Have you ever been on an airplane that experiences the type of turbulence that makes you regret you flew that day? When it happens, you are never in doubt that the plane will land, but you suddenly wonder whether you will be feeling 100% when you arrive back on terra firma.
Modern Trade Retailing in Turkey has recently experienced a series of shocks that has left most branded suppliers feeling like they have just been hit by an extended patch of that type of turbulence. There is little doubt that Turkey will continue to modernise – both as an economy and as a retail market – but nobody is quite sure how good they will feel at the end of the journey.
On 5 December, Kantar Consulting hosted our sixth annual Turkish Retail Key Account Planning Workshop in Istanbul. We had a full room of suppliers attend the day-long workshop where we discussed, ‘Turkish Turbulence’ and more. Below you will find our summary of key discussion points throughout the day as well plus to the PowerPoint presentations delivered by our line-up of speakers that included Pelin Memis, Derya Güvenç and me, Ray Gaul. Let me break these discussion points into six key areas.
- The Three Types of Modern Trade Competing for Attention. One big discussion topic was related to the three types of modern trade – the recent past, the present and the future – epitomised by the types of shopper communication retailers use to capture trips. In the past, the message was “if you buy your entire grocery basket from us we can save you time and money”. Successful hypermarkets and supermarkets delivered this message most clearly. Today, most retailers are communicating day-to-day savings on individual items or services, such as CarrefourSA’s most recent food experience hall in Istanbul. Additionally, discounters and specialty formats such as drugstores and express stores are the best at using this type of communication. In the future, with the arrival of Amazon in Turkey, we expect the message to be more comprehensive around lifestyles and entertainment in combination with goods and services
- Hyperinflation. Another big area of discussion related to the recent wave of hyperinflation. According to the Turkish Statistical Institute, the annual rate of consumer price inflation was 25% in September, 25% in October and 22% in November this year. Kantar fielded a statistically representative survey in October as a way to judge the shopper impact of this inflation. Many indicated they would make changes to the brands they buy, the retailers they shop and the frequency they shop as a result of hyperinflation.
- Retailer Financial Models in Periods of Inflation. We talked deeply about the dilemma facing Turkish Modern Trade retailers burdened by heavy debts denominated in either dollars or Euros. The basic premise of this discussion is that trying to get shoppers to ‘spend more’ by either adding more categories to the store, more premium items to the category or by getting them to buy more items through better promotions would not in and of itself be enough for retailers to generate the dollar- or Euro-denominated funds required to meet debt repayments. The net result is that while buyers will be looking to negotiate for better promotional funds and better margins, other parts of the retailer’s organisation will be focused on the bigger picture of making the store more approachable to a wider audience and getting shoppers to visit more frequently.
- Amazon as a Customer and as a Disruptor. Another big topic was Amazon’s “less than exciting” launch in Turkey and what that means for suppliers hoping to work with Amazon to sell goods and services. This was a case where lots of different people had different opinions. One client even suggested that Alibaba’s arrival in Turkey is generating better opportunities for suppliers. This is a divisive topic that will only grow in magnitude with time.
- Discounter Inflection Points. Another hot topic relates to Turkey’s three largest food discounters – Bim, A101, and Sok. These three companies have grown from having very few locations in 2008, just 10 years ago, to having thousands of store openings each year. ‘Turkish Turbulence’ appears to have put a brake on the discounters’ plans to open even more outlets and is likely to get them to focus on doing more with the stores they already operate.
- Meet the CEO. Finally, we gave participants a chance to work with peers from other supplier companies to prepare a meeting with a fictional CEO interested in hearing ways we can do better with Key Accounts. Some of the teams created some great ideas, had lots of fun and ultimately felt better about the turbulence in Turkey today.
Please find below links to our PowerPoint decks, available to registered Kantar Retail IQ subscribers only. In addition, we encourage you to sign up for next year’s seventh annual Turkish Key Accounts Workshop via this link. If you have suggestions for topics you would like us to cover in 2019, please feel free to email me directly with your suggestions.
Ray Gaul (Ray.Gaul@KantarConsulting.com)
Turkish Key Accounts Workshop Presentation Decks:
Turkey: Retail Today and Tomorrow (But Mostly Today)
Unlocking Retailer Financial Models - Win with Category Captaincy
Understanding Amazon - Amazon as a Customer
Managing Amazon Disruption - Supporting key accounts against Amazon
Discounter vs. Discounter - The New Battleground
Convenience - Looking Beyond The Channel For Success