Can Local Markets Become Global Chains? – Final Word –

After graduating from university and earning my degree in Chemical Engineering, I went to the United Kingdom to pursue a master’s degree in business and marketing at a prestigious university. At the time, it never even crossed my mind that I would receive a far better education at a fast-food restaurant, where I worked part-time for a year, than at that highly respected institution. Then again, as you move through life, you often realize that the lessons you gain and the turning points that shape your journey can only truly be understood when you look back and connect the dots. My colleagues included Indian, Chinese, Filipino, and Polish workers, while our restaurant manager was British. Do you know what was interesting? Twenty years ago, those of us working in that fast-food branch in the UK, coming from different parts of the world, were all students—but we were also already university graduates pursuing master’s degrees in different fields. In fact, in many respects, we were far better educated, more skilled, and more culturally aware than our local British manager. Despite this reality, working under someone who, in comparison, seemed more limited in perspective and less capable of embracing a “global citizen” mindset was a unique experience. It made me realize that even in the 21st century—where effective management and intelligence are supposedly essential in professional life—questions such as whether fairness truly exists among people, what meritocracy really means, what real wealth is, and what the true secret of abundance might be, can still play out in everyday workplace dynamics. These were lessons that life, quite abruptly, confronted me with at a very young age. Through this experience, a kind of selective perception began to form in my mind, and in the years that followed, I had similar experiences in different countries, across various industries and companies. I came to realize that the greatest teacher for those who are willing to learn is life itself.

For those wondering why I began the ninth and final part of this series on whether a global company can emerge from our local markets in such a way, let me explain. Through personal experience, I have learned that even large international corporate management structures can make surprisingly simple mistakes, and that even the most basic principles of human relations—let alone trade or business life—can be overlooked or only partially applied in practice. Since those days, no matter how high a company’s sales volume or brand recognition may be, I have stopped overestimating any firm or its top management. I would also recommend the same approach: do not place any institution, its owners, or its white-collar executives on a pedestal. After all, humans are fallible; they make mistakes from time to time. The issue is not only to draw inspiration from successes; the more valuable lesson is often overlooked: we should also remember the mistakes and failures of others. Human life is short, and learning solely through trial and error is an extremely costly process that wastes irreplaceable time. This is why historical knowledge is so valuable—not only for understanding current developments or identifying trends, but also for preparing for the future. To be ready for what lies ahead, one must have a firm grasp of the past. In order to better understand the food retail and grocery sector in our country, in the previous eight articles we have, as far as possible, discussed early examples of retailing, important companies in the industry, many “firsts” related to the sector, and individuals who initiated various pioneering practices and contributed to transformation through these innovations. All three of the country’s first national supermarket chains, which had been established by municipalities, were later privatized and transferred to various private companies. In 1975, Migros was sold to the Koç Group, in 1993 Gima to the Dedeman & Bilfer Group, and in 1999 Tansaş to the Doğuş Group. Was grocery retailing really the core business of leading industrial and tourism holding companies? Of course not, but the cash flow generated by the sector was attractive. Just 2.5 years after the acquisition, the Dedeman Group sold Gima to the renowned banker Hüsnü Özyeğin. The Fiba Group, which carried out significant work at Gima, attempted to divest the company almost every year over a similar period. After all, grocery retailing was nothing like banking; there were no exceptionally high profit margins, and store rents and personnel expenses accounted for a substantial portion of total costs. Fixed asset depreciation was significant, and each year stores required various renovation and refurbishment expenses, both large and small. Competition was intense, and simply selling low-priced products was not enough; it was necessary to maintain a continuous connection with consumers and regularly understand their needs and expectations. In the history of our retail sector, this company—founded in 1956 and holding a very important place in the industry—became the subject of a direct competition between two of the country’s leading industrial families. In 2005, shortly after Koç Holding announced that it had reached an agreement with Fiba Holding to acquire Gima, Sabancı Holding declared that it had actually acquired the company itself. Following this, Koç Holding placed full-page advertisements in newspapers, stating that the relevant acquisition and sale process was not ethical. Sabancı Holding, on the other hand, responded by saying that they had simply paid more and therefore secured the deal. Hüsnü Özyeğin stated that, as a businessman, he would naturally sell to whoever offered a higher price. When he eventually divested Gima 8.5 years later, he reportedly marked the occasion with a sacrifice and remarked, “I am relieved.”Archival records are still available online, and it is possible to access contemporary newspaper reports. Those who doubt this account are encouraged to conduct their own research. Driven by the frustration of having “lost” Gima to Sabancı, Koç Holding later turned its attention to Tansaş, a company it had previously been unable to reach an agreement on in terms of price. Under the leadership of Servet Topaloğlu, Tansaş underwent a remarkable transformation, regained its founding spirit, and became a significantly more valuable company. Approximately 1.5 years later, Koç Holding acquired Tansaş from the Doğuş Group, paying a price roughly 3.5 to 4 times higher than its previous valuation. So, what was the final outcome? The French-backed Carrefour absorbed Gima, while Migros eventually absorbed Tansaş. Two of the country’s leading industrial conglomerates, driven by rivalry between themselves, ultimately chose not to preserve these valuable retail brands from Anatolia, but instead allowed both to disappear in the broader struggle between Migros and Carrefour. Yet both brands, which were ultimately left to decline, held strong positions in their respective regions—Ege and Central Anatolia—and each had a deeply loyal, established customer base. The removal of Gima signage and its replacement with Carrefour branding, as well as the substitution of the Tansaş logo with that of Migros, did not sit well with local consumers. This sentiment was eventually recognized by the management of both companies. Years later, attempts were made to revive both Tansaş and Gima; however, it was too late for these historic brands, as their original identity and “spirit” had already been lost.

