The anticipated boom in Indian retail has once again brought to fore varied and complex talent related challenges for organizations seeking to establish a foothold in the Indian market. What are the skill-sets required to bring about the necessary transformative changes in Indian retail? What could be the possible measures the industry can take to develop a talent pipeline for the future? And finally, is homegrown talent adequately prepared to take on these challenges head-on?
India: Still a Sleeping Retail Giant in the Making?
There is a growing recognition that in emerging markets such as India, retail is likely to likely to be the primary driver of the next wave of economic growth due to:
A large and untapped market
Low organised retail penetration
High GDP growth
Rising disposable incomes
Large number of aspirational consumers (middle-class, young Indians, rural population, etc.)
Though organized retail in the country has primarily been a metro-centric phenomenon so far, rising disposable incomes in tier-2 and even tier-3 cities has increasingly brought them into focus as emerging centers on the Indian retail landscape.
The Retail Opportunities and Talent Divide
Given the phenomenal growth that lies ahead for the retail industry, we strongly believe quality of talent will be the number 1 differentiator between success and failure for this industry.
The struggle for talent will really be at several different levels with myriad perspectives. The Indian market by its very nature reflects complexity, and differences in climate, demographics and cultures translate into differences in consumer tastes, preferences and spending habits across the nation.
Against this backdrop, the paucity of talent in retail specific functions such as Store Insights, Buying & Merchandising, Store Planning, and Visual Merchandising, etc., will be one of the key challenges confronting global retailers looking to set up shop in India and Indian retailers looking to compete with the best across the world in their industry.
Couple this with the lack of adequate leadership talent and the staggering demand for smart, articulate, well informed, thinking on your feet type talent at the shop floor, that can actually influence the share of wallet of the consumers and the talent issue magnifies manifold.
As estimated by own research and validated through several external sources, the retail industry will create close to 2 million new jobs in India of which 5% would be leadership roles.
Building a Talent Pipeline for the Future
In the long run, relying on expatriate leadership talent alone will not prove to be a viable proposition. It is imperative for retail majors, both domestic as well as global, to focus their efforts towards the development of native talent for taking on the top jobs in their respective organizations.
Poaching talent from other consumer facing industries has been standard practice for several retailers when they enter evolving retail markets like India. At the bottom of the talent pyramid, retailers will grapple with an acute shortage of skilled shop floor personnel. They need to put the necessary structures in place to ensure a steady pipeline of such talent from the very inception of their entry into the market. Instituting vocational development programs in collaboration with academic institutions, government vocational skilling institutes, inclusive growth non for profit bodies could be an option.
Compensation and Retail Talent
Given the huge demand for talent in this sector, and the lack of adequate numbers, compensation continues to remain an area that HR leaders are watching very carefully. Given that people are the “real” asset in the business, managing employee cost effectively becomes priority the number 2 for the HR function after acquisition.
For foreign retailers coming into India they need to be prepared for the salary levels prevailing in the country. Indian compensation levels, especially in this sector are fast catching up with global levels and salaries in excess of 500,000USD for the top job are not uncommon.
The failure to hire and retain the “right” talent at the “right” compensation will prove to be a costly affair with issues like loss of training investment, the opportunity cost of lost business all adding hidden costs to the balance sheet.
Preparing for the Road Ahead
Overcoming the impending talent crisis in this industry and driving a high performance retail organization will require focused and strategic talent management.
To build talent powerhouses companies would need to build a long-term approach rather than fulfill short-term needs. The need of the hour is for organizations to remain one step ahead of anticipated challenges and put into place a strategic vision for how best those challenges can be met.
For global players starting off on a clean slate in the Indian market, with customers yet to settle upon their favorite retail brand, prioritizing the quality of leadership talent brought into the organization could well be the secret to success in the Indian market.