Istanbul: a truly remarkable city.
Istanbul:
the History of Sales in a 5-Block Radius
(part 5 of a 5-part series)
Three things will shape the near-term evolution of Istanbul’s sales culture:
- The continued westernization of Turkish culture
- Technology
- Domestic growth & tourism
1. The continued westernization of Turkish culture
Comfort and convenience drive foot traffic. Foot traffic drives consumer decision-making, and decision-making drives revenue. Since customers vote with their feet first and their wallets second, hopefully those revenues generate profits — which ensure a business’s viability and sustainability.
Evidence of western permeation is apparent throughout the city, as it is with so many cities around the world. Recognizable brands are global and Istanbul is no exception. Part of the enjoyment for me of visiting cities that have not been totally “ruined” by chain sameness is the uniqueness of their products, brands, and cultures. Prague (to me) is an example of getting overcooked, where too much is too much. I want more Prague and less Everywhere Else.
Make no mistake: Ours is a global marketplace and the mega-merchants have a voracious appetite for expansion, especially in growing cities of 13 million.
The Mall Factor
On top of the increase in chain sameness is the proliferation of shopping malls. The malls don’t just siphon off cash from local businesses, they change foot traffic. Shoppers abandon a decentralized, horizontal, street-based shopping experience for one of vertical, centralized convenience. Istanbul locals like the malls and flock to them, especially in rotten weather.
Tourists, on the other hand, clamor for both. They enjoy the decentralized culture and drumbeats of streetside immersion but also are curious to compare the new malls with their malls back home. Malls in Istanbul are comparatively new (by Western standards), but immensely popular. Istanbul has become one of the biggest shopping centers in the European region thanks to complexes like Metrocity, Akmerkez and Cevahir Mall — which is the biggest mall in Europe and seventh largest shopping center in the world.
Covering Cevahir in a day takes ambition, commitment, lots of time, and a comfortable pair of shoes. Its 343 stores present a challenge that is all you can eat and more.
On Sundays, when most shops are closed, the malls are flooded. While not everyone buys, everyone does participate, so the eateries do a frantic business from opening until closing. It’s not just the Turks who go to the malls; foreign tourists like the variety and convenience of newly built jumbo malls, too.
Most Istanbul malls are vertical. One is outdoor-centric and requires too much walking to suit my personal taste. The recent American trend toward outdoor, walking store clusters has not caught on and probably will not. The city simply doesn’t have the space.
The rapid proliferation of malls in Istanbul will cause the local shopkeepers to adapt. At risk are those who sell what the malls sell, which are primarily clothes and shoes. Merchants must differentiate and work to drive down the cost of inventory, which technology can help. The malls also move the city away from a bartering culture, as bar codes replace haggling.
Pride: Pillars to build around
Part of the magic of Istanbul is its wonderfully maintained assortment of historic venues and the respectful way the Turks present these monuments. When it comes to protection and presentation of their ancient cultural heritage, the Turks are light years ahead of the Greeks. Consequently the lifeblood of Istanbul’s tourism business — Old Town — is vibrant, healthy, fun, simple to navigate, and safe. Old Town is a well-oiled engine that assures a satisfying tourist experience, which guarantees three things: happy tourists readily willing to spend money, positive word of mouth, and repeat business. Athens is in trouble because it torches all of these. What Istanbul does beautifully, Athens does poorly. Both are reaping what they’ve sowed.
Moving forward, Istanbul will experience a continuing “mall-ification,” coupled with a strong need for Turkish authenticity in areas of the city where visitors with money expect it. Caught in the squeeze will be the vendors who sell what can be more easily and cheaply acquired at home, on-line, or the mall. If they cannot differentiate, they will be in trouble.
2. Technology
The current impact of technology, even for those already walking head-down along city streets, portends the future: digital addiction will rise, generational impatience will grow, access to information will explode, and how goods and services are sourced — and thus sold and re-sold — will change. Old channels will be obsolete.
This, of course, is the Catch-22 of shopping centers and westernization: On one hand more recognizable products become readily available. On the other, savvy buyers can evaluate the products in brick-and-mortar stores but buy them cheaper on-line — which crushes the guy paying for the storefront who doesn’t get the sale.
This will happen in Istanbul. Big time.
Technology changes human behaviors in good ways and bad. Tools help us save time, which is an indirect cost saving, and they can help a smart buyer save money on acquisition. Technology also assists in a big and measurable way that impacts well-run businesses: tighter inventory controls will eliminate the need for product stockpiling and hoarding, which seemed a problem I noticed in several areas of the city. Inventory is expensive — it’s dead money — and smart businesses will focus on strategic churns, which is a different than much of what exists today.
But technology’s biggest gift to professional selling in Istanbul will be the expanding opportunities it creates for strategic planning, innovation, process improvement, and value-creation — which is already a pillar of the Istanbul business culture.
