Saying that the share of energy in its costs has doubled since the beginning of this year, Chain Stores Association (ZMD) President Serhan Tınastepe said that they will establish an “energy saving commission” within the Turkish Shopping Centers and Retailers Federation (TAMPF). Making a special statement to our newspaper DÜNYA, Tınastepe pointed out that serious measures have been taken regarding energy saving in the EU, and said, “Savings have been made in areas such as closing escalators, reducing lighting, heating. We have serious problems with costs, even if they are not related to energy supply. We have taken measures in the past. “We need to increase these measures even more. We are working on how we can carry out this process without disturbing the natural flow of trade and without making consumers unhappy,” he said.
60 thousand new jobs in 2021
ZMD is one of the associations that contributes to the spread of organized retail and thus to the growth of the formal economy. Tınastepe, President of ZMD, which represents 55 thousand sales points, 360 thousand employments and 500 billion TL turnover with Turkey’s largest retailers from technology to cosmetics, from DIY stores to fashion retail by the end of 2021, said that organized retail is 90 percent in developed countries and 90 percent in developing countries. gave the information that he received a share of 70 percent, and drew attention to the fact that this rate is still at a low level of 35 percent in Turkey. In this context, Tınastepe stated that there is a lot of work to be done in terms of the development of organized retail, and that one of the main goals of both ZMD and TAMPF, of which they are a member, is to develop organized retail in Turkey and to have a larger share in total retail.
We have more IT people than Silicon Valley
Stating that organized retail is of vital importance for the registered economy, Serhan Tınastepe said, “All the products and services we buy and sell are registered and this means significant added value to the economy.” Explaining that another important contribution is registered employment, Tınastepe said, “Retail is a sector that is a medicine for youth unemployment. Today, one in three young people in Turkey is unemployed. As an association, we see youth unemployment as one of Turkey’s most burning problems. 85-90 percent of the employees in our sector are under the age of 30. We also make a huge difference in terms of qualified workforce. In the organized retail industry, finance More financiers from the industry, more IT professionals from the Silicon Valley, more engineers from the industrial sector,” he said.
Its turnover reached 1 trillion TL
ZMD members closed 2020 with a turnover of 320 billion TL, 50 thousand sales points and 300 thousand employments. According to the information given by Tınastepe, as of last year, the number of stores reached 55 thousand, the number of employees 360 thousand and the total turnover reached 500 billion TL. Tınastepe said that although a very high increase in the number of stores and employees is not expected this year, the trend in turnover is quite good: “Sales have almost doubled. We do not know what will happen in the last quarter of the year, but the total turnover of the brands we represent this year may reach 1 trillion TL.” Although ZMD members vary according to the sector and brand, they still have not caught up with the pre-epidemic sales in units. Tınastepe stated that unit sales are behind 2019 by 5-15 percent. Brands operating in the retail sector during the epidemic period, including ZMD brands, closed their inefficient stores and chose to increase smaller and more efficient points.
Merchandising has slowed
Noting that this trend has come to an end, Serhan Tınastepe said, “Last year, ZMD members opened around 5 thousand new stores with these efforts. We do not expect a significant growth in terms of retailing throughout this year. There is no new supply for merchandising anyway. Most of our members see their development areas as abroad. Every brand in Turkey is now following a strategy to protect the stores they have,” he said. While inflation, which is rising simultaneously with the whole world, is felt much more deeply in Turkey, the purchasing power of the consumer is melting day by day.
Domestic demand drives tourists
Despite all these developments, Tınastepe, who is crazy about the fact that domestic demand is quite lively with the effect of the activity in tourism, said, “Prices are in an increasing trend. For this reason, consumers are pushing their purchases forward. Because consumers do not have a chance to evaluate their money in the financial markets in line with inflation. He prefers to buy a product that he plans to buy in 3-5 months now. Unfortunately, this situation also leads to expectation inflation. Another event that keeps domestic demand alive is tourism” said. Tınastepe said that the rate of foreign shopping in tourist areas varies between 20 and 80 percent according to brands.
Problems waiting to be solved in the industry:
■ Customs duty on imported brands should be reduced. Tourists come not only for the sea, sand and sun, but also for shopping. They spend more on accommodation and food than they do on accommodation. When we remain expensive in foreign brands due to taxes, it negatively affects both the economy of this country and the investment and employment of foreign brands in Turkey.
■ A VAT exemption should be applied to store investments, just like tourism and industry, and VAT and withholding tax on rents should be reduced. We pay 18 percent VAT on rent and 25 percent withholding tax. This is a situation that especially increases informality and encourages it. We have expectations regarding the reduction of VAT to 8 and withholding tax to 10, both in terms of recording these and bringing them to reasonable levels.
■ There are installments for everything, not for cosmetics. Generally, installment bans on credit cards are applied as a tightening policy. GoldThe installment ban on many products such as mobile phones and mobile phones was stretched, but the cosmetics did not move. We do not understand the reason why the installment ban still continues, even though it does not have a negative effect on the current account deficit.
