Retail rebounds, so does attrition

Remember the attendant who served you coffee last month at the hypermarket diner?

Chances are, you will find him selling menswear at a large-format departmental store in some time.

Indian retail may have left the slowdown behind, but an old ghost has returned to haunt it — attrition.

In a throwback to 2007 when a new brand entered the market each day, conveniently poaching staff from the payrolls of existing players, retailers today are desperate to curtail employee churn, especially at the front-end, as people leave within months and sometimes days of finding a job for as little as a few hundred bucks more.

Quick-service restaurants (QSR) and cafe chains, which are looking to expand in order to be able to make the most of the economic growth and consumers’ rising propensity to spend, appear to be the hardest hit.

“It is the single largest challenge that we have. Attrition today in India has got nothing to do with your best practices as a company. Whether you are a great company or an Indian company or a multinational, a Rs500 difference can make a person shift to other brands. At that level, money is the only driver,” says Sanjay Coutinho, chief executive officer, Barista Coffee Company (India) Ltd, which runs the Barista Lavazza chain of cafes.

Santhosh Unni, chief executive officer of cafe chain Costa Coffee India, says most employees who leave the company do so within the first 21 days of joining.

However, Shyamala Deshpande, president - HR and training, Cafe Coffee Day, a division of Amalgamated Bean Coffee Trading Co Ltd, feels the first three months are when the most attrition takes place.

“It is a very young workforce that we have in the industry today, and they are very fickle-minded. It is difficult to tell young employees of a long-term career,” says Deshpande of Cafe Coffee Day.

Costa Coffee’s Unni concurs: “It is a very big challenge that we face today where the key thing is to keep people at store level motivated, so that they do not shift to another job for additional Rs200.”

Attrition in the QSR business is, in fact, as high as 100% per year, says Samir Kuckreja, chief executive officer and managing director of fast food chain Nirula’s. “Which means, every year your entire staff (front-end) changes.”

As existing QSRs and cafe chains such as Subway, McDonald’s, KFC, Barista Lavazza, Cafe Coffee Day and others expand their network, and many international chains scurry to open shop, there is a huge demand for manpower.

Retail majors like Pantaloon Retail (India), Aditya Birla Retail and Shoppers Stop are also back to creating thousands of jobs annually. This has resulted in attrition in the sector attaining the crazy proportions last seen in 2007.

Thomas Varghese, chief executive officer, Aditya Birla Retail Ltd, says all retailers are struggling with attrition on front-end, which is 7-8% a month or 90% a year.

Kuckreja of Nirula’s says employees look for better-paying opportunities across sectors like retail and business process outsourcing.

According to Barista’s Coutinho, attrition is hampering the store performance of retailers.

“If you see the performance of a store and if your store is doing very well on several parameters, grill down and see why. Nine out of 10 times the reason would be that the store has a very low attrition rate,” says Unni of Costa Coffee.

Most retailers like Costa Coffee and Cafe Coffee Day train people from rural India on the cafe culture environment.

Ironically, the churn continues despite employers showing the staff clear career growth graphs and investing heavily in training employees, not to forget on motivational and retention-oriented programmes.

In order to retain staff, retailers like Aditya Birla Retail are offering long-term opportunity to their customer service associates who could progress to become store managers in 4-5 years with the company.

Barista is devising strategies at staff retention, while Costa Coffee has started a training module 12 months ago and Nirula’s has a training and staff retention cell, while Cafe Coffee Day has increased the number of training days for new employees.