Following up the recent trends in Turkey’s retail markets, daily Milliyet newspaper brought up a discussion on “fashion brands vs malls” in relation to current conflicts on fixed rents defined on foreign exchange basis in lease agreements. ( “50 yıllık devin isyanı” MİLLİYET, Ekonomi, Şükrü Andaç, 12 Feb. 2017)

In relation to current property legislation in Turkey and the terms in lease agreements, several points need to be clarified:

Property legislation completely disregards and lease agreements rarely include terms on “times of crisis” . While legislation does not prohibit a reference to such terms in lease agreements between malls and retail chains, the “mood” of the retail markets during times of sweet growth rarely pushes retailers to bring up a discussion on what will happen if and when crises arise. This remains at the back of the negotiators’ minds as acquisition of the right locations in the “best” malls rules as a priority.

The real problem is the distribution of income and related economic policies of the current government. Consumer market segments within the “top 40%” income ranges provide a wave of growth that carries retail chains forward in good times; but the same segments are the most conservative in “holding their purse back” when the climate offers scents of crisis. Turkey’s retail industry is known to remain totally silent on issues of income distribution and holds back any discussion with the government on a structural problem.

As Vahap Küçük (LCWaikiki) and Yalçın Ayaydın (İpekyol) pointed out ( there are a limited number of similar examples) Turkey’s brands that have foreign partners and overseas operations ( therefore income in foreign exchange) remain outside of the portrait of crisis. This seems to be the best tool for a safe leverage against local economic crisis.

Beyond the ups and downs of economic and political waves, the real problem is the neglect on the use of strongest weapon in retail: data analytics. Here is a list of the main items on the data analytics agenda that remain to be solved in Turkey’s retail markets:

1.The bosses of retail chains and malls have to realize that predictive analytics is a much cheaper tool than closing down stores or loosing the best tenants due to disagreements on fixed rents in foreign currency terms. They have to go beyond their gut feeling and personal experience references for defining the future of retail markets in Turkey; how the behaviour of a target market will change in the trade area of a mall, say, in 2020 and 2025 can only be defined by predictive analytics.

2.Starting by the official institute of statistics (TUIK) and professional bodies in the retail industry, retail companies need to redefine their business plans, lease agreements and marketing policies on a national retail data lake, where the performance of malls and retailers are measured ( and leases redefined) against the market conditions beyond their own control. Data analytics is the real tool for solving disagreements on leases.

3.Finally, retail professional bodies need to set up a special envoy and study group for revising all legislation related to retail business in Turkey. From the protection of brand identity and design innovations to the consumer safety in stores and malls, a fresh and full-bodied attack on deficiencies in legislation need to be made. Again, that can only be done by putting forward the right data in front of government authorities.


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