The meaning of the grocery business is changing; as is every other form of business.

The “small grocery stores against supermarkets” story has caught on. The state-sponsored advertorials recently have had this grocer thing going on.  I guess we all pretend to like the grocers in our neighborhood. We want them to survive, but for some reason we go to supermarkets instead to do our shopping. So, the small grocers are falling into financial distress. This should be the case. Otherwise, there is no point in the commercials.

In this context, the government has been planning to introduce a retail sector law that would increase its control over the retail market transformation. The law, however, is still waiting for codification. Meanwhile, people speculate that the number of grocery stores has declined by more than 50 percent. I recently attended a meeting on Turkey’s retail sector. The main theme was the same: how should we protect the grocers? I wondered if the number of groceries were actually in decline. Have you ever checked the figures? Well, I did. But I did not see any evidence of a decline in the number of groceries whatsoever. The marketing research firm İPSOS released its Household Consumption Index. The survey, among other things, shows where people prefer to buy fast moving consumer goods together with annual change in the share of each sector. Figures the index represents have nothing in common with the “our neighbor Mr. Grocer” story on the television. Let me tell you what I think.

According to the İPSOS survey, the share of grocery stores and slightly bigger convenience stores in the retail market was 38 percent in 2006. Bigger convenience stores refer to individual stores not affiliated to any chain store, sort of modern and capital owner grocers. Their share declined to 34 percent by 2006 and rose to 38 again in 2013. Here, 11 percent is composed of small traditional groceries and 27 percent of larger convenient stores. From my perspective, there has been no decline in the market share of grocery stores in Turkey. Instead, the share of neighborhood markets that are a part of large chain stores has increased. I will come back to that; but the first point to keep in mind is that the retail market share of groceries has not declined considerably. Second, AC Nielsen’s studies from the 1990s stated that there were around 100,000 grocery stores in Turkey. Recent statistics by the Ministry of Customs and Trade reveal that there are around 170,000 groceries. Then, the number has not decreased, but increased.

Given these statistics, I have hard time understanding the ongoing debate to move large retail stores out of city centers. What does this mean? If we make it more difficult to access large markets that push small retailers into bankruptcy, the small grocery stores can be saved? This argument is correct in some ways: zoning permits arbitrarily given to large markets and malls paralyze traffic, damage the environment, and so on. But what we have to do in response is to not give markets with floor area larger than a certain amount in the city center. This could also save the small grocer. But this path has never been tried here. United Kingdom has done it; Turkey could take it as an example: in the 1990s the UK banned large shopping malls in city centers and the planning regulation authority was delegated to city councils. Researchers who studied 300-something city council decisions given between 1993 and 2003 identified that the decision to move large malls out of town did not have an adverse effect on the modern/traditional competition in the retail sector; it just changed the quality of the competition. Large retail stores opened smaller store chains in central locations in order to protect their presence in city centers. At the end of the day, stores affiliated with national-local chain stores spread across town centers. The modern kept on competing with the traditional, only in a different format. The focal point here is that competition in the retail market has become harsher. You might check a recent study by Rafaella Sadun for more on this.

So, this is what is happening in Turkey as well. Large chain stores are opening smaller stores in central locations; traditional groceries are turning into larger convenient stores. The meaning of the grocery business is changing; as is every other form of business. We are living in an age of rapid change. Today we have professions that we have never heard of only 20 years ago, such as data analyst. Company senior management teams now have CDOs as well as CEOs. So, traditional grocery stores as we know them no longer exist. Even if they did, we wouldn’t go and shop there anyway. But the sector is still present, in a different format. That’s what the figures say.  Having said this, I really have no idea about the meaning of those awareness-raising commercials on the television.

This commentary was published in Radikal daily on 21.01.2014