The involvement of Sabancı Group in consumer electronics and

Transcription

TEACHING CASE
TEKNOSA:
Is Offense the Best Defense?
Dr. Cüneyt Evirgen
Sabancı University
October 2011
© Dr. Cüneyt Evirgen
1
TEKNOSA: Is Offense the Best Defense?1
As plans for 2010 were being prepared, leadership team of Teknosa, market leader in
consumer electronics retailing in Turkey, was again at a juncture. Attacks by foreign
and local competitors had been rather aggressive and every one was declaring growth
objectives. Pricing pressures had become even harder to cope with also putting a
strain on profitability. As competition was developing nationwide, it was also
becoming fiercer particularly in large metropolitan cities. Retail sales floor area (in
terms of square meters) growth as well as revenue growth of competitors were
continuing as the total market was also developing. The largest competitor,
MediaMarkt (part of the German Metro Group), was almost catching up with Teknosa
in terms of retail sales area covered. Moreover, all of the major western consumer
electronics retailers had entered the Turkish market simultaneously. This was the first
time in the world that all of them were competing head-to-head in the same market at
the same time.
Since the market was expected to open up again after the relative shrinkage due to the
reflections of the global economic crisis during 2008-09, Mr. Haluk Dinçer and Mr.
Mehmet Nane (President of the Board and General Manager of Teknosa respectively)
had to decide what was the best strategy to follow and course of action to take in
order to protect Teknosa’s leadership position in the market and continue its growth.
Turkish retail industry observers were noting that upcoming years were prone to some
tough competitive market wars in consumer electronics retailing in Turkey. As the the
indigenous leading local incumbent from an emerging country, would Teknosa be
able to win over the experienced alien whales that were also experiencing direct
competition among themselves for the first time in the same market?
TURKISH RETAIL MARKET TRANSFORMATION
In Turkey, retailing was predominantly run by traditional, unorganized channels in the
1990s. In fact, this was the result of a closed economic structure in the country until
1983 when a switch was made to liberal economic system. The first modern shopping
mall in Turkey opened its doors in 1988 in Istanbul and the industry had to wait for
more than a decade to pick up its growth curve. The first retail related industry
association was formed in 1994 which later became the Turkish Shopping Centers and
Retailers Association. Retail chains at that time were very limited and stores were
located on high streets of major cities. The majority of both food and nonfood
retailers were mom-and-pop stores. At the end of 1994, there were 10 shopping malls
in Turkey and this number went up to 50 by the end of 2000. Consumer electronics
retailing was done through individual stores that ran the spot markets for foreign
brands and through the exclusive dealer networks of the major Turkish brown and
white goods manufacturers such as Arçelik, Vestel and Profilo.
1
This case was prepared by Dr. Cüneyt Evirgen with the assistance of Yüksel Kaplancık both at
Sabanci University, Istanbul, Turkey. Dr. Evirgen was also a Member of the Board at Teknosa starting
in 2005. The author would also like to thank Teknosa top management and Jones Lang LaSalle,
Turkey for their support during data collection for the case. The case is intended as a basis for class
discussion and not to serve as an endorsement, source of primary data or as an illustration for good or
bad practice. Not to be reproduced or quoted without permission.
2
From 2000 onwards, however, structural transformation of the retail industry started
which significantly speeded up with the entrance of international retail real estate
developers of foreign origin into the Turkish market. Especially, after 2004, major
cities turned into big construction sites with cranes working on new shopping mall
constructions. While the major metropolitan areas got to be rather crowded with
shopping malls, after 2007 such projects also moved to other regions in Turkey and
second-tier cities as well. Number of shopping malls was 164 in 2007 and 208 by late
2008. As a result, the retail space available for renting in shopping malls was 3,85
million square meters in 2007, 4,84 million square meters in 2008 and is estimated to
reach 6,52 million square meters by 2010. About 40% of this total available area was
in Istanbul. The result, however, was that the distribution of shopping malls was very
uneven, being highly skewed towards the major cities, such as Istanbul, Ankara,
İzmir. On the other hand, most other cities had either no or only one shopping mall
(see Exhibits 1 and 2 for development of shopping malls and retail space through the
years).
Turkish retailers jumped on this development wave and began to open stores in these
shopping malls thereby expanding the coverage of their chains. Growth in terms of
retail space available and revenues generated due to organic expansion was very high
for all players. Such an untapped market potential also caught the attention of foreign
retailers who began to enter Turkey one after another.
The transformation was so fast and big that the share of modern retailing in the total
retail market, which was estimated to be around 10% in 2004, increased to 38% in
2007 and is expected to reach 50% by 2010. The market also increased from about 50
billion dollars in 2000 to 150 billion dollars in 2007 and was estimated to reach 200
billion dollars by 2010. By the end of 2010, there were 263 shopping malls in 48
cities around Turkey with many more projects planned or under construction. The
malls built were world class through the knowhow transfer taking place led by foreign
retail real estate developers and consultants. Different types of malls were built such
as theme oriented malls, power centers2, mixed-use development projects3, outlet
malls, specialty malls, etc. Retail rental space prices went up and while demand for
retail space used to be less than supply in the past, demand by retailers by far
exceeded the supply, particularly in cities outside the metropolitan areas.
The significant development of shopping mall real estate and increasing penetration
of such malls in more cities nationwide was leading the growth of organized modern
retail market in Turkey. This provided growth opportunities for all players in the
market and local and foreign retail chains began to develop and expand their coverage
in all product categories of retail.
2
Power centers are shopping centers that consist primarily of collections of big box (large, limited
service) retail stores with fewer small specialty tenants compared to traditional strip centers (Source:
Levy & Weitz, Retailing Management, 2009, p.201)
3
Mixed use developments (MXDs) combine shopping centers, office towers, hotels, residential
complexes, civic centers and convention centers and offer an all-inclusive environment (Source: Levy
& Weitz, Retailing Management, 2009, p.208)
3
Transformation of retailing was also welcomed by Turkish consumers who flooded
into the shopping malls as they opened. In fact, going to a mall became a family or
social event. In a shopping mall, families and individuals could eat, entertain
themselves, enjoy the lively environment, and rest and shop as they like and they
could find all stores lined up next to each other in a comfortable environment.
