Sinan Öncel: Rent is the most significant cost item for the organized retail sector

According to a statement from the United Brands Association (BMD), the results of the association's November survey conducted among its members have been shared with the public.

Accordingly, despite "attractive discount" campaigns in organized retail, demand remained below expectations in November as well. The slowdown in demand that began in September continued in November.

In the statement, which included his views, BMD President Öncel stated that sales for many brands remained below expectations in November and noted the following:

"Throughout 2023, there has been an increase in unit sales compared to 2022. However, price-driven increases in turnover have been decreasing since September due to the base effect. After the significant decline in unit sales in September and October, we were hopeful for November, which featured discount campaigns. The result was not as we expected. In November, unit sales increased for 61% of our members, while they declined for 39%. 12% of our members participating in the survey saw an increase of over 40% in unit sales. However, the decline in sales seen in 39% of our brands during a month when attractive discounts were offered points to a contraction in demand.

On the other hand, November was a month in which sales to foreigners dropped significantly, partly due to the season. In November, unit sales to foreigners increased for 41% of our members, while they decreased for 59%. In non-food retail, although demand remained below expectations, our brands made a significant contribution to the fight against inflation in November through discount campaigns. While the CPI increased by 3.28% last month, prices in the clothing and footwear group fell by 0.31%. Many of our companies continue to offer discounts, albeit at different rates. Therefore, we can say that prices will likely decline or see only a very limited increase in the clothing and footwear group in December as well."

"'Non-transparent' practices regarding common area and energy expenses in shopping malls still persist"

Touching upon current issues in organized retail, Öncel stated that exorbitant rent increases and overhead expenses, for which "transparency" still cannot be achieved despite legal regulations, are the two priority problems.

Pointing out that 87% of BMD members are complaining about demands for exorbitant rent increases, Öncel made the following assessment:

"Rent constitutes the most important cost item for the organized retail sector. We are facing demands for rent increases of up to 6-7 times for contracts that have completed their 10th extension year. However, to fight inflation collectively, we must first curb the increases in all costs, including rent. If demands for rent increases that do not align with market realities continue, we may face a situation such as the closure of inefficient stores after the beginning of the year. On the other hand, despite legal regulations, 'non-transparent' practices regarding common area and energy expenses still continue in many shopping malls. We receive numerous complaints every month from our members who cannot obtain a healthy breakdown of overhead expenses from mall managements."

Öncel also drew attention to the fact that in 2024, the performance of organized retail will be determined by cost increases such as rent and personnel expenses, as well as consumer purchasing power and tourist spending.

News Source: 12punto