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HR ASPECTS IN RETAIL

The Retail Business in India today is catering to people in cities and towns and has been growing and spreading at a great pace in an evolutionized and revolutionized way. They are no longer the old kirana stores, but huge shopping complexes beyond comparison that go to provide all customer needs in a most conducive environment making their purchases a recreational outing filled with fun and delight. Nowadays there are these big plazas, multiplexes or shopping malls as the only and the easiest way of getting their daily requirements avoiding week day market or even shops in the neighourhood. With the growing number, these retail businesses have turned into many organizations calling for huge number of employees, plans and strategies to move sales and sales support, to efficiently handle complaints and products services, to cut down costs, to improve quality of customers and employee services and enhance process efficiency and so on and so forth. Human Resources (HR) though means people, in real business terms refers to one of the most important functions of business, we are all aware of. Today, Human Resources is one of the most important aspects of business organizations because it provides services required by them. The present era is of HR and has been realized as indispensable by corporates. However, it is observed that HR percolation has not reached the ideal levels. In present times, HR is not limited only to managing people, but also has its strong connect into business. Therefore, HR is seen in all spheres of business activity catering the needs of business both directly as well as indirectly and can go to have a great impact on any business. It is equally important in providing and supporting other business functions such as finance, operations, marketing, IT, purchases and many more depending upon the type of the organization. The very purpose of HR function starts from recruitment and selection process in ensuring that the organisations have the right people, with the right knowledge, skills and attitudes, in the right place, at the right time and for a right pay. Along with it, HR also goes to provide necessary training and development programmes in the organisations to enable people to work effectively and efficiently, undertake skills assessment/ performance appraisals to place and reward people rightly, work out proper compensation plans to the monetary requirements of people over the years to their different levels or positions, create a conducive work environment to maintain discipline and culture through various policies and procedures and so on.

Retail Challenges:
Retail business has undergone a sea change over the past decade. Today, manufacturer can no longer rely on sales to take place by ensuring mere

availability of his product. It is about their desires and aspirations, and forging long-lasting relationships. As the Indian consumer evolves they expect more and more at each and every time when they step into a store. Retail today has changed from selling a product or a service to selling a hope, an aspiration and above all an experience that a consumer would like to repeat. The challenges facing the Indian organized retail sector are various and these are stopping the Indian retail industry from reaching its full potential. These retail challenges are classified under the following heads:

HR Challenges:
Trained manpower shortage Trained manpower shortage is another challenge facing the organized retail sector in India. The Indian retailers have difficulty in finding trained person and also have to pay more in order to retain them. This again brings down the Indian retailers profit levels. Higher seasonal pressure During festival seasons or on special occasions, unlike others, retailers have to be present to serve the customers. This calls for additional responsibilities and commitment. Workforce is required to be present even on weekends. Slow career growth The promotions/ career growth paths are slow that act as a demotivating factor for employees. It can be seen that the attrition rate is much higher in retail Organizations. Even incentives are sometimes delayed which brings down the employee morale and motivation. Attrition rates and retention of personnel There seems to be a high level of attrition in the retail sector which is almost 40% according to a recent study. Front end jobs are facing an attrition rate as high as even 80%. Shortage of middle management level professionals The industry is facing a shortage of middle management level professionals. Major retailers are hiring aggressively from the similar and smaller organizations by offering better packages. They are creating various levels of management and hiring on a spree. Some of the areas such as technology, supply chain, distribution, logistics, marketing, product development and research are becoming very critical for the success of the organizations. All of these would lead to the recruitment of highly professional people who

specialize in these fields. There is also a trend for hiring hotel management graduates, though now many retail schools are coming up, and Pantaloon has set up links with major business schools from where it would be selecting the right candidates. Shortage of skilled manpower in rural areas A retail organization setting up an outlet in rural area finds it difficult to get the right candidates as employees. This is because they hesitate to work for long hours because of several family commitments. Also, it becomes difficult to get women employees from rural areas.

