The year 2014 is expected to be a year in the Turkish retail
sector in which increasing differentiation in terms of profit
earnings is going to be felt among the various different
industries. Especially crucial to understand the increasing
differentiation among different sub industries with the Turkish
retail sector is the complex interdependence that Turkey's
energy needs have created among traditionally unconnected
Turkey's energy bill currently amounts to USD$60 billion
which in turn accounts to the 25% of the total imports of the
country. Given the fact that Turkish high economic growth dictates
an energy dependency which is not likely to go away in the short
term due to the underdevelopment of the renewable energy potential
of the country, the economic policy makers of the country have to
look for some other ways to reign in the current account deficit of
the country which have been crippling the economic prospects for
the long term future of Turkey. Hence, the authorities having found
themselves in a situation where the local savings are low and the
energy bill mounting high, turned their attention to other sectors
like the retail to implement a policy of spending cuts to deal with
the ever growing problem of current account deficit.
Recent Legislative Changes
The recent changes in the Turkish legislation brought some
novelties to clamp down the consumer demand for some consumer goods
that are deemed to be contributing to the current account deficit.
The number of installments which had previously reached 24 in the
past for the mobile phones has recently been reduced to one. The
spending sprees for the imported consumer electronics which have
been perceived as one of the important contributors to the current
account deficit are trying to be prevented by such regulations. The
maximum number of installments for furniture and consumer
electronics are reduced to 12. The number of installments for the
automobile purchases went down to 24 which used to be 48 in the
The Repercussions for the Retail Sector
Here starts the inevitable differentiation within the retail
sector. Especially given the heavy reliance of the Turkish consumer
to the banking credits that provides long term payment
opportunities in maximum number of installments, the year 2014
might be a rocky one for the retail sector. The specific sectors
which are subjected to a more stringent installment regime might be
affected more compared to the ones that are subjected to la ax
installment regime. A recent survey conducted among the Turkish
retailers has cited the ratio of the retailers who think that their
profitability are in decline compared to the same period of the
previous year as 52.9%.
As a result of the growing differentiation due to different
installment regimes some specific areas within the retail sector do
not feel the pressure that is felt by others. Especially the recent
news state that not only the number of visitors to the shopping
malls but also the number of shopping malls themselves are on the
rise in Turkey. The giro index for the shopping malls reveals a
5.8% increase during March 2014. The price of the rentable area for
a square meter in shopping malls in Istanbul and Anatolian cities
reflect the current rise in which the price has increased to reach
654 Turkish liras in Istanbul as well as 499 Turkish liras in the
cities of Anatolia.
The year 2014 will be most probably a year of mixed blessing for
the retail sector. Due to the complex interdependence that exist
between the country's energy needs, the current account
deficit, the need to boost national savings and the health of the
national economy, a policy of spending cuts have been adopted. Such
policy specifically focuses on some key retail sectors like
consumer electronics, especially the mobile phones which are
regarded as the contributors to the current account deficit due to
their importation from abroad. That's why a differentiation
inside the retail sector in terms of profitability is almost
inevitable especially given the fact that various different sub
industries are subjected to different kinds of installment regimes.
The declining demand for consumer electronics when juxtaposed with
the growing prices per square meter for the shopping malls both in
Istanbul and Anatolian cities testify to the growing
differentiation within the sector.
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