Mumbai/New Delhi : Reliance Industries’ online wholesale format will reduce their workforce in the wholesale division by two-thirds over the next few weeks as part of a larger cost-cutting measure. The company has laid off employees after beginning a distribution price war last year, while aligning its operations with the recently acquired Carry and Metro Cash.
Three officials privy to the development informed the Economic Times that the company has asked more than 1,000 workers on the ground including 500 Corporate office executives at its corporate office to resign over the last few days as an element of a wider cost-cutting plan that will be in operation over the next few weeks. This will include laying off 15,000 staff in the wholesale segment. Another large round of layoffs is being planned with hundreds of workers already put on a performance improvement plan (PIP) the Economic Times reported through sources. The remaining sales employees have been put on a variable pay structure following the lowering of the fixed pay salary of Reliance.
According to them, the business intention is to close more over half of the 150 or so fulfilment centres providing groceries and other items to neighbourhood stores. German retailer Metro AG made an announcement last week, that Reliance Retail purchased its 31-store Indian cash and carry operation for a total of Rs 2,850 crore from Metro AG.
Traditional wholesalers for Kirana stores have been replaced by Reliance’s business-to-business (B2B) approach. The Economic Times reported that roles at the backend and online sales operations will overlap with those of the 3,500 permanent employees of Metro.
The B2B format of the company replaces traditional distributors for Kirana stores. The company also intends to close down more than half its fulfilment centres where products are prepared and sent to local stores, in order to improve its profits. The recent acquisition of Metro AG, the German retailer costing $344 is also considered an additional reason for JioMart to make the changes.
After beginning a price war in the grocery B2B space with deep discounting, prompting traditional distributors to threaten to halt supplies from consumer product organisations, JioMart is looking to focus on reducing losses and improving margins. Reliance Retail already plays a big part in the online B2B retail market in India. With the new addition of Metro’s 3,500 employees, workers will be forced to either leave the organisation or change their jobs.
The company has plans to shut over half of its 150 fulfilment centres supplying general merchandise and groceries to neighbourhood stores.
