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Critical increase in the transition to profitability

In fact, it has never been easy to become profitable.

Son Güncelleme: 01.07.2013

But now it has become much more difficult. Compared with five years ago, the time taken to become profitable has lengthened considerably in almost every sector. For example, it takes a clothing store three to five years to become profitable. Whereas, five years ago, one year was enough. The period has now increased to three years for a furniture store and four years for a newly opened school. The reason for the longer time that it take to become profitable is the growing competition that intensifies by the day... Moreover, experts say that in the future the time required to become profitable will continue to increase. Five years ago everything was very different. A newly opened white goods retailer would become profitable within two months.

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It would be one year at most before a shopping mall would bring an investor a profit. For a successful hospital in the right location, 18 months would be enough to bring a profit. But for many sectors these “swift profit” stories have now been left in the past. Today these periods have at least doubled in almost every field. There are even sectors where the period has increased by five- or sixfold.

The most important reason for the lengthening of the time taken to make a profit is intense competition. Another factor is excessive supply, namely an increase in the number of players. There are a large number of players in many areas, from technology retailing to clothing, furniture and the private hospital sector. This situation has resulted in competition shifting to price, which has meant abandoning profit margins and a lengthening in the time it takes to become profitable. Other dynamics affecting the length of time it takes to become profitable are the high rents in shopping malls, sectoral risks and regional differences.

When one looks at the data for the last five years, it can be seen that there has been a dramatic increase in the time taken to become profitable in all sectors. Otokog General Manager Görgün Özdemir says: “The length of time varies according to factors such as the location of the distributor, the brand you represent and the size of the outlet. But we can say that the period is definitely increasing every year.” The situation is no different in furniture. In recent years, the length of time taken to become profitable has doubled.

So compared with five years ago, which are the sectors where there has been the greatest increase in the time it takes to become profitable? White goods rank first. A white goods distributor which took three months to become profitable five years ago cannot now see a profit in less than twelve months. In fact, for some brands it takes up to three years.  
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