Consumer spending cooling off, hitting retailers hard

ISTANBUL

Contraction in the retail sector that started in the second half of this year continued into September, according to the United Brands Association (BMD), which represents 516 companies.

This was mainly due to the government’s measures aimed at bringing inflation under control.

“Unit sales remained almost flat in August after falling sharply in July. But in September we experienced a very significant decline again,” said Sinan Öncel, the president of the association.

Even though it marked the start of a new season, two out of every three brands in the ready-to-wear, footwear and cosmetics categories reported a decline in unit sales in September, Öncel added, citing a survey conducted among BMD member companies.

“All food and beverage brands saw a decline in unit sales. The increase in turnover in September also generally lagged inflation,” he said.

Some 23 percent of companies responded that their sales were down between 11 percent to 20 percent in September compared with the previous month, according to the survey.

For 2 percent of retailers, the month-on-month decline in sales was more than 40 percent.

They anticipated a decline in demand in the non-food organized retail sector due to the economic administration's measures to cut demand, Öncel noted.

“However, we did not expect such a sharp contraction and such a rapid cooling off in September. The situation was beyond 'cooling off,' companies 'got completely frozen,'" he scolded.

The economic administration appears to be mainly focused on "cooling demand" in the fight against inflation, Öncel said, stressing that the most pressing issue for them is cost inflation.