Store Manager

Retail Sector in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US$ and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people. As of 2013, India’s retailing industry was essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India’s retail and logistics industry employs about 40 million Indians (3.3% of Indian population).

Until 2011, Indian central government denied (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process. In November 2011, India’s central government announced retail reforms for both multi-brand stores and single-brand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Walmart, Tesco as well single brand majors such as IKEA, Nike and Apple. The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reaches a consensus.

In January 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership, but imposed the requirement that the single brand retailer source 30 percent of its goods from India. Indian government continues the hold on retail reforms for multi-brand stores. In June 2012, IKEA announced it had applied for permission to invest $1.9 billion in India and set up 25 retail stores. An analyst from Fitch Group stated that the 30 percent requirement was likely to significantly delay if not prevent most single brand majors from Europe, USA and Japan from opening stores and creating associated jobs in India.

On 14 September 2012, the government of India announced the opening of FDI in multi-brand retail, subject to approvals by individual states. This decision was welcomed by economists and the markets, but caused protests and an upheaval in India’s central government’s political coalition structure. On 20 September 2012, the Government of India formally notified the FDI reforms for single and multi brand retail, thereby making it effective under Indian law.

On 7 December 2012, the Federal Government of India allowed 51% FDI in multi-brand retail in India. The government managed to get the approval of multi-brand retail in the parliament despite heavy uproar from the opposition (the NDA and leftist parties).Some states will allow foreign supermarkets like Walmart,Tesco and Carrefour to open while other states will not.

Today, only a small part of retail in India is organised. Despite this, it is estimated that the sector in India is worth more than $400 billion, with domestic and international players planning to expand across the country. Industry leaders predict that the next phase of growth will emerge from rural markets. There are projections of the workforce doubling by 2015, from the current five lakhs to more than 10 lakhs. Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m) / person is lowest in the world Indian retail density of 6 percent is highest in the world. 1.8 million households in India have an annual income of over 4.5 million (US$75,150.00). While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are significant challenges as well given that over 90% of trade is conducted through independent local stores. Challenges include geographically dispersed population, small ticket sizes, complex distribution network, little use of IT systems, limitations of mass media and existence of counterfeit goods. A number of merger and acquisitions have begun in Indian retail market. PWC estimates the multi-brand retail market to grow to $220 billion by 2020.

Productivity Enhancement is a challenges in Retail – Training is the Key

A McKinsey study claims retail productivity in India is very low compared to international peer measures. For example, the labor productivity in Indian retail was just 6% of the labor productivity in United States in 2010. India’s labor productivity in food retailing is about 5% compared to Brazil’s 14%; while India’s labor productivity in non-food retailing is about 8% compared to Poland’s 25%. Total retail employment in India, both organized and unorganized, account for about 6% of Indian labor work force currently – most of which is unorganized. This is about a third of levels in United States and Europe; and about half of levels in other emerging economies. A complete expansion of retail sector to levels and productivity similar to other emerging economies and developed economies such as the United States would create over 50 million jobs in India. Training and development of labor and management for higher retail productivity is expected to be a challenge. A ‘Vibrant Economy’, India topped A T Kearney’s list of emerging markets for retail investments for three consecutive years and stood 2nd only behind Vietnam this year. The 2nd fastest growing economy in the world, the 3rd largest economy in terms of GDP in the next 5 years and the 4th largest economy in PPP terms after USA, China & Japan, India is rated among the top 10 FDI destinations.

A report by investment banker Goldman Sachs, credits India with the potential to deliver the fastest growth over the next 50 years with an average rate of more than five per cent a year for the entire period. All these are clear portends in terms of investments and returns. To sustain an ambitious GDP growth target of nine per cent per annum, India needs to invest around USD 500 billion in development of Infrastructure over the next five years. Of this, about USD150 billion is expected to come from foreign investments. Indian retail industry itself has attracted total investment of over Rs.20,000 crore in creating infrastructure, systems & shop-fit. Corporate bigwigs such as Reliance, AV Birla, Tata, Godrej, Bharti, Mahindra, ITC, RPG, Pantaloon, Raheja and Wadia Group are expected to invest close to Rs.1 trillion in the business of retail over the next five years. Reliance Retail is investing Rs.30,000 crore in setting up multiple retail formats backed by a 68- strong distribution network, with expected sales of over Rs.100,000 crore by 2010. The Future Group’s Pantaloon Retail and RPG’s Spencer’s are also going all out to maintain their dominant position on India’s retail horizon. The Lifestyle India, Indiabulls, Wadhawan Group, Vishal Retail, petroleum majors IOCL, BPCL & HPCL, and others are firming up more and more ambitious retail expansion plans by the day. While global retailers Metro AG and Shoprite Holdings increase their presence on the Indian retail landscape, the Bharti – Wal-mart combine is scouting locations for their joint retail venture. The recent tie-up between Tata and Tesco further adds to the action in retail.

At the heart of the India growth story is its population, the generators of wealth, both as producers and consumers. With the largest young population in the world – over 890 million people below 45 years of age, India indeed makes a resplendent market. The country has more English speaking people than in the whole of Europe taken together. Its 300 million odd middle class, the “Real” consumers, has attracted the attention of the world, and as the economy grows so does India’s middle class. It is estimated that 70 million Indians earn a salary of over USD 19,500 a year, a figure that is set to rise to 140 million by 2015. The number of effective consumers is expected to swell to over 600 million by this time – sufficient to establish India as one of the largest consumer markets of the world

Staffing challenges in the Retail Sector

With retail giants entering into the fray there is an acute shortage of manpower and talent in the retail sector. Retailers like Reliance itself now hire around 60-70 percent of its front end staff from government school pass outs. To face this expected talent shortage higher educational institutions starts introducing new courses. Retail career area includes store operation, supply chain management, human resource management, entrepreneurship, IT, sales etc. The management schools like NMIMS, IIMs has started offering courses with specialization in this field. Number of e-learning portals have started providing online courses for retail in India. Foreign Institutional Investors and corporate like Lifestyle tie up with Indian institutes like National Institute of Fashion Technology (NIFT) to start both short and long term course for fashion retail management and retail supply chain management. The great demand for those qualified students surely attract more and more youngsters and managers to this industry.

Within the Retail Sector, Speakwell proposes to offer training to take up roles in Store Operations, which would fetch a candidate anywhere between Rs. 8,000/- to Rs. 10,000/- as starting salary and would offer a decent growth to the candidate. The candidate can join as trainee in store operations and grow to become an Asst. Store Manager within 3 – 4 years. Students who come to Speakwell centers are also likely target for taking up jobs in the retail sector. A training program in Retail would spruce up their chances of performing well in the interviews. Over the next 10 years, we expect to train & place over one lakh students for the retail sector.


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