Furthermore, in 2004, a consumer banking innovation took place in Turkey: payment
at cash price through monthly installments. Retailers partnered with banks allowing
payments for purchases to be made using a credit card. The cash price (no interest
added) of the bought merchandise was divided into a certain number of equal
installments to be charged on the credit card used for each consecutive month
following the purchase date until all installments were charged. This had a big bang
effect in Turkey and retail sales skyrocketed. Consumers could purchase big ticket
items and pay for them in so many months through equal installments, allowing them
to enjoy using the products right away. Postponed or dropped purchase intentions
were revitalized which fueled retail sales. This had a dramatic impact on Teknosa’s
sales as well since most of consumer electronics products were big ticket items. While
this type of payment was limited to a couple of credit card brands and retailers to start
with, soon it became a widespread standard tool for all credit card brands and
retailers. Retailers made periodic agreements with various credit card brands and the
extent of options they were able to offer gave them competitive advantages. Now, the
no interest feature of payment by credit card installments is used discretionally by
banks and retailers, but this method continues to be the prevailing form of payment in
retail.
CONSUMER ELECTRONICS RETAILING MARKET IN TURKEY
Turkish consumers could buy consumer electronics products including domestic
appliances through a variety of retail outlets. However, historically there was a
limitation on retail outlets selling foreign brown goods brands of white and brown
goods. There was a very well established dealership structure set up by Turkish
manufacturers of white goods such as Arçelik, Vestel, Beko as well as foreign
companies such as Bosch. Especially, Arçelik clearly dominated the whole market
and had entered into manufacturing and selling of brown goods and small domestic
appliances businesses as well. Before the 1990s there was practically no modern retail
chain for foreign brands of brown goods and other consumer electronics in Turkey
apart from the nationally established dealers of the mainly white goods brands noted
above. However, beginning with the turn of the 21st century, a major transformation
started in the traditional retail market structure towards modern retailing along with
the modernization of the retail market as a whole. In fact, Teknosa was the company
that started it all at large scale.
In the end, the total retail market for consumer electronics and domestic appliances
was structured in terms of five major types of retailers. These were technical
superstores (TSS), consumer electronic stores (CES), computer superstores (CSS),
telecom specialists (TCR) and mass merchants. In this categorization, retailers such as
Teknosa, MediaMarkt, Darty, ElectroWorld, Best Buy, Vatan, Bimeks, etc) were
grouped under the TSS channel that represented multi-brand retailing with no
manufacturing. Dealership structures such as those of Arçelik and Vestel as well as
those of foreign brands such as Sony, Nokia, and Samsung constituted the CES
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channel which was characterized by mono-brands. Dealers of mostly Turkish
computer manufacturers such as Casper and Exper as well as thousands of small IT
shops were referred to as the CSS channel. GSM telecom operator stores such as
Turkcell, Vodafone, and Avea as well as thousands of mom and pop shops selling
cellular phones constituted the TCR channel. Lastly, retailers such as Carrefour, Real,
Metro represented the mass merchant category of retailers. The structure and
development of the total market was tracked by the syndicated consumer electronics
retail tracking study run by GfK Turkey4 that reported the split of the total market
across these five categories of retailers.
The trend across the years clearly indicated the significant growth that was taking
place in the total market that went up to 8.7 billion TL in 2007 (US$1 =1.4 TL). Due
to the effect of the global economic crisis in the world, the market shrunk a bit in
2008 and 2009, however, early indications in 2010 showed that the market was going
to be back on its growth curve. However, data also highlighted the transformation in
the market towards the growth of the TSS channel and shrinkage of the CES and CSS
channels across the years. Over the recent years, market growth was been driven by
TSS and mass merchants, while GSM operator chains have made an aggressive move
starting in 2009 (See Exhibits 3 and 4).
Hence, the consumer electronics retail market was both growing and transforming its
internal structure at the same time. The total market was mainly split into three
product categories as IT, CE (TV, audio, video) +photo and telecom. There was
however, significant differences in the strength of the alternative retail channel
structures depending on the product category. All major global brands of products
were represented and sold in the TSS channel in Turkey. Technical superstore was the
most preferred channel to purchase consumer electronics products with the exception
of white goods and small domestic appliances where the brand manufacturer dealers
(the CES channel) were preferred more. CES channel dominated the white goods
category and similarly TCR channel dominated the telecom category and especially
cellular phones (See Exhibit 5 for most preferred retailers in the electronics and
technology products as a whole).
TECHNOLOGY CONSUMER IN TURKEY
Technology Consumer Profile
The profile of the technology consumer in Turkey slightly deviated from the general
population statistics. The technology consumer was predominantly male while the
female proportion had been rising over the years especially after the expansion of the
product portfolios in the TSS channel to include major and small domestic appliances.
Overall, technology consumer was relatively more educated, urban, in his/her early
thirties, bachelor or newly married The socio economic status of the technology
consumer reflected the urban Turkish population indicating that the target group
covered all strata of the population (See Exhibit 6).
Since the purchasing power of these consumers were correlated with their disposable
income, demand for all price levels and types of products existed in the market.
4
Marketing research company (www.gfk.com)
5
However, price sensitivity of consumers was relatively higher in white goods
compared to high end products such as LCD panel TVs or smart phones. The
aspirational nature of technology products was a big driver of sales in consumer
electronics retailers as people from all income levels visited the stores. While sales of
white goods were mostly driven by the replacement need, sales of IT products, panel
TVs (plasma or LCD) and digital cameras were driven by their low penetration levels
in Turkey. Cellular phones was a case of its own as Turkey had one of the highest
cellular phone usage rates in the world and cellular phone ownership was almost
100% in urban households.
Consumer Purchasing Behavior
Technology consumer in Turkey made his/her buying decision on his/her own or
jointly and was influenced by others in the family or others depending on the product
category. Family members influencing the purchase decision also tended to vary
based on the product category. Decisions regarding products for general household
usage (e.g. TV, white goods, audio systems) were jointly made by the family
members whereas 75% of cellular phones were purchased individually. Word of
mouth and recommendations by relatives and close friends played a significant role
on cellular phone purchase decisions. Children were particularly influential on
computer, computer accessories, and game console purchase decisions whereas
female spouses heavily influenced white goods and small domestic appliance
purchases. Technology consumers preferred to shop around and gather information
about the products on their own during their store visits, but as the technical
sophistication of the products increased (e.g. LCD TV, audio systems, laptops), so did
the tendency to get consultancy and advice from a sales consultant in the store.
Among factors influencing purchase decision were desire to own better technology,
recommendations by friends/relatives/colleagues, information and service given by
the sales staff, web search and sales promotions. However, the relative importance of
these factors also significantly varied across different regions of Turkey.
Overall, the primary reason for purchase was replacement of an existing product due
to malfunctioning or getting old, particularly for white goods and small domestic
appliances. Desire to own the latest technology was a stronger motive in purchases of
game consoles, computers as well as cellular phones and recommendations by friends
and relatives was another significant motive in cellular phone purchases.
