Dependency Syndrome!

Organized retailing is growing very rapidly in Turkey and major chains are becoming more widespread, This transformation is bringing with it an important development. The rate of dependence of some products, ranging from frozen foodstuffs to personal care products, on supermarkets is rising rapidly. Analysts note that this trend, which the giant brands in other countries are also facing, will continue to increase in Turkey.

“Tide is indisputably the best washing detergent in history. Procter & Gamble invests millions of dollars each year and works with the best chemists in order to improve the performance of Tide still further… Now with the rise of Wal-Mart distribution has become even more important than before. Just one of the chainstores triples Tide’s sales. Without Wal-Mart Tide is dead.” This paragraph is taken from Seth Godin’s book ‘The Purple Cow’. The relationship between Tide and Wal-Mart is a very good example of the relationship between a brand and a distribution channel. In developed countries organised retailers account for 70 percent of sales. As a result, producers are heavily dependent on supermarkets.

This type of relationship is not very well-established in Turkey because organised supermarkets currently account for a very small proportion of the retail market. Organised retailers are estimated to account for 35 percent of total sales in Turkey. Despite this low rate, dependence on supermarkets in categories such as furniture care products, special coffees, frozen foodstuffs and breakfast cereals is over 95 percent. This naturally demonstrates the dependence of several brands on supermarkets.

Analysts believe that in the future the dependence on supermarkets of several categories will increase. This belief is based on expectations of an increase in the share of organised retailers in distribution channels.

Supermarkets predominant in cosmetics

Perfumeries and supermarkets are the two most strategic sales channels for cosmetics... According to the results of a survey conducted by AC Nielsen in 2003, which showed the weight of supermarkets in product groups, the product with the highest rate of dependence on supermarkets is hair conditioner. In hair mousse the rate is 76 percent, in shampoo it is 74 percent. The rate of dependence is a little lower for hair spray. Supermarkets account for 65 percent of sales of hair spray. For deodorants the rate is 64 percent.

Pharmacies losing out

Supermarkets are strategically important for sales of products aimed at babies. In the past pharmacies used to have an important place in the sale of baby products. But the development of the retail market has resulted in a development in favour of supermarkets.

P & G Foreign Relations Director Dr. Hayrünnisa Aligil says that supermarkets account for approximately 85 percent of sales of diapers, with the remainder being sold in smaller stores, cornershops and pharmacies. She notes that the sales distribution of Prima is in harmony with the market.

Look out for the discount supermarkets!

The milk market must be evaluated in two categories, fresh milk and long life milk (UHT), because strategies for sales channels are developed according to the product’s characteristics. Product characteristics and shopping habits mean that cornershops account for 48 percent of sales of fresh milk. When we examine the milk market in Turkey we see that fresh milk accounts for 15 percent of the total market and that supermarkets account for 6 percent of sales of fresh milk. Whereas UHT milk accounts for 85 percent of total sales. Supermarkets account for 65 percent of total milk sales and 94 percent of sales of UHT milk.

SUPERMARKETS DEPENDENT ON STRONG BRANDS

IT IS MAJOR PRODUCERS WHO HOLD THE CARDS

The forces controlling the producers’ distribution channels are very important. Producers such as Nestle, P & G, Unilever and Coca Cola are firms which already are powerful on a global scale. From their perspective, at least for a specific period, there can be no such question of them being dependent on supermarkets, because to a large degree it is their word which goes. In one sense, from the perspective of ‘controlling the channels’, they are currently stronger than the supermarkets,

CONSUMER DEMANDS HAVE AN IMPACT Supermarkets are to a certain extent dependent on global and strong local brands. As the result of a very good marketing mix, advertising and marketing strategies major global brands have secured a significant consumer segment for themselves. As a result of this strategy, these consumers look for their products and services in the supermarkets. Supermarkets cannot ignore such demands from the consumers for very long. As a result, the concept of procurement control management, which is accepted as being based on the  principle of ‘mutual dependence’, constitutes the foundation of modern marketing.

EBRU FIRAT
efirat@capital.com.tr