Like all big cities, Istanbul is jammed to the gills with “stuff.” As I walked through the streets of Kadikoy and Uskadar on the Asian side of the Bosphorus River I could not help but think, “If China went on vacation for a decade, the world would still be hawking unsold stuff.”
Turkey imports more from China than China imports from Turkey, which is sort of standard for the Chinese business model. But when I look at what will happen as a result of the ever-increasing permeation of technology into the daily habits of Istanbul business, merchants will have less of a need to stockpile cheap inventory that sits without generating revenue for one very simple reason: They will not have to. Smart ones will sell through it or dump it and shift to a technology-based strategic sourcing model.
Technology will expand in Istanbul what we are already see in other, more mature markets: a virtual marketplace with local fulfillment and/or delivery. Commodity suppliers, armed with smarter acquisition options, better inventory control, and operational improvement opportunities, will have more efficient distribution while improving their ability to nimbly respond to market opportunities. Service sectors will strengthen and grow.
Culturally the Turks will face the same conundrum many other societies already do: old school methods and traditions now face an impatient expectation of immediacy. Behavioral impact within the Turkish society, especially the young, will be significant. Younger workers will scoff and challenge the service levels of a previous generation. To Gen Y, the old way of doing things is not competitive with what’s required now.
There will be a strong, distinct, and dramatic gap between 20-something Turks in the workforce and the previous generation. For these younger Turk workers, for whom technology and tool proficiency is organic, dealing with the status quo will be a constant challenge. Older Turks, for whom technological competence must be learned, will struggle to deal with an accelerated pace of relentless change. The result of the two interacting will be clashes of frustration.
Thanks to emerging, expanding technology at home and in the work place, interesting times lie ahead for the multigenerational Turkish work force — and they are approaching much faster than most realize.
3. Domestic growth & tourism
Istanbul has demonstrated the elasticity to grow, although space is built out and future projects will involve knockdown rebuilds. While master builders, the Turks will face increasing density challenges, although they have the water to do so. There is no reason to expect the city to stop growing, so the sheer demand for infrastructure support will continue to rise.
Tourism & Tradition
As the city evolves, what businesses survive? What the Turks do well, they do very well; and they have continually demonstrated the ability to deliver value-based products and services into the marketplace. These, of course, will always sustain. Earlier in this series we covered many of these wonderful products and business models.
So what goes? More malls will gobble up small stores trying to sell comparable things like shoes and clothing. For merchants who choose to stand and fight, sustenance will be a challenge unless their businesses reinvent themselves similar to what we discussed in “Best Practices” (part 4).
Also at risk will be commodity businesses that lack the critical mass to ward off the encroachment of increasing real estate demand, which will be relentless.
The Olympic Games of 2020
The Olympic effect will go one of two ways: If Istanbul gets the Games, the historic district will be buried under Chinese-made “trinkets & trash” the likes of which even the Turks cannot possibly fathom. The stuff will flood the city, much like Atlanta got buried under the logo-stamped rubble of the 1996 games. Sultans would roll over in their tombs if they saw it end cap displays stockpiled in the Grand Bazaar.
This will happen for two reasons. First, it’s the Olympics, where opportunists rise like Transformers. And second, Istanbul is such a big city, with such a steady stream of tourists into a concentrated area, that the percentage play is to assume visitors will eventually defy the odds and buy it all up.
On the other hand, without the Olympics we may see a slight shift in product mix as technology, malls, and western influence reshape what sells well. I think we will see more of a return back toward the Turkish core with less reliance on stockpiled imported trinkets & trash.
If the European Union stays stable and tourist visits continue rebounding from the recession as expected, the city will maintain its steady influx of cash from Germany, Russia, United Kingdom, Netherlands, France, the Arab world, Caucasia, and Japan. Tourists in lesser numbers come from North America, Georgia, and Scandinavia. While half of visitors to Turkey flock to coastal resort cities, the Arab, Japanese, German, and American tourists mainly visit Istanbul and historical sites like Ephesus, one of the seven wonders of the ancient world. These are visitors with money and money is always served.
In 2011, Turkey ranked as the 6th most popular tourist destination in the world. One in eight foreign visitors to Turkey goes to Istanbul. With tourism increasing 10 percent year-over-year, tourism is a value-driven growth industry far too big not to be catered to. Since westerners prefer to shop a certain way — they like to “buy” rather than be sold — we will see increasing numbers of stores replicate of the sales best practices discussed in Part 4.
This is to be expected: In expanding markets there is more money to be made and smart shopkeepers will adapt.
Unlike Athens, its historic neighbor 700 miles to the southwest, Istanbul is a “repeat business” city. It is clean, proud, vibrant, multi-faceted, evolving, and fascinating — a “What took me so long to come here?” town.
So if you haven’t been to Istanbul, do yourself a favor and go. And if you have been to Istanbul, do yourself a favor and go back.
Like all good things in life, once is never enough.