What Is the Future of National Supermarkets?

In my June article, we examined with figures how local players have been growing in Türkiye. In addition, we are seeing that national supermarkets in Türkiye have been shrinking in terms of the number of stores, employees, and total square meters. The entry and exit of Continental from the Turkish market, Dia’s withdrawal, Carrefour’s management change, and the possibility of Kipa leaving the Turkish market at any moment… But why?

One of the most important reasons for this is considered to be the appointment of foreign executives to top management positions. For example, Kipa’s current senior executives and CarrefourSA’s former top executives were foreign nationals. CarrefourSA appointed a Turkish General Manager for the first time; before that, the company was always managed by foreign executives. Yes, Migros has been owned by a foreign investment fund for years, but its top executives have always been Turkish. One of the reasons behind Migros’ continued success was this as well. Here, please do not misunderstand the point; however, a foreign executive naturally may not fully understand the consumer or completely grasp the local culture. As a result, employees may also fail to fully understand the customer. Or maybe they just don’t want to. The reason for Carrefoursa’s decline in performance prior to Mehmet Nane’s tenure may have been their shift toward real estate rather than their focus on the grocery business. This is because they focused on shopping malls and the rental income they generated, rather than the grocery business itself. As you know, there’s a separate company that manages this aspect of Carrefour’s operations. But today, Mehmet Nane is fully immersed in the retail business and is keeping it alive. In that sense, he’s growing the business.

Metro Group Business (MGB) decided to focus on its core business, Cash & Carry, namely Metro. Some of you may ask me about Real: “It was managed by Turkish executives, so why did it not continue?” Real’s decision was entirely a global one, because the main issue was a lack of profitability. What the Germans could not achieve at Real, Hacı Beğendik accomplished, turning a company that had been losing 55 million TL into a business generating 20 million TL in profit in its first year. So, how was profitability increased in this case? First of all, Real had a large number of foreign executives with high costs. The company parted ways with all of them. This operation alone enabled the company to save 500 thousand TL per month… Real achieved this success by transitioning from a national structure to a more local one.

One of the reasons behind the failure of national supermarkets is that they focused solely on the hypermarket segment. However, the appointment of a retail veteran like Mehmet Nane as the head of Carrefour changed the company’s course. Nowadays, initiatives such as CarrefourSA Mini stores, and on the other hand, the possibility of combining Anadolu Holding’s Ekomini concept with Migros’ MJet concept, may emerge. The reason is quite clear: to capture a share of the groggery, traditional grocery store, and discount retail markets. The important point here is that national supermarket and discount market should be viewed and managed as separate businesses. Because they are truly sales channels belonging to different worlds. For example, BİM and File seem likely to succeed in this area, because the management teams of BİM and File stores are different. Even their headquarters are separate.

One of the most important reasons behind the failure of companies like Dia is that they did not adapt or modify their business models from their home countries to take into account Turkish customers and local culture.

If you remember, HSBC’s brand slogan was “The World’s Local Bank.” In fact, there are many messages embedded within this motto. Even if you are a global company, you need to act locally. In other words, I believe that actions and strategies should not only be tailored according to countries, but also adapted to regions and cities. Today, even local retailers and discount stores take actions and prepare promotional inserts based on regions and cities. For example, while offering tea-cutting machines in the Black Sea Region, they can sell Ezine cheese in the Aegean Region.