India’s Retail Giants Slash 26,000 Jobs Amid Economic Slowdown
In a surprising turn of events, India’s retail sector witnessed a significant reduction in workforce in FY24, with around a dozen major lifestyle, grocery retailers, and quick-service restaurants collectively slashing nearly 26,000 jobs. This marked a stark contrast to the hiring spree seen in the previous two financial years, as companies grappled with weakening consumer demand and slowed down store expansions.
According to a report by The Economic Times, the bulk of the workforce reduction was driven by five major retailers: Reliance Industries‘ retail arm, Titan, Raymond, Page Industries, and Spencer’s. These companies, which had employed 455,000 people in FY23, saw their combined workforce shrink to 429,000 in FY24, a decline of 17%. This figure includes both permanent and contractual staff, adjusted for attrition.
Kumar Rajagopalan, CEO of the Retailers Association of India, highlighted the challenges faced by the industry in talent acquisition. „There is a shortage of talent, and we are working to collaborate with universities to provide the industry with more hiring options,“ he said. While some companies have reduced staff due to business closures, others like Shoppers Stop and Trent continue to expand and will require additional personnel.
The downturn in retail hiring comes as Indian consumers began cutting back on non-essential spending on apparel, lifestyle products, electronics, and dining out since Diwali 2022. Factors such as inflation, rising interest rates, job losses in sectors like startups and IT, and a general economic slowdown have contributed to this shift. Retail sales growth in India slowed to 4% last year, following a surge in post-pandemic spending driven by „revenge shopping.“
Reliance Industries, in its annual report, noted that voluntary separations in FY24 were lower than in FY23, attributing the reduction to the high employee turnover rate typical of the retail sector, especially in store operations. Devangshu Dutta, founder of retail consulting firm Third Eyesight, pointed out that store productivity tends to fluctuate in cycles. „Post-pandemic, we saw a spike in consumer spending, prompting retailers to expand their networks. However, if some stores prove unviable, management teams are now more objective, even ruthless, in shutting them down.“
Retailers have also slowed their pace of store expansions, with the sector recording a growth rate of just 9%, the slowest in at least five years. According to commercial real estate firm CBRE, the retail sector absorbed 7.1 million square feet of space across India’s top eight cities in 2023, a figure expected to drop to 6-6.5 million square feet in 2024.
Avenue Supermarts CEO & MD Neville Noronha emphasized the importance of strategic talent management as the company navigates these challenges. „To ensure sustainable growth over the next decade, we must think about the kind of talent we need today and in the coming years,“ he told investors.
In conclusion, the retail sector in India is facing significant challenges as companies grapple with slowing consumer demand, economic uncertainties, and changing market dynamics. Strategic talent management, prudent decision-making, and a focus on operational efficiency will be crucial for retailers to navigate these turbulent times and emerge stronger in the future.