and slowdown in hiring have created a pool of talent eager to move on—and back to sectors it came from. “This is a good time to hire talent at realistic salaries,” says Prakash.