The primary reason for not making a purchase from a consumer electronics retailer
visited was more price related. Other reasons for not making a purchase were related
to payment options offered, product not being in stock, product demonstration
limitations, products on sales promotion not being available and lack of product
knowledge of the sales staff. These barriers pointed to the main challenges faced by
all consumer electronics retailers.
Technology appeared to be a high involvement product category for the Turkish
consumers. The majority of technology consumers (77%) in Turkey were interested in
using the latest technology, but were also involved in a search process (19%) (See
Exhibit 7 for figures regarding behavioral changes of Turkish consumers’ regarding
use of technology across the 2007-2009 periods).
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The top five attributes that had the most impact on consumer electronics retailer brand
equity were availability of wide variety of products, leadership, offering best
shopping experience, good prices and sales staff related attributes. Other leading
attributes included quality of products, trustability, wide distribution of stores, after
sales service, responsiveness to customer need and recommendations by others.
SABANCI GROUP AND RETAILING
Teknosa was one of the companies of the Sabancı Group which was the second
largest Turkish conglomerate whose businesses were mostly in banking and industrial
manufacturing (business-to-business) areas. “Sabancı” was the surname of the
founder of the Group which was a very well known and highly respected and trusted
name all around Turkey. Names of all Sabancı Group companies ended with “SA”
and the letters S and A placed in circles5 was the mark of this in company logos.
Hence, “SA” at the end of Teknosa pointed out that Teknosa was also a Sabancı
Group company and everybody in Turkey could easily recognize this.
The involvement of the Sabancı Group in consumer electronics and white goods
retailing went back to 1996. The Group had its first retail experience when a joint
venture was formed with Carrefour to form CarrefourSA in Turkey in 1996. However,
executive management of the company was controlled by the French partner and
Sabancı was represented on the company Board. Thus, this joint venture had not
given Sabancı Group a chance to be directly involved in retail operations, but rather
being an influencer and decision maker as an investor. There were probably other
venues of retail that could be promising.
Up until that time, the experience of the Group with Japanese companies had been
very promising and successful 50/50 joint ventures formed with Toyota, Bridgestone
and Mitsubishi had been profitably growing. Looking for an area of new investment
and growth, assessment was made that Japanese brands of white goods were
underrepresented in Turkey. Mr. Mehmet Nane, a 32 years old project manager was
given the assignment to work on possible partners to work with and finally, a
distributorship agreement was signed with Sharp Inc. to market their products in
Turkey. Sharp washing machines were not included in the agreement since they were
top loading types and Hoover brand front loading washing machines were also added
to the product portfolio. Additionally, distributorship agreement was made with
Thomson brand for TV and audio equipment.
Hence, Sabancı Group became the wholesale distributor for Sharp, Hoover and
Thomson in Turkey. The channel structure was initially based on nonexclusive
dealers, but, after a while, decision was made to enter the retail side of the business
and the first company owned store was opened at the end of 1998 in Izmir under the
name Direct Shop. Izmir was relatively a much smaller market than Istanbul where
the majority of trade took place, yet being the third largest city in Turkey it also
represented a good test market. The first recruited employee for Direct Shop was Mr.
5
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Bahadır Özbek. The results of the first month following the opening were rather
promising. With 70SKUs, $250,000 revenue was generated. The total revenue of the
wholesale business at that time was $20 million.
March 2000 marked the establishment of the new company, Teknosa, where Demir
Sabanci (third generation family member) was both the founding General Manager
and President of the Board and Mr. Mehmet Nane was the Vice-President. The first
six months of operation passed dealing with ERP software issues since the existing
ERP system was not suitable for a retail business due to the different nature of a retail
business operation. The company grew to 12 stores and brand name was changed to
Klik. Issues, however, did not end since problems were faced with registering the new
brand name. It was found out that the word “Klik” was already preregistered by a
different company. Eventually, the store name was changed to Teknosa and the first
invoice was written in October 2000.
2000-2002: Foundation/Initial Years
The world of business, particularly in emerging countries such as Turkey was prone to
surprises. A very significant political crisis that broke out in February 2001 in Turkey
was followed by a 50% devaluation of the Turkish Lira against the US dollar.
Teknosa was hit by a $20 million currency loss when the annual revenues were at the
same level. 10 of the total number of 24 stores of Teknosa were shut down, the
company contracted and a new game plan was needed.
Preparation of the 2002 budget marked the revitalization of the business. Shareholders
(i.e. Sabancı family members) seriously challenged the draft budget prepared that was
based on opening new stores, and asked for downsizing of the number of stores as
well as staff size. The revised budget targeted 15 stores in total with a total staff size
of 330. One major decision made was to purchase the products from local distributors
of the brands carried rather than directly importing them to hedge the currency risk.
Shareholders approved the revised budget and agreed to invest $25 million of equity
into the company.
The first manufacturers that gave their products to Teknosa were Arçelik and Vestel,
the two leading Turkish brown and white goods companies who had their own
exclusive mono-brand dealer networks all around the country. Hence, the first multibrand retail store chain of brown and white goods was born in Turkey.
In 2001, franchise agreement was signed with Radio Shack (a major US consumer
electronics retailer) and three stores were opened under the Radio Shack name. A lot
of things regarding running a consumer electronics retail business was learned out of
this experience. However, later on it was clear that the product range of Radio Shack
(mostly electronics parts and accessories) was not appropriate for Turkey at that time
and eventually, Radio Shack stores were all converted into Teknosa stores.
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2002-2004: First Growth Wave/Teknosa Gets On His Feet
In 2001, governance structure in the Sabancı Group was changed and strategic
business units (SBUs) were formed. The Food and Retail SBU6 was formed under
which the packaged consumer goods and retail businesses were placed. Later on, in
2002, this SBU was split into two separate SBUs as Food SBU and Retail SBU where
Mr. Demir Sabanci became the Head of Retail SBU. That was when Mr. Mustafa
Altindag (then Deputy General Manager) became the General Manager and Mr.
Bahadır Özbek became the Deputy General Manager in charge of marketing and sales
at Teknosa and Mr. Mehmet Nane became the Retail Director at the Retail SBU
within the Sabancı Group.
The revitalization road map for Teknosa in 2002 included many critical initiatives and
operational investments. One of these was assignment of Sabancı University to run a
retail business analysis of Teknosa for the company to become a world class retailer
and set up a retail sales performance system in the stores. Sabancı University worked
with leading foreign retail consultants such as Retail Performance Specialists (UK)
who was also the European representative for Friedman International, a well known
retail consultancy firm. Thus, a bridge was formed for transfer of world class retail
sales knowhow to Teknosa. This was one of many visionary decisions made that
radically changed the retail sales management at Teknosa.
