An outlook on the retail sector in Turkey (2012)
On the contrary to many economies in Western Europe, Turkey has left behind quite a successful year in 2011.
Business owners and professionals forecast 2012 is likely to be a year of success as well, with 6-7 percent growth.
Many companies thanks to the bitter experience they have survived through in the close future, have taken some measures to enable them to run them their businesses on a “flexible structure” against a likely crisis, both on national and int’l level.
RETAIL SALES
Talking about the retail sector in Turkey, it has been observed in the last few years that retail sales realized by tourists have significantly increased in parallel to the development in the position of Turkey globally, in terms of politics and economy.
To give an idea for instance based on figures provided by some major retailers retail sales to foreigners which were recorded at around 2 percent of the total in 2008, have now risen to 7 percent.
THE FACTORS BEHIND THE INCREASE
When we analyze the reason or the influential factors behind this upward trend (in a not very bright economy globally) we find it has to do with Turkey becoming a truly attractive tourist destination and thus drawing more potential retail buyers to the country. Furthermore it is forecasted by experts Turkish retail market will be further enjoying an increase of around 20-30 percent in sales by 2014.
To keep pace with this development several companies have realized the need for recruitment of personnel in their work places, who can speak different languages which could be considered as one of the initial steps on the way to becoming a global player.
PRICE STABILITY AND COST PRESSURE ON RETAILERS
Another finding in a research about the sector is that prices have been quite steady for a long while now (since 2007). It could even be said they have been in a slight downwards trend. Now, this is “more than” unusual for Turkey but it can easily be seen the stability of exchange rates, the absence of big fluctuations and certainly the huge in supply from China have had a substantial impact on said situation.
In fact it is recorded prices have fallen down by approx. 4 percent each year for an absolute change in the retail sector despite the pressure on costs caused by increases in cotton and wool prices and changes in customs duty applications. However, the retailer can and should not be expected to bear all this cost increase much longer. Indeed after a five years period of downward trend prices have started to rise again.
FORECAST FOR PRICE INCREASES
A forecast by experts in the sector says a maximum of 10-12 percent increase per season would be acceptable. In any case the retailers are (and should be) aware it would be wise to bear some of the cost increase instead of reflecting the whole burden to the customer. Under current competition this would not be possible anyway and ignoring this fact could lead to great failure of the establishment.
EXPERIENCE GAINED IN THE CRISIS AND IMPORTANCE OF CRM
The retail sector in Turkey has benefitted much from the difficulties experienced during the crisis in terms of learning how to cope with emergencies and companies that learned focusing on fundamentals is of priority to survive have come out of the crisis even stronger.
Another important thing however is whoever would like to survive these tough times cannot do this without building a very efficient bridge of information flow with its customers. Thus CRM seems to be of top importance for companies provided it is applied cost effective and efficiently.
Innovation, speed, flexibility and the fourth P of the marketing mix (distribution) are other top important tools companies should pay attention to, to keep sailing their boats on this troubled water.
Editor, BTT
03.03.2012