Operational Challenges:
Right Location Right location at the right place among the right concentration of people too plays a very important role in the functioning and growth of retail business and this is one of the most determining aspects of retail business. Lack of retail space The biggest challenge facing the Indian organized retail sector is the lack of retail space. With real estate prices escalating due to increase in demand from the Indian organized retail sector, it is posing a challenge to its growth. With Indian retailers having to shell out more for retail space it is affecting the overall profitability in retail. Infrastructure and Logistics The lack of proper infrastructure and distribution channels in the country results in inefficient processes. This is a major hindrance for retailers as a nonefficient distribution channel is very difficult to handle and can result in huge losses. Infrastructure does not have a strong base in India when urbanization and globalization are compelling companies to develop infrastructure facilities. Supply Chain Management The retail scenario is characterized by logistical challenges, constant changes in consumer preferences and evolution of new retail formats. All this increases the challenges faced by the industry. Retail majors are under serious pressure to improve their supply chain systems and distribution channels and reach the levels of quality and service desired by the consumers. Barriers for new entrants

Government regulations on FDI in the country can be seen as a barrier to entry. Other barriers may be the inability to build economies of scale, substantial capital requirements in terms of investments in store locations, limited access for distribution and high costs in terms of supply chain efficiencies. Aggressive expansion Over the last few years it was observed that Indian retailers went on an expansion spree just because of the availability of real estate and not actual requirement that led to clustering. Following the slowdown and cash crunch in 2008, several outlets were cash strapped and had to be closed down. Frauds in Retail It is one of the primary challenges the companies would have to face. Frauds, including vendor frauds, thefts, pilferages, shoplifting and inaccuracy in supervision and administration are the challenges that are difficult to handle. This is so even after the use of security techniques, such as CCTVs and POS systems. Improvement in the process efficiency The efficiency in the process of retail business should also be going better by reducing the time involved at each work stage and by making work processes easy or less complicated.

Financial Challenges:
The high cost of real estate Real estate prices in some cities are among the highest in the world. The lease or rent of the property is one of the major areas of expenditure; high lease rentals eat into the profitability of a project. High stamp duties Stamp duties are high on transfer of property, which varies from state to state. Also strong pro-tenancy laws make it difficult to evict the tenant. Multiple and complex taxation system Sales tax rates vary from state to state, while organized players have to face a multiple point control and tax system, there is considerable sales tax evasion by small stores. Also in many locations, retailers have to face multi point octroi. Consistency in the increase of sales and maintenance of profitability

Maintaining profit and sales consistency in itself is a great threat to business. Business wavering due to poor sales performance due to poor strategies may bring multiplied losses.

Reduction of costs Today most of the organizations strive hard on bringing down costs wherever possible to avoid unnecessary expenses that affect profitability and growth.

Marketing Challenges:
Change in the behavior pattern of Indian consumers The behavior pattern of the Indian consumer has undergone a major change. Their earnings are more, have got western influences, women working force is increasing, desire for luxury items and better quality and so on are all really scaling high. All these have led the Indian organized retail sector to give more in order to satisfy the Indian customer. Merchandising Planning Merchandising planning is one of the biggest challenges that any multi store retailer faces. Getting the right mix of products, which is store specific across organization, is a combination of customer insight, allocation and assortment techniques. Right Positioning The core purpose of retailers is to inform the target customers about the offerings of the mall, persuade them to visit the mall and remind them about the mall. Various communication tools available to the mall developer for this purpose may include advertising, buzz marketing (WoM), and celebrity endorsement, use of print media, press releases and viral marketing. Once the message is being conveyed through these channels, the mall developer must add a personal touch to his message by carrying out a door-to-door campaign in order to reinforce the message. Effective Visual Communication Retailer has to give more emphasis on display visual merchandising, lighting, signage and specialized props. The visual communication strategy might be planned and also be brand positioned. Theme or lifestyle displays using stylized mannequins and props, which are based on a season or an event, are used to

