Currency Rate Apparel and Non-Food Sales

TL/$ Currency Rate vs Retail Trade Volume 

 Overall trend of TL/$ exchange rate is parallel to apparel&FTW and non-food consumption trade indexes.

Local Fests are important dates to be considered

Christmas and sale periods are always important time frames for the retailers all around the world, the difference in Turkey is that the consumption show a greater jump in Ramadan (Eid) and Sacrifice Fests compared to new years and sale time. It is an important lesson that a multinational operating in Turkey should consider, where all merchandising and window changes are made in parallel to European guidelines and strong focus on holiday windows and neglecting the local fests.  

 

Apparel&FTW sales less affected comp to nonfood sales in FX-rate changes

After 2014 where TL/$ rate has risen faster compared to prior periods, the difference between non-food retailing and apparel retailing changed in favor of apparel retailing, here one can interpret this outcome as after food products, the budgets allocated to apparel and FTW is affected less than other non-food categories in hard-times.

 

Sacrifice Fest & Ramadan Fest

The retail sales jumped during sacrifice and Ramadan fests in the last 5 years however we should consider that the date of the holly fests change and they are always 11 days earlier compared to previous year. Meaning that Ramadan fests move away from the back to school period to the summer season (we have seen this in 2014), where Ramadan fests sales were not as strong as compared to previous years. Likely Sacrifice fests move close to the "back to school" period which means that in 2015 the retail sales in sacrifice fest in 2015 will be much higher compared to Ramadan fest.  Of course this also means that we will be losing one of the special dates out of 3 where sales rocketed; in 2015 back to school and sacrifice will be together and the Ramadan will be lost in the mid of June.

 

Trade indexes from tuik.gov.tr (in constant prices where 2010 average is 100)

Monthly average Fx rate has been calculated from the tcmb.gov.tr time series data

 

2015 Consumer Trends in Key Words

In the age of google the only thing you need to have is the right key words for the search to reach info. Below is a summary from Euromonitor report and Canada International Markets Bureau, demographics trend report. Hope you have further/good readings from keywords.

Top-up Shopping: To buy less but more often.  This is a consumer preference reflected in plans for smaller, neighbourhood stores.

Mobile Shopping :The widespread adoption of smartphones also means that consumers are able to shop anytime, anywhere and are becoming increasingly demanding in terms of convenience.
 Vegan fashion  brands that pride themselves on animal-free designs are being spotlighted by journalists for their style.

Conscious consumption is on the rise

Female empowerment as consumer driver

Social Talent is definitely the new celebrity, this is the result of a total shift in the way a whole generation consumes their entertainment and selects their influencers from the people like me them.

Online megaphone: Consumers notice online reviews and trust them and this is influencing buying decisions.

Pay-as-you-live generation prefers lightweight living: the “sharing economy” is growing and disrupting the way in which individuals think of space and ownership. Consumers are increasingly preoccupied with access rather than ownership. In collaborative consumption, perhaps ridesharing and homesharing are the most visible activities, as more people share their vehicles and homes. More people are “shedding stuff” – downsizing on possessions to embrace lightweight living. Such consumers access documents, music, film and other media digitally and are happy to rent.

Peer marketplaces, where consumers buy from other consumers, democratise luxury services and let consumers buy in occasional work by those with cookery or office skills.

Omnichannel Shopping is important, altough fast pace of growth seen in online sales,  90% of shoppers surveyed would prefer to buy in a brick-and-mortar store across demographic and age groups.

Millennials, young people born roughly between 1980 and the mid-2000s are the first “digital natives” and are seldom out of the news. Millennial traits include a lack of trust in authority and a level of optimism some find ungrounded. Having grown up on free services, games and social networking, brands are finding it harder to sell to them. Millennials are buying fewer cars and homes, despite being immersed in consumer culture, particularly electronics They are using their comfort with technology to locate best prices and learn about trends. They are more socially consicuos but less brand loyal.

Connected health: more consumers are acting on their belief that monitoring their wellbeing digitally will help them stay well. The consumer need to share, benchmark, compete and stay motivated means this tracking and health-promoting activity is spilling over into discussions on social networking, dedicated social networking platforms / apps – some created by brands such as Nike and Adidas – and blogs. This phenomenon is also related to the broader perception of wellbeing.