Results of the initial situation analysis clearly indicated improvement areas for
Teknosa such as human resource practices, IT infrastructure, store sales management,
regional area management, managerial processes, etc. Hence, in 2003 significant
operational investments were made such as implementing a world class sales
performance management system and retail ERP & IT system. Key retail sales
performance indicators such as conversion rate, number of invoice written, sales and
items per invoice became key performance measures that were measured, tracked and
targeted as standard practice. The system was very well integrated across all levels of
the retail sales force, starting from the individual sales consultant at each store and
moving up to store managers, area managers and sales director. The Sales Director
was able to see the real-time full sales performance dashboard for Teknosa retail
stores at his fingertips sitting in his office. Store sale scorecards that used to be
prepared manually using MS Excel spreadsheets were now produced electronically
once a sale was run at the cash register. Real time tracking of sales at store level
enabled area and store managers to make effective and fast decisions and catch up
with the pace of retail. Moreover, ongoing, uninterrupted training programs were
executed for all new and existing sales staff at all levels.
An organizational change was also implemented in late 2004 where managerial
positions reporting directly to the General Manager were redefined. Sales, marketing
communication and category management functions were separated and a director
was assigned for each.
Overall, the period 2002-2004 represented a fast track expansion period for Teknosa.
By the end of 2004, Teknosa had 56 stores (all company owned) around Turkey. The
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Strategic Business Unit
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stores were on average 250 square meters in size and were mostly located in shopping
malls with some being on high streets.
All through this period, in essence, Teknosa created the multibrand consumer
electronics retail chain industry in Turkey and became the market leader through its
growth. During this period, Teknosa also launched alternative sales channel
initiatives including setting up a call center for sales by telephone and an e-sales store
(www.teknosa.com) for sales over the internet. Both of these initiatives were
pioneering initiatives in consumer electronics retailing in Turkey. Teknosa also led
the usage of periodic monthly sales promotion inserts or flyers distributed with
national newspapers and at the stores.
The strategy of Teknosa was based on a service oriented modern retail concept and
differentiation was the key. The core concept was based on the customer experience
within the store and the objective was to be the store of choice for the targeted
consumer electronics consumer. Variety of leading brands displayed and sold, sales
promotions, methods of payments offered, convenience of reaching the stores,
professionalism of the sales staff, in-store sales consultancy offered, modern
merchandising and displays within the stores, after sales services, etc were driving the
different dimensions of differentiation.
The growth of the consumer electronics retail business led by Teknosa soon began to
attract a lot of attention, both locally and internationally. Some local consumer
electronics retail chains that had been around for 10-20 years with stagnant growth
got spurred by the growth triggered by Teknosa and turned on their growth engines as
well. Among these were Bimeks, Gold Bilgisayar and Vatan Bilgisayar (“bilgisayar”
means “computer” in Turkish). Moreover, foreign consumer electronics retail chains
such as MediaMarkt (part of Metro Group, Germany), ElectroWorld (part of the
Dixons Group, UK), Darty (part of the Kesa Group, France) and Best Buy (US) began
investigating the Turkish market and signaling their intentions to enter. Turkey, with
its total population close to 70 million, 45% of which was under 40 years old,
growing per capita income and relatively low levels of consumer electronics product
penetration was representing huge growth opportunities. This attractiveness was
further amplified by the fact that the US and Western European markets were
reaching saturation levels. One of the imminent reflections of foreign retailers’ entry
plans was that Teknosa became a source of staff recruitment by these companies.
Since history of modern retailing was very short in Turkey, and even shorter in
consumer electronics retailing, there was a significant lack of experienced local talent
at all levels of the retail business. By that time, Teknosa was the home of experienced
and well trained talent in consumer electronics retail in Turkey.
Another critical reflection was that Teknosa began to come across these other
consumer electronics retailers for rental space in new shopping mall development
projects that were underway. Now, for real estate developers there were alternative
renters in the consumer electronics category and a very strong and aggressive
competition for limited supply began to build up.
Issues coming up due to the fast growth of the company as well as the growing
competition were not the only issues that Teknosa had to deal with. In late 2004, the
founding General Manager and Head of Retail SBU at Sabancı, Mr. Demir Sabancı
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resigned and left the Sabancı Group following some other Sabancı family members to
build his own business and Mr. Mehmet Nane left the Retail SBU and became the
General Secretary of Sabancı Holding while his Board membership at Teknosa
continued. There were rumors in the business circles that Mr. Demir Sabancı was
going to reenter consumer electronics retailing business with a foreign partner. Mr.
Haluk Dinçer was now the new Head of Retail SBU. Following the resignation of the
General Manager, Mr. Mustafa Altindağ, in May 2005, Mr. Mehmet Nane became
General Manager at Teknosa. Now, Mr. Nane was in command after having lived
through all the stages of Teknosa’s establishment with its ups and downs. However,
both Haluk Dinçer and he were now facing serious strategic choices to take the
company further.
The company had established a strong track record over the previous three years,
grown fast, created the consumer electronics retail market and became the market
leader and was now feeling the pressures of moving into a new growth stage and
threat of upcoming foreign competitors. So what should be done and how? Is a
change of strategy needed and if so in what direction? These were some of the key
questions that the new leadership of Teknosa had to find answers to.
2005-2010: The Competitive War Begins
The new leadership of Teknosa sat on the driver’s seat with aggressive targets and a
commitment to keep its market leadership and continue its growth profitably. 40 new
stores were opened in one year taking the total number of stores to 96 in 23 cities and
2 small towns nationwide by the end of 2004. Starting in 2005, Teknosa followed the
pace of growth of modern retail outlets in Turkey.
New store openings took two routes. One was related to expanding in major cities and
the other one was entering uncontested fronts such as second-tier cities and large
enough towns in Anatolia. On one side, special attention was given to following and
preempting retail space in new shopping mall projects in the cities. On the other side,
Teknosa also started moving into large enough towns outside the cities all around the
country and open up street stores on the main streets. Consumers in these smaller
markets warmly welcomed a modern retailer coming to town. In addition to opening
brand new stores, inefficient stores were closed down and promising stores were
relocated by moving to larger locations in the same area. By that time, Teknosa store
opening team had become real experts in opening up a store in an extremely short
time. The team could open up a new store every week.
Organizationally, the sales, category management and marketing communication
functions had to work closely and in a coordinated manner which was absolutely
essential for business success. Mehmet Nane called this group as the “Troika” and
was keen on establishing a seamless operation through their joint effort. Support
functions such as HR, IT and finance were critical to make sure that the whole
operation in the field worked flawlessly and without interruption.
