Selling in Istanbul: the Market in Snapshot

   

Istanbul: the History of Sales in a 5-Block Radius

Part 1 of 5: The Market in Snapshot

 

At last count I have worked in 32 countries, the strongest gravitational pull toward Eastern and Central Europe, the Middle East, and developing nations like Turkey. When it comes to professional selling I am intrigued by change and market evolution; and I love to study how different nations attack different opportunities at a given point in time. Also how they deal with inherited or forced problems, plan to grow, or need to adapt.  This is doubly true when visiting nations that do not have a long history of selling in some modified version of a modern, open market system.

People and businesses are flocking to Istanbul. It’s no secret why.

Because of the enormity and business velocity that churns inside Istanbul’s geographic concentration, this five-part series will explain how revenue generators succeed in current market situations. Part 1 shares background. Parts 2, 3, and 4 will compare and contrast different selling strategies in different segments, followed by Part 5, an educated guess on where this market is headed and why.

Every morning millions of workers in Istanbul rise and head to work. This is a selling-centric city and every day these workers fan out and utilize a veritable history of professional selling techniques: from centuries old simple sale tricks to sophisticated, modernized, big money gambits tied to strategic selling.

How they get the job done is different and fascinating. The street has taught most.

Istanbul is a growth market and growth markets create winners and casualties. In this series we will discuss what works for them and what does not.

But first, we need some background.

Old as Dirt

With a population of 13.5 million, Istanbul has 1.5 million more people than New York and Los Angeles combined and trails only Shanghai among the world’s most populous cities. It is Turkey’s economic and cultural heart.

A vast, sprawling city, Istanbul covers 2,000 square miles blanketing both sides of the ultra-busy Bosphorus River—which connects the Black Sea with the Sea of Marmara and thus the Aegean and Mediterranean. The city straddles two continents: On one side of the Bosphorus, Istanbul’s commercial and historical center sits in Europe. On the opposite side, across the high bridge or ten minutes by water taxi, one-third of Istanbul’s population lives in Asia.

The cultural influences of both continents vibrantly mesh to forge Istanbul’s wonderful, singular personality.

Founded around 660 BC as Byzantium, Istanbul has evolved into one of history’s most significant cities. Reestablished as Constantinople a thousand years after its founding, the city has served as capitol of four legendary empires:

• the Roman Empire (330–395). Population at the time: 300,000.
• the Byzantine Empire (395–1204 and again between 1261–1453). Pop. 45,000.
• the Latin Empire (1204–1261). Pop. 100,000.
• the Ottoman Empire (1453–1922). Pop. 45,000—500,000.

Istanbul was instrumental in Christianity’s thousand-year advancement during Roman and Byzantine rule. But when the Ottomans conquered the city in 1453, they transformed it into an Islamic stronghold. While the Republic of Turkey was formed in 1923 and exists today, Istanbul remains a largely Islamic city.

With Ankara, not Istanbul, now the Republic’s capitol, the remarkable palaces and breathtaking imperial mosques that line Istanbul’s hills serve as inescapable, ever-vigilant reminders of the city’s empirical past.

The scenic historic district—Old Town—drives Istanbul’s vital and vibrant tourism industry. The Turks are proud of their heritage. They take great care of these extraordinary sites and make sure the tourist experience is a great one, which helps fuel the economy.

Since the Republic came into existence in 1923, the city’s growth has been remarkable:

Year	Pop.
1924	500,000
1945	860,000
1965	1,742,000
1985	5,475,000
2005	12,061,000
2010	13,256,000
Current (U.N. est.)	13,483,052

Istanbul’s strategic location—along the historic Silk Road where rail networks link Europe and the Middle East, and at the mouth of the lone water corridor between the Black Sea and the Mediterranean—has provided a blended and stimulating populace.

Istanbul’s population has increased tenfold since the 1950s, as migrants from rural Anatolia flocked to the metropolis. Infrastructure improvements have enabled growth and produced a complex transportation network. The Turks are good builders and continually prove it. The city has traffic—all megalopolises do—but getting around is easy and cheap.

Tourism

In 2000, Istanbul hosted 2.4 million tourists. This year? More than 7 million. All spent money, making the city the world’s tenth most popular tourist destination.

While the draw is its historic center, Istanbul is very much a global city. It is bidding for the 2020 Summer Olympics and on September 7 the International Olympic Committee will decide which of three cities—Istanbul, Tokyo, or Madrid—will host the 2020 Games. Winning the Games would be a coming out party of sorts, much like the 2008 Games were for Beijing.

Ninety percent of tourist hotels are concentrated in the European side, closer to Istanbul’s 70 museums, the most remarkable and popular of which are the Topkapi Palace Museum and the spectacular converted mosque Hagia Sophia. Together they bring in $30 million in entrance fee revenue. These are extraordinary venues, well worth the trip and cost of admission.

But Istanbul offers far more than just these two. Look around, greatness surrounds you. The city houses 17 palaces, 64 mosques, and 49 churches of historical significance. You and your shoes will wear out long before you run out of fascinating things to see.

