Before the crisis, on average, they used to sell a car once every 30 days. As a result of the crisis, this has now lengthened to 80 days. A house used to change hands after 105 days, but since the crisis it takes 165 days to find a buyer. In 2007, the sales period for a refrigerator was 30 days, but now it waits 45 days for a buyer. Over the last year, the sales period for all products has increased in virtually every sector. Companies are seeking a solution in aggressive campaigns.
The effects of the global crisis have appeared in virtually every sector. Consumers are postponing their demands and, in some categories, have stopped buying. This is increasing the length of time that products remain on the shelves. Capital’s survey of 20 sectors reveals how the average sales period has changed over the last year in different product groups. The findings reveal that there has been a considerable contraction in demand and that, as a result, the length of time that goods are remaining on the shelves has risen significantly. Here are the resultant average sales periods sector by sector…
The Record Is In Automotives
When we compare the average sales period in 2008 with the average sales period in 2007 in this survey, we can see that the gloomiest picture is in the automotive sector. The automotive sector ranks first with a sales period which has lengthened two and a half fold.
According to the results of the survey, the average length of time for a car to find a buyer was 30 days in the second half of 2007 but lengthened to 70-80 days in the second half of 2008. Aykut Özüner, who is Ford Otomotiv Assistant General Manager Responsible for Sales and Marketing, summarizes the negative impact of this as follows: “The lengthening of the sales period causes both a loss of revenue and increases in costs such as guarantees, maintenance and stocking.”
What Is Happening In Two Sectors?
In the housing sector, the average sales period has lengthened by around 60 percent and it is now the buyer who has the final word. “At the end of 2007, the sales period for real estate was 90-120 days, depending on the neighborhood. At the moment we can say that it is 150-180 days. This figure applies both to secondhand and to new housing,” says Re/Max Turkey Business Development Leader Ebru Karahan, who stresses that housing is now a buyer’s market.
In the technology market, the average length of time that products remain on the shelf has increased by 50 percent compared with one year ago. For some products, the figure is 85 percent.
There is no doubt that the lengthening in the time it takes to sell a product also incurs significant additional costs for companies. There are variations in the length of time that each market can tolerate. For example, for technological products the maximum period they can stay on the shelf is 60 days. After two months the stocking costs rise significantly. In clothing, the lengthening of the sales period adds an additional cost of 5 percent per month. In the small household appliances sector the figure is 2-5 percent.
In automotives, stocks currently stand at over 150,000 vehicles, which look like they will take 8 months to clear. Officials from Honda Türkiye say: “Under these conditions, the monthly cost of the current stocks is very high at around TL 60 million.”
Are Discounts The Solution?
The lengthening of sales periods is pushing companies to organize different campaigns and aggressive discounts. For example, in recent weeks, white goods producers have been trying to get rid of their existing stocks by not charging Special Consumption Tax or Value Added Tax. Of course, it is not only in white goods that there are campaigns… Car sellers are offering significant discounts for cash and attractive payment terms.
In the retail sector, there has been a flurry of “continuous sales” outside the traditional sales seasons.
In addition to campaigns, there have been striking price reductions in foodstuffs and fast-moving consumer goods. These two sectors are the least affected by the crisis, but have been forced to apply discounts because of the decline in consumers’ price tolerance. Experts confirm that the crisis psychology has resulted in a shift in consumer shopping habits towards ones which are price-sensitive.