In addition to its retail stores, Teknosa had also been running a wholesale
distributorship business for Mitsubishi and Sharp air-conditioners and white goods in
Turkey through a dealer network. In 2006, this division was restructured and the
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İklimsa7 subbrand was born in Teknosa. İklimsa established an exclusive dealer
network by transforming the existing network and also started to have private label air
conditioners produced for the company in Far East. Later on, with the development of
big box stores, Teknosa added white goods to its product portfolio in its retail stores
as well.
Along with its fast organic growth, Teknosa also launched various business
improvement initiatives and continued its infrastructural investments.
One of the major initiatives after 2005 was launch of new retail formats by Teknosa.
Examples such as Teknosa Cep (“cep” means “pocket” in Turkish), Teknosa Extra,
Teknosa Exxtra, Teknosa Outlet and Teknosa Planet were developed and launched.
This variety of store formats constituted the Teknosa fleet of stores to fight the
competitive war for market leadership in the Turkish consumer electronics retail
market (See Exhibit 8 for pictures of these different formats).
The size of a standard Teknosa store was between 200-300 square meters. These
stores carried merchandise for sale in all consumer electronics categories such as TVs,
desktop or laptop computers, digital cameras, audio systems, cellular phones, etc,
however, white goods were not offered. Teknosa did not offer any private label
products and all products sold were well-known global brands.
Teknosa Cep was a retail format that focused on the concept of mobility. The product
range included “pocket size” mobile technologies such as cellular phones, mp3/mp4
players, cameras and related accessories. They were much smaller in terms of size
with an average store being about 70 square meters. This small size enabled them to
be able to enter into smaller markets and neighborhoods, have high location mobility
and requiring less real estate and merchandising investment. These stores would
directly confront especially GSM operator dealer networks that were scattered around
such areas and neighborhoods and were significant players in the cellular devices
market. Indeed, Teknosa Cep stores were referred to as “street fighters” within the
company to reflect on this positioning.
Teknosa Extra was larger than a standard Teknosa store with about 600 square meter
store area enabling larger selection and variety of merchandise to be displayed and
sold. Teknosa Exxtra stores represented the largest format with a store size between
1500-3000 square meters. The product portfolio and number of SKUs was the highest
in these stores. Teknosa Planet was a special version of Teknosa Exxtra and an
extraordinary concept created to set up an iconic showcase store to contribute to
Teknosa brand equity that offered a distinctively different and rewarding shopping
experience. In fact, this store was one of the five finalists in the Best Retail Design of
the Year Award in 2009 in the World Retailing Congress held in Barcelona, Spain.
Teknosa Outlets, on the other hand, were stores where repaired or returned
merchandise were offered for resale at discounted prices along with brand new
products. Such products were labeled as red tag products and an information card was
placed next to them describing the reason for such labeling. These stores were located
in outlet shopping malls along with outlet stores of other retailers in other categories.
7
“İklim” means “climate” in Turkish and “SA” stands for “Sabancı”
12
The product range offered for sale in these different store formats varied based on the
store size. The product categories carried were IT products (desktop/laptop/notebook/
netbook computers, printers, IT related accessories, etc), telecom products (cellular
phones, landline phones, navigation devices, telecom related accessories, etc.),
consumer electronics products (plasma/LCD/LED panel TVs, home theater
equipment, music boxes, DVD players, digital cameras and camcorders, mp3 players,
video games, game consoles, etc) and white goods (refrigerators, ovens, air
conditioners, small kitchen appliances, vacuum cleaners, fitness equipment, personal
care devices, etc).
White goods, for instance were mostly sold in Extra and Exxtra stores since their
bulky size required larger store area, Overall, about a third of total Teknosa sales
came from IT products, about a third from consumer electronics, about a quarter from
telecom and the rest from optic and white goods categories where white goods was
the smallest category.
By the end of 2009, Teknosa had reached a total of 244 stores in 65 cities and 36
small towns nationwide. (See Exhibits 9, 10a, 10b, 11, 12 and 13). During this period,
seeing the growth trajectory of the company and the toughening competition,
shareholders had also decided to increase the working capital of the company in order
to better finance its growth and this had the boosting effect to reach the nationwide
coverage of the Teknosa stores at the end of 2009.
Another significant initiative during this period was establishment of Teknosa
Academy. This was a training hub for Teknosa, particularly for the sales staff to
manage retail staff turnover, continued organic growth and changing and evolving
product portfolio that demanded continuous product knowledge updating of the sales
staff. The objective was to ensure that consumers were met by knowledgeable, service
oriented, professional sales staff at the stores who contribute to a rewarding and
memorable shopping experience at Teknosa stores. The Academy also offered
operational and procedural trainings and had an exclusive store training support group
that was in the field providing on-site support to the stores. The trainings included inclass sessions, e-learning tools, model store experience, capability building
workshops, etc.
In line with its customer oriented business approach, Teknosa strongly emphasized to
be close to the consumers and to listen to them. In order to keep up with the changing
needs of the consumers and be aligned with their expectations, the marketing research
budget was always kept large enough. In addition to running a series of consumer
research studies on a continuous basis, a number of ad hoc research projects were
carried out annually. This enabled Teknosa to be on top of consumers’ needs and
expectations and their evaluations of Teknosa as well as keeping track of competition
and market situation.
As Teknosa expanded, it became the major retail outlet for consumer electronics
product brands in Turkey. If a new product introduced in Turkey was not sold in
Teknosa, its penetration success rate was seriously endangered. Hence, Teknosa
became the retail channel preferred by the brand manufacturers as well. The result
13
was that Teknosa was able to establish strong relationships with product suppliers in
Turkey and run joint promotions and get their support on various initiatives.
Teknosa Asist was introduced as the hub of after sales service at Teknosa. This
service located in each store in its subbranded format was set up to handle all aftersales service needs of the consumers. If a consumer had a need for after sales support
(such as repair, return, installment, product usage, etc) all s/he had to do was to visit
the Teknosa Asist service counter and staff there responded to that need, facilitating
the whole process for the consumer.
During the 2005-2010 periods, Teknosa also launched two other consumer initiatives
one of which was Teknosa Guarantee. This was a service that offered extended
warranty coverage for merchandise bought from Teknosa at an incremental cost for
periods beyond the standard warranty offered by the brand manufacturers. The second
was a consumer loyalty program, namely Teknosa Card that rewarded Teknosa
consumers for their repeat business. The program also allowed development of
personalized communication and special offers for Teknosa consumers.
During this growth period, the continued expansion, growth of SKUs, new product
and service introductions, etc began to necessitate prioritizing optimization of
merchandising and merchandise allocation decisions. Along this route, Teknosa
decided to further improve on the concept and applications of scientific retailing.
