Reliance JioMart Lays Off Staff After Metro Cash And Carry Buyout
About 500-600 employees affected so far; JioMart to also shut down some of its warehouses.
JioMart, the online wholesale platform by Reliance Retail Ltd., has laid off about 500–600 employees to streamline operations after its acquisition of Metro Cash and Carry India Pvt., according to a person in the know.
Several employees have already been put on a performance improvement plan, and for the rest, JioMart has shifted away from a fixed pay structure to variable pay, the person said on condition of anonymity as details are not public yet. This is part of their annual appraisal process, and the firm hires more people than it lets go, the person said.
The Economic Times first reported that the company is considering cutting two-thirds of its workforce, or as many as 9,900 jobs, over the coming weeks. BQ Prime could not independently verify this number.
Emailed queries to Reliance Retail Ltd. remained unanswered at the time of publishing.
Another person familiar with the development said the exits at JioMart vary between 400 and 500 every year. This year, the exits could be slightly higher due to overapplying roles, the person said.
JioMart sells electronics, apparel, and cosmetics, but grocery anchors its growth ambitions. Besides selling directly to retail customers, it provides bulk supplies to kiranas, or mom-and-pop stores, competing with business-to-business e-commerce startup Udaan and traditional distributors.
Why The Layoffs
JioMart gained about 3,500 permanent employees after the acquisition of German wholesaler Metro Cash & Carry's India operations. That caused an overlap in roles across levels.
Besides, JioMart is now looking to improve margins and pare losses.
JioMart’s aggressive pricing strategy in the grocery B2B space with deep discounting initially prompted traditional distributors to halt supplies from consumer goods companies. As it looks to turn profitable, the company has also decided to shut down some of its warehouses.
General trade—as distribution via bulk suppliers is called—commands about 80% of India's household retail supply chain. However, their share is depleting as companies are increasingly shifting to B2B, either as an extension to their existing networks or as a replacement for ineffective traditional distributors. Traditional distributors still have an edge over bigger players because of their reach in the hinterland.