Reliance Retail to axe 3,000 jobs

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 insiste nce 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...

Source: Financial Express