Manpower Management, Real Estate and Supply Chain will be the key in Retail
A revolution is set to sweep across the country in the next three-to-five years in the retail sector, as traditional markets make way for departmental stores, hypermarkets and western-style malls. While penetration of organised retail in India remains slightly below 4%, domestic major retail players have announced aggressive expansion plans even as a plethora of new flashy malls are mushrooming in metros and second-rung cities. Three ‘big bang’ initiatives are shaking up the retail sector: Reliance Industries’ Rs 25,000-crore mega plan to create 100 million square feet of retail space and a sales target of Rs 100,000 crore by 2011, Aditya Birla Group’s Rs 15,000-crore retail foray and retail giant Wal-Mart’s entry via a joint venture with Bharti.
Even with net profit margins of only 4%, the return on investment is 16-18%. Besides, India’s vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets.
While there may be droves of young people applying for a spot behind the register, without any tradition of large retail stores in India, there is a paucity of experienced manpower available for mid-management positions. Meeting suitable manpower requirements and managing human resources in the future will become a challenge as competition hots up, experts feel. This is great opportunities for MBA students to look at this sector wherein you have also chance to prove your mettle and it is a emerging sector which may play for atleast next ten years. The other opportunities in these sectors include supply chain management and agricultural management. In fact, Reliance want to acquire 2000 acres of land in Karnataka in all District and Taluka headquarters for agriculture and it is also recruiting fresh agricultural graduates for a pay package of Rs. 3-3.50 Lakh per annum, till now an unkown figure in this sector.
Moreover, due to the increasing demand for manpower at the junior management level, number of schools and institutions have started offering retail specific syllabus. Retail management has come up as a seperate course in many B-schools. In fact, ISB has recently introduced an elective on retail management in its curriculum.
Presently, due to the dearth of experienced talent in this field, Reliance Retail is in the process of hiring around 100 senior expat managers, of which, 50-60 managers with 15-20 years of retail experience in global biggies like Wal-Mart, Best Buy, Tesco, ASDA and Kroger, have already joined the company. The AV Birla Group, which is readying itself for a retail venture, also intends to tap expats with overseas experience for its leadership team comprising 30-40 persons.
With some 350-odd mall expected to come up in the next three years, availability of reatil space is another major concern. Technopak Advisors pegs the gap between supply and demand of reatil space at a staggering 400 million square feet. Given the fact that large pockets of land are more easily available in smaller towns than in the metros, players such as Reliance have announced major retail forays in tier 2 towns. Tier 2 and 3 cities will be major growth drivers in future. So, if you are taking a management job in this sector, be ready to move to Tier 2 or 3 cities. However, while tier 2 cities represent an immense opportunity, infrastructure remains a major issue.
Another major issue is supply chain management. Significant invetsment in restructuring of the existing fragmented market in supply chain management is needed. According to a recent report by Enam Securities, cutting the number of intermediaries between the farmer and the reatiler could reduce costs by almost 7%. An estimated investment of Rs. 5000 crores will be needed to restructure the supply chain.
Detailed articles brought by ET Retail Survey
1. Mall Mania
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