Yimpaş, which entered financial distress, was acquired by the Kiler Group in 2008. However, just seven years later, the Kiler family sold their own supermarket chain to Carrefour. Similarly, Beğendik acquired the Real stores from the German Metro Group in 2014, but only three years later the company declared bankruptcy in its supermarket and shopping mall operations, abandoning its retail-focused strategy in favor of high-budget construction projects. Ultimately, all Beğendik stores—once a brand that had earned strong consumer loyalty across many Anatolian cities—were shut down, and the company went bankrupt. Uyum Market was established in 1998 by sector professionals such as İskender Keleş, Ali Akyüz, Mehmet Akyüz, Ahmet Akyüz, Erdal Tüfekçi, Yusuf Balkan, and İsmail Çalışkan, all of whom came from the very roots of the trade and were experienced in wholesale and grocery operations. The chain later went public and attracted significant investor interest as a local retail brand. In 2012, it was acquired by Makro Market, another domestic supermarket. Makro Market, founded in 1991 by the Songör family, had by that time evolved into a national chain with a six-partner structure and operations across 15 provinces. With a total of 279 stores—192 under the Makro brand and 87 under Uyum—it had established a significant retail presence. However, in 2018, the company ultimately declared bankruptcy, with some of its stores being transferred to Migros. Unfortunately, the grocery retail sector in Türkiye—marked at times by regulatory gaps and uneven competitive conditions—proved unforgiving toward strategic distraction and loss of focus. The successive bankruptcies and acquisitions in the retail sector eventually led to a structure in which only a handful of major retail companies—BİM, A101, Migros, ŞOK, and Carrefour—came to control nearly half of the country’s total food retail market and approximately 75% of the organized and modern retail channel. However, the increasing weight of living conditions and the fact that market dynamics began to operate increasingly in favor of a very small number of dominant players also mobilized some idealistic figures within the country. As I always say, when one person changes, everything changes! Local governments have started taking action again, much like they did 70 years ago. For example, there is a supermarket chain in Erzurum called Halk Pazarı. It has moved extremely quickly and accomplished important things because it understands what the people of the region need and knows how to develop cooperation with local producers and suppliers in the area. Similarly, in İzmir, there is İzmar (İzmir municipal supply market). Many local governments across the country have genuinely begun launching their own grocery store chains. This was the inevitable outcome: when there is a lack of central planning and regulation, and citizens are left to fend for themselves, local administrations independently develop alternative solutions for the people in their regions—much like the organization of the Kuva-yi Milliye (National Forces) during the national struggle period. For those asking, “What kind of lack of regulation are you talking about?”, let me explain. The grocery retail sector in our country is so poorly regulated that anyone can open a branch wherever they want and sell whatever products they choose, in whatever format and category they prefer. And don’t assume that this is how things should be simply because it is a free market. I mentioned this in previous articles: even a century ago, an American company could not simply open branches in any state it wanted, even within its own country—and that is still largely the case today. Each state has the right to require a local partnership arrangement based on its own economic conditions. You may recall that we began this series of articles by referring to a play called Kahraman Bakkal Süpermarkete Karşı. I assume everyone knows that profit margins on the retail sale of tobacco products are extremely low. So why is it that nearly all small neighborhood grocery stores continue to sell cigarettes? You know the answer, don’t you? If they stop selling cigarettes, they rightly worry that a large portion of their already diminished customer base will stop coming to the store altogether. They think that at least if a customer comes in to buy cigarettes, I still have a chance to sell them products displayed near the checkout, such as gum, chocolate, or snacks. Now let me ask you this: do you think it is right that a discount supermarket chain—which already has branches on virtually every street in every neighborhood and holds the largest number of stores in the country—began selling cigarettes years after its establishment? Don’t you think that the government should at least have imposed restrictions on discount supermarket chains regarding a few product categories? After all, cigarette prices are fixed everywhere, so these stores are not even offering consumers lower prices on such products. So what is the objective here—to contribute to the disappearance of the remaining neighborhood grocery stores as well? Since A101 is not a publicly traded company, I would like to use BİM as an example. Please take a look at the annual reports published by the company itself. You will notice something that is almost unheard of anywhere else in the world: despite an increase in its gross profit margin, its net profit margin has declined. Why is that? How can a company increase its gross profit margin and simultaneously grow its sales revenue, yet still earn less profit? The answer lies in inefficient or even loss-making product categories. After all, BİM, A101, and ŞOK did not sell fresh fruits and vegetables for many years following their establishment, did they?  