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Tuesday, July 26, 2011

Retail industry offers good options for enterpreneurial graduates

Organised retail industry is growing at a rapid rate in India. Big Bazaar, Spencer, More, Smart, Hypercity are all springing up in the urban centres, and with them, we are seeing a new option for graduates, especially the entrepreneurial graduates. In order to understand the options available in retail industry, let us understand the structure of the industry.

In the lowest scale, retail is dominated by Supermarkets. A supermarket like Reliance or Spencer is a shop of approximately 3000-5000 square feet space, sells about about 3000 SKU's ( stock keeping units or identified unit of sale such as soap, sugar or curd) sells about 15-30 lakhs per month and employs about 15-25 employees. A hypermarket like Big Bazaar is a shop of approximately 20-30 K square feet, sells about 15000 SKU's, clocks a sales of about 3-5 crore per month. A mega-hypermarket like Hypercity or Metro has even higher square feet area like 80 K square feet.

All these shops have three sections: Sales floor employees who help customers buy a product, back end employees who interacts with suppliers to get the material of requisite quality and quantity and supporting employees like security, cashier and cleaning. Sales floor employees progress in the following hierarchy: customer sales representative > Team Leader > Department leader ( such as that of food) > Stores manager. Other positions are Regional office and Head office positions.

Working in sales floor is supposed to be the premium job and is also paid the best, followed by back end and supporting section in the descending order. One generally starts working from supermarket and move to Hypermarket and then to mega-hypermarket. Normally it takes about 10-15 years to become a store manager. A store manager of a supermarket may earn about 25K per month while the same store manager of mega-hypermarket will earn about 100K per month.

One can join a supermarket at the lowest level even after passing HSC. That is a huge advantage for an entrepreneur as he can gain the necessary customer knowledge and buyer market as well as learn the necessary skills. If you work on sales floor, you understand what customers want, how they buy, which products move faster in the market and so on. If you are working as a Buyer ( in back end section), you not only gain information about the best suppliers of a product, you also understand which products have better margins. For instance, you will understand that apparel section has higher profit margin than food section !

By the time you graduate, you have learnt the ropes of business and can make the next move. You can , for instance, start an apparel shop in an area that you know has market. Or you can decide to become an intermediate distributor of vegetables and fruits. Or you can just decide to have a repair shop for TV's.

Even if you decide to stick with employment, MBA can be a distinct advantage to move beyond the level of store manager. One can also move midway to Hotels and restaurants if one finds it as more exciting. I know of a person who decided to use his retail management expertise to start a franchise outlet of Macdonald. Not only the options are available, but they are available at the right age.

Do you see the advantages of working in retail?

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