JioMart Implements Workforce Reduction Following Metro Cash and Carry Acquisition
- ByStartupStory | May 25, 2023
JioMart, the online wholesale platform owned by Reliance Industries and led by Mukesh Ambani, has allegedly carried out a significant workforce reduction, affecting more than a thousand employees. The decision is said to be part of the company’s efforts to streamline its operations following the recent acquisition of Metro Cash and Carry.
As per sources mentioned in a report, the recent wave of layoffs at JioMart is reportedly a part of a broader downsizing plan that aims to reduce the wholesale division’s workforce by two-thirds from its current strength of 15,000 employees. A reliable insider revealed that over the past few days, approximately 1,000 individuals, including 500 corporate office executives, were allegedly asked to resign by the company.
According to the same source, JioMart is reportedly planning further layoffs, with several hundred employees already placed on a performance improvement plan (PIP). Additionally, the company has transitioned the remaining sales employees to a variable pay structure by reducing their fixed pay salaries.
As per the insider, the integration of Metro’s permanent workforce of 3,500 employees has resulted in overlapping roles within the company. This move comes as JioMart, known for initiating a price war in the grocery B2B sector, aims to enhance profit margins and minimize losses.
In addition to the layoffs, JioMart is reportedly considering the closure of over half of its 150 fulfillment centers, which serve as the source of groceries and general merchandise for local neighborhood stores.
The acquisition of Metro Cash and Carry by Reliance Retail Ventures has received approval from the Competition Commission of India. The deal, which was finalized in December 2022, involved a cash consideration of Rs 2,850 crore. Through this acquisition, Reliance Retail will gain access to Metro’s stores located in various cities such as Amritsar, Ahmedabad, Bengaluru, Delhi, Ghaziabad, Guntur, Hyderabad, Hubballi, Indore, Lucknow, Kolkata, Mumbai, Nasik, Surat, Visakhapatnam, and Vijayawada, enabling strategic utilization of these locations.
JPMorgan had said in an analysis that Metro’s assets could further strengthen Reliance’s B2B offering. “Per RIL, the acquisition would give RIL access to a large base of registered Kiranas and other institutional customers, and strong supplier network among others. Over the years, RIL has focused on the large Kirana store ecosystem in India and the acquisition of METRO’s wholesale business is a positive,” JPMorgan analysts noted in a report.
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