The Big Mac & Starbucks Index

Istanbul is affordable. To frame the relative cost of living in American terms, a Big Mac sells for a modest 5 percent premium. A Starbucks tall latte is just 6 percent more. Both prices are good. These premiums are far lower than those charged throughout Europe and Asia.

As in other emerging economies, western fast food such as McDonald’s and Starbucks represents an expensive niche product with a price-point well above local, traditional staples. As such the Big Mac is not a mainstream “cheap” meal (as it is perceived in America) but a luxury import for foreigners and the middle class.

Translation: For visiting Westerners, the city provides great experiential and culinary value.

Hilly with A Chance of Earthquakes

Istanbul has a long history of big earthquakes. The city sits near the North Anatolian Fault and African and Eurasian Plates. The 1509 earthquake caused a massive tsunami that broke over the walls of the city and killed nearly 20 percent of the townspeople. A mere 13 years ago an earthquake epicentered in nearby İzmit. It killed 18,000, with 1,000 of them living in Istanbul’s suburbs.

The Turks remain concerned about future catastrophes. Having traded construction safety for rapid growth and expediency, their concern is legitimate: Seismologists rate the risk of a 7.6-magnitude or greater earthquake striking Istanbul by 2030 greater than 60 percent, which is nearly the same as the forecast for northern California.

Economy

Istanbul ranks 34^th among the world’s urban areas in Gross Domestic Product (GDP)— the market value of all officially recognized goods and services produced within a given time–with eleven of cities ranked ahead of them American. Istanbul is a productive place. The city produces output on par with Beijing and Buenos Aires.

Istanbul accounts for 27 percent of Turkey’s GDP, and is home to 20 percent of the country’s industrial labor force. Its GDP-per-capita and productivity are greater than the Turkish national averages by huge margins—70 percent and 50 percent, respectively—due in large part to the city’s focus on high-value-added activities.

This is significant in selling because value is where differentiation happens and revenue and margin maximize.

Thanks to its high population and significant contribution to the national economy, Istanbul is responsible for two-fifths of Turkey’s tax revenue, including that collected from 30 billionaires, the fifth-highest number among all global cities.

As expected for a city its size, Istanbul has a diverse industrial economy featuring both commodities and value-based solutions. Commodity production is diverse: For example, olive oil, tobacco, transport vehicles, and electronics are all packaged for sale in Istanbul.

Despite a focus on high-value-added work, Istanbul’s low-value-added manufacturing sector is substantial. It also plays an interesting, important, and somewhat unusual role. While representing just 26 percent of Istanbul’s GDP, this blue-collar sector accounts for four-fifths (80 percent) of the city’s total exports.

Turkey is a nation of 73.64 million, with a Gross Domestic Product of $775 billion. In current US dollars, the Gross National Income (GNI) per person is escalating rapidly and has doubled since 2004. It now measure just over 10,000, also above average when compared to peer groups in Europe and Central Asia. Istanbul, of course, is driving all this.

Imports & Exports

As the only sea route between the oil-rich Black Sea and the Mediterranean, the Bosphorus River that bisects Istanbul is one of the world’s busiest waterways. More than 200 million tons of oil pass through the strait each year; and as a result the traffic on the Bosphorus is three times that through Egypt’s Suez Canal. The Suez, which connects the Mediterranean Sea and the Red Sea, enables transportation by water between Europe and Asia without having to navigate around Africa. The Bosphorus is far more active and will remain that way for the foreseeable future.

Istanbul imports more than it exports ($69.9 billion to $41.4 billion), but workers are busy and volume is steady so the economy keeps moving.

Imports involve mainly machinery, chemicals, semi-finished goods, fuels, and transport equipment. Turkey has seven principal trading partners: the European Union countries of Germany, United Kingdom, Italy, and France, plus Russia, China, and the United States.

Turkey’s major exports are textiles and clothing, automotive, iron and steel, white goods (refrigerators, washing machines, etc.), chemicals, and pharmaceuticals. Turkey is also a leading shipbuilder. Main export partners are European Union nations, the United States, and Russia. Note that China is conspicuously absent.

Jobs & Unemployment

Enabling those exports are jobs, which helps keep the city’s employment rate at a relatively manageable 9 percent.

Compared with neighbor Greece’s calamitous unemployment rate—currently an angry and dangerous 26 percent—Turkey’s work force is in far stronger shape; and the country’s 3 percent year-over-year retail sales growth lends a comfort of stability.  Consumer confidence is good. Interest rates are around 5 percent and money is available.

The poverty level hovers around 20 percent (five points higher than America), although virtually all have access to clean, improved water. Water, of course, is vitally important: It enables population growth and economic expansion.

Istanbul is a big, growing, vibrant city. Tomorrow, in Part 2, we will visit the famed Grand Bazaar and examine what techniques 4,000 merchants under one roof use as they scramble to earn a living.

 

Tomorrow:

Part 2 of 5

The Grand Bazaar