promote collections and have to change to keep touch with the trend. The merchandise presentation ought to be very creative to generate interest. Threat of substitutes The unorganized retail sector is still the largest wherein cheaper versions of products are available. This still services most of the middle and poor income families in the country. Also taxation favours the small retail businesses. Bargaining power of Buyers Bargaining power of buyers is fast increasing and can be termed as moderate to high, depending on the product or service. In an age of informed consumer, meeting the buyers expectation in terms of product, price and service is increasingly becoming difficult. Co-ordination of Stores and Merchandise Management There is often the problem of coordination between stores and merchandise management only to hamper smooth functioning of the business. Rapid price changes Rapid price changes, obsolescence of the products and low margins pose as serious challenges. Customers are more informed and are mostly quality conscious nowadays. They would not compromise on quality and at the same would expect the products to be inexpensive. This inexpensiveness and good quality will in turn lead to low margins. Promptness in providing quality customer services Should retail businesses thrive well? The only way out is through promptness in providing sophisticated quality services. Retention of profitable customers and Customer satisfaction Retaining good customers should be one of the concerns while they look forward of creating clientele. This is further possible by keeping them satisfied always not only by continuously improving the quality of goods and services but also by nurturing of customer relations and building knowledge of products, services and customers.

Other Challenges:
Retail not recognized as an industry in India

Lack of recognition as an industry hampers the availability of finance to the existing and new players. This affects growth and expansion plans. Entry restrictions The Indian government has allowed 51% foreign direct investment (FDI) in the Indian retail sector to one brand shops only. This has made the entry of global retail giants to organized retail sector in India difficult. This is a challenge being faced by the Indian organized retail sector. But the global retail giants like Tesco, Wal-Mart, and Metro AG are entering the organized retail sector in India indirectly through franchisee agreement and cash and carry wholesale trading. Many Indian companies are also entering the Indian organized retail sector like Reliance Industries Limited, Pantaloons, and Bharti Telecoms. But they are facing stiff competition from these global retail giants. As a result discounting is becoming an accepted practice. This too brings down the profit of the Indian retailers. All these are posing as challenges facing the Indian organized retail sector. Sustainability of business This is of course the ultimate challenge of all business to perpetually grow and sustain in the world amidst strong competition and numerous challenges to bear.

HR COMBATTING RETAIL CHALLENGES:


In this era of globalization, human aspects is one of the key factors of business performance and so building human framework has been the primary objective to meet the global challenges in organizations. There are number of HR related retail challenges that need special attention from management perspective as they too have a great impact on the business. Some of the challenges of HR are: talent acquisition and retention, direct interaction with people who are conscious about their rights, work environment, maintenance of cordial human relations and so on. HR sailing through retail definitely requires plans and strategies in the field to combat the retail challenges. The task is all the more difficult because of the composition of the workforce, its size and scope for employee growth. Retail business has its HR challenges to meet besides other challenges from the functional areas. But our presentation limits only to HR challenges in retail industry. How HR goes to combat these challenges are explained below:

1)

Talent acquisition and retention of personnel: HR has to constantly cater to the human requirement. Any large retail business requires huge number of people because people are required to work in various sections of the store, administration, accounts, maintenance, stores, security and so on. Acquisition of people is a challenge because of continuous attrition rate which is very high. At the same time, retaining good employees is hard as the compensation given is much less in comparison with the corporate world. Poaching has become rampant, where the competitors lure the employees with lucrative pay packages and other benefits.

