How will the number of players change?

Even though the sizes of the sectors in Turkey are small compared with developed countries, there are more players. But analysts say that this situation is a product of the development process. Some expect the major players in the sectors to become more powerful and for the number of small players to decline, while others expect newcomers amongst the major players.

In an interview he gave to Capital, Ali Sabancı, the board chair of Pegasus, commented on what he saw as the ideal number of companies that the sector could sustain by saying: “Since 1985, 26 airlines have collapsed and closed… At the moment there are 14 authorized air carriers in Turkey. There may be a consolidation. We believe that at most 3-4 players will be able to survive in the sector. We shall try with all our strength to be a company which buys rather than is bought.”

Teknosa General Manager Mehmet Nane notes that the situation is the same in the technology markets business, commenting: “In developed markets, the most technology chain that can survive is 4-5.”

In brief, each sector has a specific number of players that it can sustain… Because globalization has changed the rules of the game in virtually every sector. Competition makes it very difficult for any company without a strong financial structure to survive. According to the statistics, an average of 150 new companies are established every day. 80 percent of these companies disappear within five years. In fact, the number of companies in virtually every sector in Turkey is higher than in Europe. Experts believe that this situation is misleading. They say that, although the size of the sectors in Turkey are smaller than in developed countries, the number of companies is higher... And they believe that this is a product of the development process.

The recent positive developments in the Turkish economy has made the different sectors in the country more attractive. For this reason, there are a very large number of players in virtually every sector and companies are competing for a slice of the cake. But as everything is still not completely settled in the sectors, people believe that there will be a consolidation and the number of companies will decline.

We studied how the number of companies in different sectors would change in the future and which companies would survive.

The Future Of Retailing
In Turkey the number of players in the retail sector is about the same as in developed countries. But while in developed countries the 3-4 major players account for 70 pr 80 percent of the market, in Turkey the fur major players account for around 6 percent. This is the result of the sector not yet settling down. Nurdan Tümbek Tekeoğlu, the Turkey representative of the Metro Group, says that in countries where retail sector has reached saturation point there are, like in Turkey, 3-4 major players, and adds: “But there was previously a lot of activity and there used to be more than 10 players on the market. Now finally 3-4 major players dominate the market,” and adds that, as Turkey has not yet experienced such intense competition: “In the future we expect competition to become much more intense in the retail sector and for the number of players to increase.” In the food retailing sector there are around 60 large and small market chains. In the future there will probably be a consolidation and the number of players will probably fall.

What Will Happen In White Goods?
In recent years the white goods sector has become more competitive. The boom in the construction sector in particular and the trend towards built-in products has increased competition in the high income group. But, however lively the market may be, it is still not easy for new players to establish themselves in the sector and the white goods sector is expected to remain dominated by three major players.

BSH Board Chairman Norbert Klein says: “The Turkish white goods sector is dominated by the brands of three large companies. We think that these three companies will also continue to dominate the market in the future.” He notes that the situation is similar in developed countries.

Fadime Çoban Bazzal
[email protected]