Reliance Retail to shed 3,000 jobs in revamp

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New Delhi, Aug 26: Barely two years after the launch of the country’s most ambitious retail venture, the Rs 25,000-crore Reliance Retail seems to be revamping its business model. The first step in this mid-course correction is rightsizing: the company is in the process of retrenching around 3,000 employees, nearly one-fifth of its total employee strength of around 20,000 across the country.

The company is also planning joint ventures with foreign players for all its future and existing retail verticals, a process that is expected to be completed by the end of 2009. Reliance Retail has deferred plans to hive off its verticals as separate business entities and to tap the capital market by year-end. This is because its store rollout hasn’t matched initial targets. The company has 650 stores across the country. Its competitor, Aditya Birla’ s More, has around 600. Company sources said persistent inflation added to Reliance Retail’s pressures.

Of the 3,000 employees to be eased out of the retail business, around 1,000 are IT professionals, while the rest are consultants and employees on short-term contract.

Up until now, retail was viewed as a separate initiative of the parent company, Reliance Industries Ltd (RIL). But now, the overall restructuring plan of the retail venture will see it aligned in terms of salary structure and other practices more closely with RIL.

For instance, the retail business had hired people from other retail companies at high salaries at all levels. Henceforth, such hiring is expected to come down considerably and recruitments will be in tandem with the parent company.

Reliance Retail has also entered into JVs with a string of foreign retailers like Boots, Hamleys Toys, Marks & Spencers and Pearl Group. It is expected to strike deals with more foreign partners for almost all of its verticals, reversing its earlier insistence of going it alone. Sources told FE that the JVs too require the retail company to restructure its employee strength.