Upon completion of a large scale merchandising and logistics improvement project,
IT and systems infrastructure of category management at Teknosa was redesigned and
automated. As a result, in 2009, inventory optimization was carried out through
artificial intelligence techniques without human intervention. When a particular SKU
was tracked to be in need of restocking at a given store, the system automatically sent
out an order for product replenishment for that store in the required amount.
Moreover, a stand alone logistics warehouse was built in Istanbul which was the
largest one run by a retailer that was in a totally covered space in one location.
The marketing communication program for Teknosa was multi-faceted. On one side,
investments were made on brand development communication to ascertain the value
proposition of the Teknosa brand and increase its brand equity. On the other side,
various campaigns were planned and executed to support and incentivize sales.
TV and radio commercials, print ads, sale promotion campaigns, social media,
outdoor media, PR activities and sponsorships were all used as alternative vehicles to
support both the brand equity and sales at Teknosa. Among the sponsorships, some
major initiatives were sports related where Teknosa was the technology sponsor for
the Turkish national football team, Turkish national basketball team and the 2010
World Basketball Championship held in Turkey. Additionally, its Technology for
Women sponsorship supported training programs offered for free to Turkish women
particularly in less developed cities of Turkey to become computer literate. The
Technology for History program supported digitization of historical documents and
archives in Turkey. Teknosa was also typically the technology sponsor for major
conferences targeting the retail industry in Turkey. Additionally, working with youth
oriented celebrities or celebrity sponsorships were also used as part of the marketing
communication campaigns.
14
The period 2005-2010 was a continuous organic growth period for Teknosa that had
244 stores in 65 cities and 36 small towns all around Turkey with a total of 80.134
square meter retail space by the end of 2009. Moreover, market leadership was
strengthened every year as Teknosa continued to gain market share year after year and
grew faster than the market. Even in 2009, when the total market shrank by about
12%, Teknosa grew by 17%. Despite the growth of Teknosa, however, competitive
pressure was significantly building up in the market with the entry of international
consumer electronics retailers in Turkey with aggressive investment and growth
objectives of their own.
Teknosa also continued to invest in improving its organizational procedures and
processes. The result was crowned by receiving the first ISO 9001:2010 Quality
Management System certification in Turkey in its category. Additionally, Teknosa
was the recipient of many prestigious local and international awards or nominations.
In 2009, Teknosa received the Retail Chain of the Year award given by FAPRA
(Federation of Asia-Pacific Retailers Associations). In 2008, Teknosa was one of the
five finalists in the Best Retail Design of the World award given by the World
Retailing Congress. In 2009, Teknosa received the best marketing campaign, the best
customer satisfaction project and the Retailer of the Year awards given by the Turkish
Shopping Centers and Retailers Association. Most important, however, were probably
the awards coming from the consumers such as best consumer electronics retailer,
best retail service, best sale campaigns, etc.
Business results during the previous five year period had also been rather promising.
By the end of 2009, Teknosa was still the market leader in the consumer electronics
retail market both in terms of retail sales area and sales revenues. Hence, as 2010 was
around the corner, Teknosa’s consistent growth and development had made the
company clear market leader in consumer electronics retailing in Turkey.
Industry observers noted the sustainable growth and market leadership of Teknosa to
be remarkable. The aggressive market entries of international consumer electronics
retailers coming in with decades of established experience had not shattered
Teknosa’s position. In fact, a German retailer, namely Electronic Partners (EP), had
entered the Turkish market during that period, but was later acquired by Teknosa and
left the market.
COMPETITION
The competitive arena in the consumer electronics retail market in Turkey consisted
of local and foreign players who had established their own retail chains. The main
competitors in the TSS channel of consumer electronics retailing in Turkey were the
foreign players (MediaMarkt, Saturn, Darty, Electro World and Best Buy) and local
players (Bimeks, Gold Bilgisayar, and Vatan Bilgisayar).
Industry observers in Turkey noted that Turkey was the first market where all of the
major international consumer electronics retailers were competing against each other
at the same time in the same market. In fact, both the world’s largest (Best Buy) and
Europe’s largest (MediaMarkt) consumer electronics retailer were confronting each
other for the first time. In short, since there was no prior incidence of this happening
before, history was being made in Turkey in consumer electronics retailing as no one
knew what the result of this interplay would be.
15
The consumer electronics retail market had experienced a strong and fast growth over
the last decade and became a fiercely competitive arena both for local and foreign
players. While the market leader was a strong local company, namely Teknosa, there
were a number of strong challengers and followers that created an exciting
competitive scenery. As one observer pointed out, what made all of this even more
interesting was the fact that consumer electronics was the core business of all of these
competitors whereas the Sabancı Group did not have any prior core competence in
retailing when Teknosa was founded.
In fact, MediaMarkt executives noted Turkey as their fastest growing market over all
the others and targeted becoming the market leader. Others, such as ElectroWorld,
Darty and Saturn were announcing their growth plans in Turkey through opening new
stores and the global market leader, Best Buy, the largest consumer electronics retailer
in the world, had set foot in the market as well with declared intentions of staying in.
Other local chains, such as Bimeks, Gold Bilgisayar and Vatan Bilgisayar sounded
confident of their future growth.
Entry of the foreign retail chains was the most significant threat for Teknosa and
keeping market leadership position required developing and executing an effective
competitive strategy. The new initiatives taken during the 2005-2010 periods were all
elements of this strategy. War was on full force and Teknosa was attacked from all
sides. The foreign retailers basically opened their stores in the same fashion as they
did in other countries, following more or less their standard blue prints. Big bang
opening style and provocative billboard advertisements and aggressive
communication tone of MediaMarkt illustrated this approach. Electro World, Darty,
Best Buy and Saturn also followed their own blueprints. Having studied these retailers
in other markets, Teknosa prepared itself for the fight. For instance, opening of each
new big box store of a foreign competitor was confronted by a strong “welcome
party” featuring strong promotions and consumer events or new store openings in
closely areas. Teknosa began fighting with competition head on wherever they came
across each other and the most intense war area was the major metropolitan cities.
MediaMarkt8
MediaMarkt which was part of the Metro Group in Germany, was the European
market leader in consumer electronics retailing with its 580 stores spread out in 14
countries with a total turnover of €19,7 billion (including MediaMarkt and Saturn
branded stores) in 2009 and opened its first store in Turkey in 2007. Their stores were
fairly large in size, as a typical MediaMarkt was, ranging between 4,000-8,000 square
meters. The large format of these stores made them category killers carrying all types
of white goods and consumer electronics in vast quantities.