Under the present circumstances, retention and motivation of personnel has become the major concern of HR. A good working atmosphere, learning and training facilities, a highly competitive pay structure, rewards and recognitions are some of the effective retention practices followed by the retail sector. While money is the main attraction for freshers, career satisfaction is the main reason with experienced personnel. Assigning the "right project to the right person" is the organizational motto these days with companies setting up Manpower Allocation Cells (MAC) to carry out this agenda. HR practitioners are therefore required to play a more proactive and prominent role in order to retain the high tech skilled employees who are constantly looking for greater gains and prospects in their work. This is the real HR challenge to retain the "knowledge workers" and "knowledgeable workers" by introducing new processes and procedures and still ride high in implementing organizational effectiveness.
2)

Improvement in the quality of life of employees: It is the task of HR to improve the quality of people and talking quality without quality of life is meaningless. It does not refer to the sophistication at the store but conducive and flexible atmosphere made available for people to work with freedom and responsibility that really matters. It is not about only getting right people but giving the rightful and treating them the right way. This definitely calls for rationalizing compensation package because that is what matters most at the foremost. It is for sure that quality employees can only create quality customers and further go to build the image of the organization. This can be further enhanced through training and development, engaging them responsibly, through knowledge sharing to enable growth and progress in their personal as well as professional lives.

3)

Provision of quality services to internal customers: This refers to the governance of good and fair HR practices to ensure that employees are compensated properly to add quality to their lives which is truly quality service to them. It is only when we provide quality services to our own employees; we can make them provide quality services to our external customers. Quality service would also mean good organizational culture, implementation of fair performance evaluation practices and appreciation, decent pay packages, performance incentives, welfare benefits, harmonious relations, scope for individual plan and growth, good working conditions and so on. Building and nurturing employee relations: This is what the world around looking for. Without building and nurturing good employee relations, performance and productivity will bring hurdles on the way to sustainability. For example: In large retail firms, the buying and selling functions are organized into separate divisions. Typically buyers are specialized in buying merchandise and are dependent upon the store managers and staff to sell it. It is the responsibility of the human resources management to develop a suitable organization structure depending upon the size of the retailing firm and the type of merchandise bought and sold by it. Human Resource team has to ensure a good coordination between buyers and sellers. Restructuring of organizations: As variety of professionals are required, HR should cater to retail needs by restructuring the organizations according to the manpower requirement and suitability of the particular retail business which is growing from time to time. Today people are well aware of their talents and capabilities, look only for suitable positions and everything connected to it in the right way. Therefore, restructuring would bring some sort of synchrony in people matching their qualifications, skills and capabilities. Competency and performance management: The HR leaders have to know people with their skills and competencies to have a proper employee engagement and then assess their performance through some appropriate methods to continually enable them to perform and grow with the business over the years. This tendency is of course only in people because they would like to see themselves growing not only vertically but horizontally to be fully secured after attaining retirement,

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while they would have discharged all their other family and societal obligations during their service period.
7)

Becoming a change agent: HR today goes to create culture through its HR practices and policies for the cause of the organization and its people. It undertakes people developmental activities, conducts leadership and motivational programmes, encourages and enriches employee engagement and performance, organizes knowledge sharing activities and brings continuous learning process, all causing change as per the changing times.

CONCLUSION:
HR has been therefore an indispensable and integral part of retail business both directly and indirectly complementing and supplementing to its various needs. It is no longer a subject of only maintaining people, but also bringing business aspect into it. It has its role to meet the vision and mission of any business through various HR activities. The various challenges that retail business faces some way or the other get connected to HR to meet the ultimate end. In the world of business today, where we look for only results from its working, its people and through people that things get accomplished, for organizations dont exist without them. Retail businesses can avoid white elephant effect by strengthening HR practices.

References: Changing Strategies in HRM By R. N. Mishra. http://www.indianmba.com/Faculty_Column/FC689/fc689.html http://goliath.ecnext.com/coms2/gi_0198-510028/Indian-retail-sectorHR-challenges.html http://business.mapsofindia.com/india-retail-industry/challengesfacing-the-indian-organized-retail-sector.html PROF. FRANCIS LOBO, Asst. Professor, THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH , Shyamnarayan Thakur Marg, Thakur Village, Kandivli (E), Mumbai 400 101. Mobile no: 9987751405. AND

SUHAS NAMBIAR, MMS Student, Sem-III, THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH.

Mobile no: 9969484341.

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