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COMPETİTİON TİME IN SHELF COSTS

Competition Time In Shelf Costs

Acquisitions have reduced the number of major players in the organized retailing sector. However, in some product branches, the number of manufacturers is rising by the day. This situation has made...

Son Güncelleme: 01.02.2008

Acquisitions have reduced the number of major players in the organized retailing sector. However, in some product branches, the number of manufacturers is rising by the day. This situation has made the shelves in retailers even more valuable. Because appearing on retail shelves is virtually a prerequisite for high sales and, to certain extent, having ‘a presence on the market’. This cost, which five years ago varied between US$10,000 and US$60,000, has now risen to US$15,000 to US$260,000.
 
According to a study by Planet Retail, the Turkish retail sector is worth US$136.9 billion a year. Organized retailing accounts for 38 percent, or US$52 billion, of this total. Foodstuffs make up the largest share at US$72.3 billion, or 52.8 percent of total retail turnover in Turkey. The organized retailing sector is growing larger every day. In fact, most experts predict that very soon organized retailers will overtake traditional sales outlets. This situation is producing a radical change in producers’ distribution channels. In any case, this is the reason they are now paying thousands of dollars in order to secure a place on the shelves of organized retailers.

A Shelf Costs Us$260,000
So how much does a shelf cost in the most competitive areas? Brands which generate high turnover and are in demand from consumers can make their own agreements with retailers which do not include shelf cost. For example, brands which have a high market share in their own category can secure a place on the shelf for free. Such brands include Coca-Cola, Ülker, Eti, Dimes, Unilever, P&G and Mey İçki. However, those brands which have newly entered the same category or which have a low market share may have to pay US$50,000 for the same shelf.

On the other hand, in the table wine section in the alcoholic drinks category, low-priced wines with a high turnover pay a shelf price of US$30-40,000 per barcode. In the olive oil category, the cost of securing a place on the shelf starts from €100,000-150,000.

Organized retailing companies can also pass on to the producer the reductions they make in order to attract more customers. Brands which have a high market share are not much affected by this situation but brands with a low market share may experience a significant decline in their profit margins.

Local chains appear to be the shining stars of the retail sector. Particularly in Anatolia, those who support local brands have become manufacturers’ favorites. Because, in most situations, brands with a low market share can easily enter local chains.

Hande Yavuz
hyavuz@capital.com.tr

  

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