The reported revenues in Turkey for 2008 were €123 million, while their 2010 target
was declared as 1 billion TL (about 500 million Euros). Turkey was the fastest
growing market for MediaMarkt among all of its markets and the company had
publicly declared its target to be the market leader in Turkey. Their customers came
from all socio-economic income groups and their positioning was to offer the lowest
8
www.mediamarkt.com , www.mediamarkt.com.tr
16
prices, largest selection, and best customer service in largest sales areas. MediaMarkt
mostly used print ads, billboards and inserts as communication vehicles and put a big
fight over price. MediaMarkt was very aggressive in its pricing and ran aggressive
campaigns across all product categories. Their brand communication also strongly
emphasized low prices at MediaMarkt.
The founding General Manager of MediaMarkt in Turkey was Mr. Mustafa Altındağ
(ex-General Manager at Teknosa). Their view on competition was expressed by one
company executive as:
“MediaMarkt, through the pioneering initiatives introduced to the Turkish market, is
not within the competition, but rather at the center of other retailers who are
competing among each other. Hence, as MediaMarkt defines the sectoral benchmark,
competition revolves around MediaMarkt” (Pilatin, February 2010)
MediaMarkt had entered the Turkish market rather aggressively and its initial growth
followed a similar pattern. By the end of 2009 MediaMarkt had 15 stores in 7 cities
with a total sales area of 75.200 square meters. The opening of their first store got a
lot of attention due to a very aggressive campaign that resulted in people lining up in
front of the store starting from night time waiting for it to open and security guards
had a very hard time to control the crowd when the store opened. This type of store
opening was in fact common practice for MediaMarkt, but was a novelty for Turkey
and soon all major consumer electronics retailers followed the same suit. However,
MediaMarkt’s aggressive sales promotion and price discounting campaigns as well as
culturally provocative advertising messages continued to be at the core of its strategy.
On the other hand, a slow down was expected in new MediaMarkt store openings in
2010.
Saturn9
Saturn was the second consumer electronics retailer company of the Metro group and
entered the Turkish market in 2008. Saturn stores were about 4.000 square meters in
size.
Visual merchandising was emphasized much more than in MediaMarkt and hence the
cost of visual merchandising at a Saturn store was higher. The first Saturn store was
opened in Istanbul. Growth plans included opening up new stores both in Istanbul and
other cities. The company has high expectations from the Turkish market and was
counting on serious growth for Saturn in the following years. Saturn store was located
as one of the anchor stores in shopping malls in Istanbul. The big challenge was to
establish the differentiation between MediaMarkt and Saturn as both belonged to the
same group. Saturn entered the market with an emphasis on low prices and intelligent
shopping for consumers. After its initial entry, however, as of the end of 2009, the
company followed a rather low profile track.
9
www.metrogroup.de
17
Electro World10
Electro World belonged to the Dixons Group which was a UK based consumer
electronics retailer. Dixons Group had 1,300 stores in 24 countries, employed 40,000
people and its 2008 revenue was 8.3 billion pounds. The group entered the Turkish
market with their Electro World brand that they had been using in Eastern Europe.
The first store was opened in 2007 in Bursa, fifth largest city in Turkey. Dixons’s
partner in Turkey for Electro World was Esas Holding where it was led by Mr. Demir
Sabanci (founding General Manager at Teknosa) and its General Manager was Mr.
Bahadır Özbek (ex-Teknosa Deputy General Manager). By the end of 2009, Electro
World had 11 stores in Turkey with a total of close to 40,000 square meters of retail
space.
Electro World grew by 72% in 2009 and its brand awareness rose to 45% in cities
where it had stores (Pilatin, February 2010). Their growth strategy was based on
expanding in large cities. In 2010, the company was also going to enter other cities by
launching a franchise program. Electro World stores were also fairly large in size
(1,500-3,000 square meters) and located either as anchor stores in shopping malls or
as street stores in retail neighborhoods. However, most of their locations were at
relatively low traffic areas. Electro World tried to position itself as a good price
location for consumers and made some aggressive sales campaigns at times across all
product categories.
The General Manager, Bahadır Özbek, stated their target as:
“We position ourselves at equal distance to both local and international competitors.
Through novel business models we bring in to the sector, our aim is both to get
market share from the existing market and grow the market” (Pilatin, February 2010)
Darty11
Darty belonged to the French Kesa Group which had 800 stores in 11 countries. The
Group employed 12,000 people and its 2008 revenues were 6 billion Euros. Darty
entered the Turkish market in 2006 and its founding CEO in Turkey was Mr. Nedim
Esgin, former General Manager of Arçelik (leading Turkish brown and white goods
manufacturer). Their store expansion strategy focused on shopping malls, retail
neighborhoods and retail power centers such as Koçtaş (a do-it-yourself retailer in
Turkey). Size of Darty stores was typically 1,000-3,000 square meters and their
locations were in line with their expansion strategy. Darty appeared to be a follower
in the market in terms of pricing and its sales promotions tended to focus more on
white goods and panel TVs.
At the end of 2009, Darty had 14 stores in 4 cities in Turkey. Darty General Manager
noted their long term target as being one of the top two consumer electronics retail
chains in Turley.
10
11
www.electroworld.com , www.electroworld.com.tr
www.darty.com , www.darty.com.tr
18
Best Buy12
US based Best Buy was the world’s largest consumer electronics retailer with stores
in the US, Canada, Mexico, Europe and China. In 2002, Canada based Future Shop
and in 2007, Five Star (one of China’s largest appliance and consumer electronics
retailers) were acquired by the company. In fact, Best Buy followed a dual branding
strategy in Canada and China by opening stores both under Best Buy in addition to
the local brands it has acquired (i.e. Future Shop and Five Star respectively) and Five
Star names. Moreover, in the second half of 2009, Carphone Warehouse in the UK
was acquired by Best Buy, strengthening its presence in Europe.
By the end of 2009, Best Buy had 1,107 stores in the US and 2,835 stores outside the
US (with 2,414 stores added following the acquisition of Carphone Warehouse). The
company’s global revenues in 2009 were $45 billion and the total retail sales floor
area covered was about 5 million square meters.
Best Buy stores were typically in the form of category killers with an average size of
5,000 square meters. On the other hand, Best Buy Mobile13 stores, subbrand focusing
on mobile technologies) were about 100-150 square meters in size. Another
distinction was between the size of its domestic and international stores. While, US
stores were typically 3,500 square meters in size, average size of its international
stores were around 500 square meters.
Best Buy had also set up its company in Turkey and was expected to open up its first
store in the city of İzmir in 2010. As industry observers emphasized, one of their key
challenges in Turkey appeared to be finding available appropriate store locations in
metropolitan areas.
Customer centricity concept was at the heart of Best Buy where all operations and
product or service offerings were based on a continuous and in-depth analysis of the
consumer electronics consumer. One of the well-branded services of Best Buy was
the Geek Squad14 which was the subbrand for its after sales services.