Why did they enter the fresh produce business in recent years? Because of this unhealthy competitive environment. Once some clever executive managed to convince his company to start selling fruits and vegetables, the others followed with the mindset of “if our competitor is doing it, we have to do it too.” Sounds almost like a joke, doesn’t it? Apparently, no one stopped to ask questions such as: “Will this further increase the workload of our logistics operations? Will this increase the workload of our store employees and make their working conditions more difficult? Will we disappoint our existing customers with a product category that begins to lose its freshness and spoil within just a few days?” It seems those concerns were overlooked. In your opinion, has selling only 8–10 kilograms of tomatoes, peppers, and cucumbers per day in their branches really transformed these small-format discount stores into significantly more successful businesses? No, on the contrary, they are recording losses by increasing their waste (spoilage) rates. I repeat this for the valuable executives of our local markets: do not overestimate any company or the bosses and top executives behind them in your mind. I, Mustafa BAŞAR, am not the president of any “Association for Protecting Grocers.” On the contrary, and I hope no one takes offense, I believe in natural selection in business life just as it exists in nature. Of course, I exclude those who act in good faith and those who work honestly from this view. However, I clearly remember that in the 1980s and 1990s, neighborhood grocery stores often held monopoly-like positions in their areas and could set prices quite freely. I also recall that almost none of them employed any female workers. That said, in a way that fits our modern era, I am fully aware that the more modern and organized retail channel will inevitably continue to grow much further in a short time. Moreover, this is truly in the interest of both our people and our state. As professionally managed companies become more store-based and structured, the economy becomes more formalized and transparent. And as those who know me well will attest, I place great value on female employment. Who could point to any other sector in our country that contributes more to the employment of our young people and women? There simply isn’t one!

For a domestic local supermarket to expand abroad and transform into an international chain, it is generally necessary for it to first become a “national chain.” However, this is of course not an absolute rule. In other words, if a valuable and significant opportunity is identified, entry into a foreign market can also be achieved by acquiring a local retail chain in another country. At present, the first supermarket brand from our country to achieve the success of becoming an international company is, as is known, BİM (excluding the overseas Migros and Ramstore operations previously carried out by the Koç Group).  Remember that when the discount retail format of Aldi from Germany was introduced in our country in 1995, BİM was still a local chain operating only in İstanbul with just 21 stores opened at the same time. Likewise, Walmart—which today is the world’s largest retail chain with 10,771 large-format stores and more than 2 million employees—was once also a local grocery store and started its commercial journey with a single store. A retail company’s stages of development and growth are similar to a historical principality first expanding around its core region, gradually becoming a structured state, and eventually turning into an empire. In other words, if you are a local and significant supermarket chain based in Malatya, and you have already achieved sufficient coverage in your core founding region through the stores you opened there, then you should not go and open a store in Kırıkkale. You should conduct preliminary research in neighboring provinces such as Elazığ, Adıyaman, Sivas, Erzincan, and Kahramanmaraş, and once you identify where the greatest opportunities exist, you should make your first out-of-province investment there. This is a natural expansion strategy within a realistic growth corridor, designed to avoid unnecessarily straining your logistics infrastructure and increasing costs. Just as it is necessary for a local retail chain not to open stores simultaneously in multiple different cities after expanding beyond its founding city in the domestic market, an international retail chain entering foreign markets should also focus on a single country at a time, rather than entering multiple markets simultaneously. Those with sufficient experience in the retail sector know well that even within the same city—across different neighborhoods and districts—consumer behavior, expectations, and shopping habits can vary significantly. Therefore, it is necessary to make plans that are suitable for local conditions and to act in consideration of local balances—in other words, to “operate locally.” What truly matters is customer demand; you must act according to what is more valuable than your own retail concept and remain flexible. Approaches such as insisting that a store must be at least a certain size, or at most this size, or refusing to sell certain product categories altogether, will not be realistic. If a local retail chain