■ Foreign and foreign partner brands foreign currency Leasing leads to unfair competition. This issue should be fixed. For example, we have two members in the same industry. They both have stores next to each other in the same mall. Both of them rented with 4 thousand Euros at the time. Currently, the rent of one is 50 thousand and the other is 70 thousand TL. We think this is unfair competition.
Unable to find IT, departments locked
Addressing the problems faced by brands and explaining that one of these problems is the inability to find IT personnel, Serhan Tınastepe said, “The IT departments of the companies are locked. Because they have serious difficulties in finding qualified personnel. A significant part of IT professionals trained in Turkey either went abroad or did not go to work here for companies abroad. It has become common for them to stay in Turkey and do business with companies in the UK, EU, Dubai and the USA and earn income with foreign exchange. The impoverishment of our country in the last period has unfortunately accelerated the brain drain. Currently, when you want a new job, IT departments of companies give deadlines of 2 years. You say let’s do the job by outsourcing, but the same is true there. In addition, the project costs reach astronomical figures. Currently, the most important obstacle to the development and digital transformation of companies in Turkey is the problem of accessing well-equipped IT teams. This is no longer a problem that companies can solve on their own. This requires an effective public policy. This work should be supported with public-private cooperation projects, and policies that will reverse the brain drain should be implemented.
Discussions always revolve around 15-20 shopping malls.
Explaining that the same shopping malls are always at the center of the discussions between the shopping malls and the brands, Tınastepe said, “In 2018, we were paying less than the fixed rate in approximately 380 of 400 shopping malls before the lease contracts were converted from foreign currency to TL. The problem was already in 15-20 shopping malls. Afterwards, the discussions took place around the same shopping malls,” he said.
We are planning a pay increase in October for employee welfare
For employees, companies are already planning a pay rise in October. Tınastepe, pointing out that companies are trying to stand by their employees in general, said, “Employees and people with fixed incomes went through a difficult period, and they continue to do so. Companies, on the other hand, had a relatively better period due to inflation and tourism. We observe that companies are more generous to their employees and this trend will continue in order not to disturb the business peace,” he said.
Stores are back to their old days
So, what kind of changes are taking place in consumer demand habits and preferences? According to Tınastepe, the most important change was the rapid return to pre-epidemic habits. Tınastepe said, “There is a shift from online to offline. With the achievement of pre-epidemic conditions, people began to prefer the store without fear. On the other hand, the destructive competition among e-commerce sites seems to have subsided. The e-commerce bill may also have an impact on this. There is also a decrease in the appetite for competition in market places. All this slows down the growth rate of e-commerce. When e-commerce slows down, merchandising accelerates. Even though the online shopping rates are already above 2019, they are behind 2021,” he said.
Contract wars are taking place with shopping malls
It has been having problems with lease agreements between brands and property owners that have expired in recent months. Tınastepe, stating that new wars are experienced in lease agreements as the terms expire, said, “The owners of the workplaces want to adapt the rents to today’s conditions when the contract period expires, and the retailers want to enjoy the advantage of being a former tenant by saying ‘we have investments in the stores, we have worked hard, we have created a customer portfolio’. Although this is resolved with peace in some places, it reaches a point where it will cause legal problems in some places. We do not prefer to be involved in legal regulations unless the issue becomes cancerous. Because every legal regulation harms the tenant-lessor relationship. We see this issue as an issue that the parties must first resolve among themselves through dialogue. However, we hear exorbitant rent demands, especially for lease agreements that exceed 10 years, and we find this very worrying. At this point, we are investigating what can be done legally.” Touching on the discussions about the rent increase rates, Tınastepe continued as follows: “This month, the rent increase rate was 55 percent compared to the 12-month PPI average. Slightly below our average turnover increase. Rent increase rate is above 55 percent in shopping malls as rent is paid mainly on turnover. Eliminating the insecurity about inflation rates will also allow the repair of the tenant-lessor relationship.”
The consumer’s tendency towards economic products has increased
Another important change in consumer habits is prudent shopping. Tınastepe said that consumers are turning to more economical products. Actually, this is not so new. Tınastepe stated that this trend, which has accelerated since 2018, has further increased with the effect of inflationary pressure.
“We have foreign members who export twice as much as they import”
ZMD President Serhan Tınastepe, who stated that almost all of the brands with foreign or foreign partners operating in Turkey at the moment, see Turkey as a supply base, said, “Many of our members with foreign capital are exporting a very important part of Turkey’s turnover, maybe more, from Turkey. and ships it to stores all over the world. Nobody sees Turkey as just a sales channel. Turkey has a dynamic real sector and an enormous production capacity. Its biggest strength is production and export. One of our members exports twice as much as he sells in Turkey. 100 million dollar If it imports, it exports 200 million dollars. This situation existed before the epidemic, but it increased much faster during this period. If the domestic investor pays 5, pay the rent, the foreigner pay 7 or say “I bring customs on the products you import, I increase taxes”. Otherwise, the investment will not come, and those who come will leave. We will lose as a country. Most Turkish companies also have foreign partners, which is quite common. Turkish companies in this situation are also experiencing major problems. We need to arrange this as soon as possible,” he said.