Salaries in the retail industry skyrocketed when Reliance went on a hiring spree for its retail venture last year. The world's largest retailer Wal-Mart and the Aditya Birla group could prop up salaries further in 2007.
Fast-paced expansions by existing retailers and the emergence of new players are creating an unprecedented war for talent, leading to 35-40 per cent rise in salaries across-the-board.
"Reliance has set new salary benchmarks. While individual talent itself will determine the price, salaries will go up significantly," said R Subramanian, managing director of the Chennai-based retail chain, Subiksha. Subiksha has stepped up hiring for expansions into the North and the West.
Subramanian will be forced to part with more money for talent shortly as the Bharti-Wal-Mart joint venture, which plans to open its first retail store by August 15, has begun its talent hunt. While Wal-Mart has a tight-fisted approach on salaries to save costs, it may not happen in India where talent is scarce, said industry sources.
The Birlas, who plan to recruit people for its new retail venture, is now offering attractive salaries to court talent.
The Birlas had to pay 35-40 per cent more to hire senior executives from rivals like Mumbai-based Shoppers' Stop. "I see the salaries going up further," said Govind Shrikhande, COO, Shoppers' Stop.
For instance, the average annual salary of a store head has jumped by 40 per cent to Rs 10 lakh in the last one year. This is set to touch Rs 14-16 lakh in the next one year, said industry sources.
Shoppers' Stop, which gave a 40 per cent hike in salaries when the churn started, last year, is exploring new ways to fight attrition. "We can, of course, give ESOPs to all employees. We need to implement other concrete measures," Shrikhande added.
Players like Mumbai-based D-Mart are organising programmes such as "Talent Meet" to create a bonding among employees. "Once in a while, we will have a singing competition or something like that before the store opens," says an employee of D-Mart at Nerul in New Mumbai.
Poaching from other industries is also underway. "There is a great shortage for skilled manpower," said Mohit Mohan, senior vice-president, executive search firm, Gilbert Associates.
That is why companies like Subiksha are recruiting from FMCG majors. Executives from Asian Paints and Bharti Telecom have recently joined the company.
There is, however, no major benefit since salaries in FMCG and Telecom industries are high. However, executives who make the switch are likely to get better bargains.
"Retail is very hot today. Hence, people want to join the industry and get substantial hikes in the next one year when more players come in," said an HR consultant.
The fight for talent is more intense at the bottom. Most store executives have joined the retail industry from call centres. Some of them are going back as the BPO industry offers decent hikes too.
Even poaching has gained momentum at the top-level too. Reliance, which doles out Rs 4 crore to its CEOs, is now losing people to new entrants. Start-ups need experienced people, since they can bring in lot of expertise for rolling out stores.
"It is not correct to assume that new entrants like Wal-Mart will go for substantial hikes. Global companies follow the policy of training people for specific needs," says Rajeev Karwal, who recently quit Reliance Retail as CEO.
What Karwal says seems to be right; if Wal-Mart's recent moves are any indication. It has chosen Lance Rettig, who joined as a cashier at a Wal-Mart store in Arizona 18 years ago, as the head of its liaison office in India.
"Nearly 76 per cent of our store managers started as associates (entry-level staff)," Michael T Duke, vice-chairman, Wal-Mart Stores, had told Hindustan Times. It remains to be seen whether this strategy will pay off in India.