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Inside China Retail: building the right teams

Leezia Yin - 14/11/2018
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Executive Summary:

  • The expected digitisation of the value chain within China retail will create a new world of retail. To thrive over the next decade, retailers will need to innovate through their processes and their people.
  • As work becomes collaborative, fewer managers will be needed. Cross-function mission critical roles will drive efficiencies and manage people through the business transformations.
  • Soft skills are becoming more important to retail employers. Fast learners, good communicators and those with industry experience are highly valued over education performance and hard skills.
  • Retail employees are looking for companies whose values align with their own and where they can learn and develop. They expect flexible working and leadership opportunities.
  • Most employees utilise head-hunters to navigate retail market opportunities. Few check internal job boards.
  • Salary increments of 21-30% for moves are expected among a high proportion of retail employees.
  • Building a retail team that can handle traditional and online retailing and support digitised logistics, adds a new dimension to the recruitment strategy. Our survey report reveals how retail companies can tap into the motivations of employees to meet the China retail challenge.

 

China has already eclipsed the US as the world’s largest retail market. With online sales increasing over 35% year on year in 2017, it also has the world’s biggest ecommerce market. Whilst scale makes the China opportunity strategically important, the expected step change in retail innovation will put the China retail market into a category of its own. This forecast shift from digital retail to ‘new retail’ - coined by Jack Ma to describe a data driven and customer centric approach enabled by digitisation of logistics – will create a dynamic new world of retail.  

Within the next ten years, China will become known less as a manufacturing powerhouse and more as a leader in digital innovation.

Change to thrive 

Since digitisation of the value chain will involve end to end transformation, it is clear companies need to establish agility and readiness for innovation through their processes and people.

Agile ways of working and faster decision making will ensure retailers can respond quickly to innovations and enjoy early success or quickly exit losing trends. As work becomes more collaborative and cross-function, less professional managers will be required. Instead, leaders will be those within mission critical roles driving efficient process management or coaching and developing employees as they migrate through business transformation.

Building the right teams

Developing the right talent will be critical. Hard skills such as data science and soft skills such as self-motivation, entrepreneurship, creativity and passion for learning will be important skills for everyone.

The HR challenge will be finding talent with the right soft skills; training and continually developing hard skills; and keeping employees motivated.

In our survey of employers and employees across functions within China retail organisations, we found optimism regarding the recruitment challenge. Only within the HR function was there a concern on the shortage of talent in the market - with half of HR managers surveyed recognising this issue.

Soft skills becoming more important

In terms of talent background, the preference remains on domestically cultivated Chinese talent and those offshore Chinese returning home over foreign professionals. 

The most important characteristic among new hires is that they are fast learners (50%) with good communication skills (25%) and industry experience (25%).

Being a fast learner was valued more by the 25-35 year old (50%) and 46-55 year old respondent groups (100%). Experience was the highest rated criteria among the 36-45 year old respondent group (100%). Education was noticeably missing from the top three criteria.

Already, China retail employment is focusing on the soft skills required to create an agile workforce and placing less value in traditionally sought-after education and hard skills.

Motivating retail talent

People are unique, but there are trends in what motivates the selection of a new employer. Our survey revealed that top motivations when considering a move include career path progression (40%), company culture (22%), and salary (14%).

Retail employees are different than other industry employees and traditionally motivated by rewards. However, our survey revealed that retail employees are increasingly looking for a role in a company whose values align with their own, and where they can learn and develop. Moves to support career growth were most important among all age groups, especially 25-36 year old respondents (48%), yet this declined through the age groups as employees gained experience and natural seniority.

Across the board, brand name was of low priority with just 6% of respondents including it as a consideration criteria.

Work expectations changing

Across retail functions and respondent age groups, flexible working hours (38%) and leadership opportunities (22%) were the top two benefits expected. These are followed by stock options (20%) and medical care (5%).

Flexible working becomes increasingly important according to the employees’ age group (34% of 25-35 years olds, 40% of 36-45 year olds and 44% of 46-55 year olds expect flexible working). The expectation is also consistent across functions, with the exception of those in marketing. Whilst leadership opportunities are more important to younger age groups (26% of 25-35 year olds, 24% of 36-45 year olds and 0% of 46-55 year olds), other criteria such as stock and medical insurance are more important to the 46-55 year old group. Medical care was selected as expected among 33% of 46-55 year olds vs 1% of 25-35 year olds and 4% of 35-45year olds.

These findings provide some insight into what employees value at different life stages.

Looking outside for opportunities

When looking for a new role, candidates predominantly use head-hunters (68%). The 46-55 year old group use these exclusively. Only 13% of employees check job boards for internal moves and just 12% utilise their own network. Approaching a company directly is an option considered exclusively by the 25-35 year old group, but only 2.5% said they would do this. 

Certainly, more can be done internally to ensure that employees are offered opportunities to migrate through departments. Communicating opportunities and selecting candidates with the right soft skills could help retain talent and their cross-function knowledge within the company. 

Salaries on the rise

Salary increment expectations for moves are on the high side. Overall 65% of salary respondents expected a salary increment of 21-30%; 38% of employees who had made a move within the last 12 months expected this. The highest expectation was among the 25-35 age group (72% expected a 21-30% salary increment). 

22% of our survey respondents expected a 10-20% increment for moves. Of those who had made a move within the last 12 months, 39% expected this. Just 7% expected less than 10% salary increment for moves.

Threats to retail success 

Whilst the paradigm shift is in progress and salary expectations paint a positive picture of the state of retail in China, our survey revealed that there is equal apprehension about the possible risks.

Technological change is reshaping the industry promising massive growth opportunities for companies that can innovate in line with consumer trends. But with this opportunity comes the threat of competition, of data privacy issues and of the inequality of inclusion.

Just as the growth of the middle class is highlighted as a major opportunity for retail in terms of growing consumption, our survey respondents acknowledged the risk that widening skills gap and intensifying automation could displace workers without education and mitigate that opportunity. That the expected redeployment of industrial jobs into the service sector to support the elevation of 180m households into a higher income bracket and create a 6% growth in consumption, might not happen.

The trade war on tariffs and macro-economic instability is also a concern. The scenario where governments’ policies favour protectionism and lead to more nationalisation could also negatively impact consumption.

Tapping motivations to meet the challenge

HR plays a crucial role in ensuring companies have the scalability and strategy in place to take their business forward over the next decade. Hiring and building a retail team that can handle traditional and online retailing and support the transition to digitised logistics, adds another dimension to the recruitment strategy.

Retail companies need people with operational and management skills in the digital realm and experience with Chinese ecommerce platforms. Given China’s size and distance between cities, they also need employees that are multi-skilled cross-function so they can work remotely and autonomously. 

Our survey reveals how HR can tap into the motivations of employees and meet the China retail challenge: 

To attract employees:

  • Assign mission critical roles
  • Communicate career path options
  • Offer flexible working opportunities
  • Show examples of culture in action

To retain employees:

  • Enable them to lead
  • Provide cross function learning opportunities
  • Reward them in line with the market
  • Provide flexible benefit options to meet their needs

 

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Manager | Retail & Luxury Recruitment
+86 21 2287 3170
lyin@morganmckinley.com