Down-aging addresses how and why consumers in a particular age group often act in ways that would be expected of their younger counterparts.Mid-life adults and seniors are seeking a return to their youth and engaging in social behaviour that is typically associated with younger generations.

Age blurring : Not only are some age groups acting younger, other age groups are acting older, leading to greater overlap between the desires, experiences, and interests of different age groups.

Agelessness: Similar to age blurring, agelessness goes beyond simply describing a phenomenon of converging interests to suggest that people are no longer limited by their age and, as a result, consumer behaviour is not defined by it.

Advice for the Store Manager

My notes from Smart Retail (Richard Hammond) combined with my comments;

* Be the person whom you, personally, would also like to be served by
* Smile!
* Sales motivation comes from inside, be sure you are feeding your appetite and energy
* Be passionate for the best retail environment ( for customers and for collegues) not just be sales animals...
* You have to create / do something different to be noticed in the multiple store environment
* If possible volunteer for different projects
*Be the contact person of head-office guys, say would be glad to assist, give your personal number when they visit your store
* Specialize in x let head-office guys know you are the best man to do x
* Create your own consumer portfolio, especially if you working in a company targeting the upper tier customers
* Try to understand your customer, and try to solve their problems instead of being sales animals... As the good saying your customer doesn't want a drill but he wants a simple hole on the wall.
* Retailing is as old as human history and it isn’t about inventing brand-new ways of doing things, it’s about creatively applying simple principles; so do “simple” brilliantly.
* Success tip in retail is about trying things: constantly adapting, nudging, and improving parts of the store
* Know and embrace what your brand stands for
* The question is how to create the happy team for best customer service
* Invest in your team, they are the ones who will take you to your next career step

Consumer Debt Trend and Retail Trade Index

All retailers have to keep an eye on how their consumers expenditure preferences change, below you can find the aggregate consumer loans and credit card debt trend from banking regulation and supervision agency. (Dec'12) (bddk.gov.tr)

As seen in the figure Turkish consumers prioritized  Mortgage and consumer loans over credit cards. Credit card debt has fallen in 2014 for the first time in 5 years.

This may be the reason for our unexplained phenomena of decreasing footfall to our stores?

In the table below Retail Trade Index change from Tuik can be found. It is also the year 2014 which has the smallest growth rate vs prior year in the last 5 years.

Retail Sector Update Report

The graphics below are from Deloitte Retail Sector Update (july 2014)

Please find the link for the complete report.

http://www2.deloitte.com/content/dam/Deloitte/tr/Documents/mergers-acqisitions/tr-retail-sector-update.pdf

 

 

 

 

 

Where to focus?

From "Retailing in th 21st century"  (Manfred Krafft)

Leopold Stiefel who is the founder and long time ceo of Media Markt says;

“[W]e do not sell sufficient volume. If your business model focuses on volume, you need to serve the Big Middle Segment. If you are an one-line shop, you do not necessarily have to serve the middle. In that case you don’t have to apply a low-cost strategy, either. Uniqueness and service are way more important for you. These companies serve the top 10-20 % of all customers. The bottom 10 % are served by discounters. In between there is a field we – as a volume selling company – try to conquer.”

As the employees of the retailing companies are we really aware of where our company targets and do we act accordingly?

On Staff Motivation

In his book smart retail Richard Hammond comments on staff motivation as below;

Individuals are motivated by a combination of:

. Financial reward

. Implied sanction

. Self-respect

. Non-financial reward

. Recognition of value contributed

Although for all retailers financial reward is the low hanging fruit in hard times it has important drawbacks too;

Money can be a demotivator rather than motivator,  (fairness of the mechanism)

It drives too much focus into short-term revenue generation at the cost of falls in customer service quality.

It conditions employees to only go beyond the job description when they are offered a cash incentive to do so.

Bonuses become absorbed quickly into the employee’s general budgets and as such are not remembered over the longer term

From my experience non financial rewards generally even worse than financial ones;

When the management decides to offer a reward such as a holiday for two, (general misbelief is that the bigger the reward is, the  more motivated the staff are) the competition dates become longer in order to have a better roi due to the cost of the reward. However in these types of competitions after a week, the sales people who understand that they have no chance to win leave the challenge and the competition will become more of a demotivator for the most of the employees and few will pursue to the last day.