Reliance Retail to axe 3,000 jobs

Written by Anandita Singh Mankotia | New Delhi, August 27: | Updated: Aug 27 2008, 18:08pm hrs
Barely two years after the launch of the countrys 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 hasnt 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 Retails 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.

When contacted about the retrenchment, a company spokesperson said, Let me categorically deny this. We would like to further clarify and reiterate that there has been no realignment of our business strategy in any way. We continue to learn from our experience and sharpen our customer offerings. Our overall retail strategy and joint ventures are completely aligned with what our chairman stated in his AGM speech: that we will aggressively pursue partnerships wherever appropriate, which give us access to world-class scale in the supply chain end and best practices on the operations end.

The spokesperson added, As far as the Reliance Retail function goes, our attrition rates are below/at par with industry standards. Our businesses have achieved scale and new ventures continue to expand. In this context, some employees in functions are continuously reassigned to group companies on the completion of projects.

Currently, the retail company has its 11 verticals in all stores across the country, and boasts among the fastest rollouts globally. Reliance Fresh, Reliance Trends, Reliance Time-out, Reliance Jewels, Reliance Mart are some of the verticals.