Overcoming HR Challenges In Southeast Asia's Retail Sector

overcoming-hr-challenges-in-southeast-asia-retail-sector1.jpg 02 November 2015

Southeast Asia's retail sector is now riding high on continuous growth and optimism. Thanks to high GDP, growing population, higher disposable income, and an increase in consumer spending in the region, the retail sector is indeed basking in good days, with retail sales growing at a CAGR (2010-2014) of 8.6% in Malaysia, 3.5% in Indonesia, and 9.5% in the Philippines. In Singapore, retail sales surged 6.1% in May 2015 as compared to May, 2014. And in Thailand, retail sales is expected to increase by 3.4% in 2017.

Over the years, the region-s retail sector has actively capitalized on the business opportunities created by the ASEAN Economic Community (AEC). Therefore, the sector has witnessed a consistent increase in investment inflows into a wide range of retail activities, including big hypermarkets, shopping malls, and boutiques and stores. In today's time, with the rising popularity of ecommerce in Southeast Asia, the integration between physical stores and online spaces is taking place. It is making shopping more personalized and opening enormous opportunities for both retailers and e7ndash;tailers. However, with the growth and prosperity of the sector, a slew of HR challenges are cropping up.

What are the HR challenges in the retail sector in SE Asia?

Like its foreign counterparts, retail HR in Southeast Asian countries are currently grappling with several workforce-related challenges. Since this is mainly a people-driven sector, addressing these challenges has now become a need of the hour for them.

Some of these challenges are as follows:

  • Challenge to drive the workforce

    Undoubtedly, the global retail sector has undergone a sea change in the past few years. In the new environment, sustaining customer pleasing holds the key to success. A bad shopping experience may cost a retailer a customer forever. Therefore, it is now more important for HR to drive the best behavior within the workforce in order to ensure optimum productivity and customer retention. And here comes the first challenge-how to make it possible?

    According to some surveys, retail HR professionals in the region are now exploring different ways to re-energize and re-innovate their workforce. As revealed by the HR head of a Singapore-based retail chain, “We7apos;re following different ways to drive the best behavior in our people. For example, we have recently reinvented our sales model so that our sales people feel more motivated and engaged.”

    Studies revealed that over 90 million people in the entire Southeast Asian region are expected to become urbanites by 2030 and the number of consumer class is projected to reach about 163 million households by 2030. To cater to the growing number of retail customers, HR should explore, innovate, and implement different ways to drive their workforce.

  • Challenge to identify and hire the right talent

    Retailing is one of the biggest employment generators in Southeast Asia. However, the region's retail sector is plagued by a severe scarcity of skilled workforce. Research shows that in many Southeast Asian countries, retail HR professionals are struggling to find appropriate candidates who can perform consistently while dealing with changing technologies, irregular work hours, and stressful situations.

    The HR manager of a Thailand-based retail store once revealed, “Many young professionals are lured by the booming retail sector in Thailand. However, most of them fail to sustain in the long run. Unlike many other sectors, this sector requires long working hours, which many young professionals cannot deal with. Therefore, the scarcity of skilled retail professionals is very common.”

    Population growth and rising competition in the sector have led to an increase in the need to create a pool of ethnically diversified retail professionals so that customers can easily relate to them. This has added to the complexity of the hiring process. According to a report published in 2014, retail is one of main sectors in Hong Kong facing a dire need for new talent.

  • Challenge to get a global perspective and manage demographic challenges

    Most of the retail chains in Southeast Asia have transcended geographical boundaries. This has created another challenge for HR professionals-it is to get a global perspective to the sector.

    On the other hand, with the talent pool evolving to include more professionals from different generational demographics, it is therefore challenging for HR professionals to address several issues coming out from various attributes and requirements of their workforce.

  • Challenge to retain talent

    Like their foreign counterparts, retail HR professionals in Southeast Asian countries are also facing the challenge to retain talent. The continuous process of recruiting, training, and replacing professionals are taking a toll on the HR department. Adding to this, the issues like lost sales and below-par service due to less experienced resource have emerged as a growing concern. Ultimately, it is hindering retailers' ability to develop a talent pool and retain customers and their market position. According to a CAP study, a retailer has to spend, on an average, about $3,328 to identify, recruit, and then train a new replacement ($10 per hour).

HOW TO OVERCOME THESE CHALLENGES

If we consider the linguistic and cultural complexities of this region, we can easily realize that to conduct business here, it is necessary for every retailing company to go beyond geographical and language borders. For talent managers and HR, it is essential to send their leaders to other countries in the region so that they can get a broader perspective to the sector. They should encourage their workforce to tap into various cross-cultural opportunities and gain more insights into different customs, languages and cultures. It will ultimately help in retaining customer loyalty.

Apart from perks and competitive compensation packages, there are several ways to address talent retention issues. HR and talent management professionals should put more emphasis on training and development of their workforce so that they can realize their true potential. Leadership development programs are found to be effective in retaining skilled professionals. Further, professionals should be given more opportunities to gain hands-on knowledge of different aspects of the retail business. Overall, employees should get the scope to take risks and explore something new with regard to the sector.

To overcome two important barriers-hierarchical thinking and communication habits-in the region's retail sector, HR should take more initiatives to create an environment wherein every employee feels empowered to express his/her opinion freely and fearlessly. Further, retailers should adopt strategic communication approaches to create and maintain their goodwill in the job market.

Given the growing complexities of HR and talent management professions, certification programs are now being offered by reputed institutes. Certified HR and talent management professionals belonging to every industry, including retail, are found to be better equipped to comprehend the changing HR landscape, address new challenges related to workforce management, and drive their workforce for optimum performance.

CONCLUSION

The HR department plays a crucial role in any retail organization, as this sector is manpower driven. Therefore, retail companies, not only in Southeast Asia but also across the world, should put proper HR practices in place. It will help companies not only retain their workforce and customer loyalty but also stay far ahead of the rising competition.

Tags: HR Challenges , Southeast Asia Retail sector , Business , Workforce management , Talent , Global perspective, HR professionals, Talent management, Certification Programs, Overcoming HR challenges