In the last two quarters, what we have tried to do is, to not replace those employees who leave us.

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#3 – Depreciation Where on one hand, other retailers adjust for depreciation every 15 years, Shoppers Stop readjusts it once every 5 years; that means, more pressure upfront on book losses. Nagesh justifies, “We believe this industry is growing very fast, therefore assets have to be replenished every 5 years.” I have a simple question. Why attempt that at all if all it does is give more losses?

#4 – Employee Charges Rise in manpower cost, which stood at 22% for the year 2008 (as per Assocham) is also hitting Shoppers Stop hard. This is one area they’re battling out with all guns blazing in the middle. Apart from “rationalising salaries” of its personnel, as Shoppers Stop CEO Govind puts it to me a few hours earlier, “In the last two quarters, what we have tried to do is, to not replace those employees who leave us. As we have a 3% attrition at the store level, this move would automatically mean that our headcount at the stores fell by about 9% in three quarters!” But doesn’t that lead to a drop in quality of service? “Not at all,” claims Govind confidently, as – according to him – consumers don’t notice the reduction in the count of personnel from four to three. Hmm, perhaps; but in reality Govind, perhaps not. But still, giving the devil its due, while manpower cost makes up about 15-20% of the operational cost in the retail sector, for Shoppers Stop, this has dropped down to a super 7% over the last three quarters.


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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).


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