wants to be accessible in a given district, it can open a store at the right location in that district, within the limits of available real estate, with a larger or smaller square footage if necessary. The same principle applies when entering a foreign country: in the cities where you need to operate, you should open stores even if there is no real estate that perfectly fits your existing retail concept. When entering a different national market, it is essential to prepare a highly detailed strategic entry and expansion plan. One should never, under any circumstances, think like a startup at the founding stage and adopt an approach such as, “let’s open one store first; if it works and succeeds, then we’ll open more stores.” Factors such as economies of scale, purchasing power, and supply chain networks are crucial for competitiveness in food retailing. In other words, if you are not able to open 20, 30, or 40 stores simultaneously or within a very short time frame, and your intention is to “test the waters” by opening just one store, then you should not enter the market at all. Beyond all the points I have emphasized, one of the most important considerations for the senior management of supermarkets aiming to become international companies is the principle of not increasing the number of branches without increasing capacity. In retail, the fundamental capacity is human resources and financial capital. In other words, you should try to recruit the best talent in advance in the relevant cities of the target country market, and allocate capital with the understanding that this will be a long-term marathon. If you cannot bring the most talented people into your organization, then under the leadership and coaching of the most competent professionals, you should continuously organize training programs for your teams to develop their skills. Becoming a company that operates in different countries—that is, becoming an international company—means transitioning into a multicultural corporate structure. Do not discriminate against anyone based on their religion, political views, skin color, language or accent, age, or gender. In fact, truly get to know your employees and show empathy; sincerely value what matters to them as well. Becoming a multicultural structure does not require losing one’s essence or originality. Even if you have thousands of stores, entering a foreign market for the first time is similar to expanding a single stall or shop. Of course, you may remove some walls to increase the selling area—meaning you must be flexible and make certain compromises to be more inclusive—but if you remove the load-bearing columns, you will end up buried under the ruins of the very shop you intended to expand. A company’s load-bearing pillars are its founding values and heritage. Be proud of your own original story—who you are and where you come from. Remember that in a world where everyone imitates one another and copycat formats are common, being original is far more valuable than it may seem. You should definitely read the book “Perakendede Liderlik” by Servet Topaloğlu, and follow him on social media and listen to his past talks. Likewise, read the articles of experienced figures in our country’s retail sector such as Ercüment Tunçalp and Selim Kılıç. The more knowledge you acquire, the more sound and realistic your ideas will become.

My final words will be about what I consider the most valuable resource: “people.” Please carefully analyze BİM. On its Board of Directors, there are two very important names: Paul Michael Foley and Karl Heinz Holland. Foley served in senior management roles for many years at Aldi Süd, while Holland held top executive positions (CFO and CEO) for many years at Lidl. In other words, BİM has, for the past three years, included in its Board of Directors senior executives from the world’s two most important discount retail companies. This is an extremely proud and highly strategic achievement. I sincerely congratulate the management of BİM and feel proud of them. Even before these two valuable names joined its Board of Directors, BİM had already launched its operations in Morocco and Egypt. I clearly state that I expect BİM to make further and very significant moves in different international markets in the near future. You should also closely examine the FİLE supermarket concept launched in 2015 by Servet Topaloğlu. The “FİLE Mini” format launched in Gaziosmanpaşa represents a very serious threat for local retail chains and a move that should be carefully analyzed; this new format, with an area of around 600 square meters, could—if successful—lead FİLE to open new stores very aggressively in the domestic market, and I believe that local chains capable of competing with retailers such as Migros, Carrefour, A101, and ŞOK may need to make significant strategic progress in response to this new format introduced by BİM.  But I had sincerely stated that I believe in natural selection in business life and trade. This is an open arena; companies and formats with strong fundamentals and those that earn consumer favor will continue their rise. I am aware that the ninth and final piece of this article series has become quite long. I am as certain as I am of my own name being Mustafa that very few people will read this article from beginning to end; I know that as well. A thousand greetings to those who patiently read it. If I have been of benefit to even one person, I am truly glad. Until we meet again in other writings on different topics, stay with love and knowledge… Goodbye!