Gold Bilgisayar15
Being one of the local players in the Turkish market, Gold Bilgisayar was originally
founded as a computer store back in 1991 and it had relatively small sized stores on
some high streets that were more like computer specialty stores. The first hypermarket
was opened in 2003 which was about 2,000 square meters of retail space a big box.
After opening up two more hypermarkets in Istanbul and one in Bursa, the company
grew its store chain through franchising. By the end of 2009, the company had
reached a total of 100 stores. Gold hypermarkets were about 1,000-2,000 square
meters in size and were located as stand alone stores along main driveways. Gold
executives were also expressing plans to open stores in shopping malls as well. Gold
was a follower in the market in terms of pricing and its sales promotions tended to
focus more on IT products and panel TVs.
12
www.bestbuy.com
www.bestbuymobile.com
14
www.geeksquad.com
15
www.gold.com.tr
13
19
Bimeks16
Bimeks was another local consumer electronics retailer that had 26 stores with total
annual revenue of about 120 million Euros by the end of 2009. The company was
founded in 1990 and grew by opening up relatively small size (100-200 square
meters) stores in shopping malls and in some retail neighborhoods. In fact, the first
consumer electronics store in a shopping mall in Turkey was opened by Bimeks back
in 1996. The initial product portfolio was limited to computers and related accessories
that made them more a computer specialty store. After 2003, the product portfolio
was expanded to include all consumer electronics categories.
However, starting in 2007, Bimeks introduced Bimeks Teknoport stores which were
big boxes with 3,000 square meters or larger retail space. These were located as
anchors next to shopping malls or retail neighborhoods along main driveways. With
Teknoport stores, Bimeks expanded its product portfolio even more to include white
goods and small household appliances as well as audio-video and more telecom
equipment. Bimeks General Manager, Mr. Arif Bayraktar, noted the company’s
strategy as offering the best price and best service to the consumer (Pilatin, February
2010). Bimeks was more like a follower in the market in terms of pricing and its sales
promotions tended to focus more on IT products and panel TVs.
Vatan Bilgisayar17
Vatan Bilgisayar opened its first store in Istanbul in 1983 as a stand-alone destination
store next to a major driveway. The growth of the company was along the same path
of opening stand-alone big box stores. Originally, Vatan was positioned as a computer
hypermarket. Later on, other consumer electronics product categories such telecom,
audio and video were added along with white goods and small household appliances.
In 2009, Vatan also introduced a new retail format under the name Vatan Notebook
which was a specialty stores for notebooks/netbooks only. These stores were located
in shopping malls and had relatively small sizes (around 150-200 square meters).
Visual merchandising elements used in Vatan Notebook stores were more consumer
experience oriented. Vatan was one of the most aggressive players in the market in
terms of pricing and consistently made very aggressive campaigns particularly in
computers and laptop categories through significant price reductions.
Overall, one of the differentiation points of the competitors listed above was the
representation of different product categories in their stores. Exhibit 14 summarizes
the relative weights of different product categories carried by these retailers.
Brand Image of Teknosa
Surveys among technology consumers in Turkey showed that Teknosa was leading
among all brand attributes but that competitors were challenging Teknosa across
different dimensions (See Exhibit 15). Leading brand attributes of Teknosa as
perceived by consumers were being Turkish, leader, wide geographic spread of stores,
16
17
www.bimeks.com.tr
www.vatanbilgisayar.com
20
trustable, best quality products and offering a wide variety of products all together.
Teknosa consumers in particular noted trust, fair prices, wide variety of products and
models, good payment conditions and proximity to home or work as the leading
reasons to shop from Teknosa rather than other retailers.
On the other hand, consumers visiting a Teknosa store, but leaving without making a
purchase underlined high price as the main reason for not making a purchase. In fact,
although industry experts noted Teknosa to be the price maker in the market,
consumers perceived Teknosa to be at a premium price point. Real-time store price
comparison studies carried out in the market with competitors validated the experts’
opinion; however, consumers’ perception was the contrary.
Ongoing consumer surveys showed that customer loyalty as well as customer
satisfaction indices of Teknosa had been increasing since 2006. However, while
Teknosa was the most preferred consumer electronics retailer in the TSS channel,
main competitors such as MediaMarkt, ElectroWorld were also steadily improving
their scores on those dimensions as well.
In fact, all TSS retailers were heavily investing in media that could be tracked through
syndicated media expenditure reports (see Exhibit 16). Sales promotion
communication was the strongest element in the communication mix of all
competitors of Teknosa. In addition responding to all of these moves through its
counterattacks, Teknosa also invested in brand building and development
communication.
2010 and beyond
Teknosa, having created the CE retail market in Turkey less than a decade ago was
able to keep its market leadership and further strengthen it until the present despite
increasing competition and the global crisis. Now, Teknosa needed to revisit its
market leader strategy to keep and enhance its position as the market war had
seriously intensified.
In trying to identify what to do next, one industry observer had made a remark to one
of the managers that story of retail is the story of size. But, does that mean store size,
a lot of retail sales floor space around the country, information technology scale or
access to capital all which point to the criticality of purchasing power and purchasing
scale of the company?
Industry observers also pointed out to some other strategic choices in front of Teknosa
such as continuing on organic growth, expanding internationally to neighboring
countries or within Europe, acquiring other players in the market, preempting
available retail locations in the market, changing merchandise, service, price or
communication mix, etc. In fact, Teknosa was under the spotlight of all industry
observers, experts and investors and city legends were heard on the street about
Teknosa to be up for sale or going public through an IPO.
Hence, some key questions facing Teknosa’s top management and urgently needing
answers were:
21
1. How will the growth of the consumer electronics retail market continue in
Turkey?
2. Is the current expansion strategy right? If not, what is the alternative?
3. Should the pace of organic growth continue or slow down?
4. Should other growth opportunities such as acquisitions or mergers be
considered?
5. Is the organizational structure ready for the next phase of growth?
6. What should be the core strategy of the company in 2010?
7. What should be the Sabancı Group’s corporate attitude towards the business?
Invest further or leave the company on its own growth path?
8. Should expanding into markets outside Turkey be considered?
22
EXHIBITS
23
24
25
26
27
28
Exhibit 8
Teknosa Store Pictures: Teknosa Exxtra
29
Exhibit 8 (continued)
Teknosa Store Pictures: Teknosa Planet (special form of Teknosa Exxtra)
30
Teknosa Store Pictures: Teknosa Extra
31
Teknosa Store Pictures: Teknosa Standard
32
Teknosa Store Pictures: Teknosa Outlet
Teknosa Store Pictures: Teknosa Cep
33
34
35
36
37
38
More “+” refers to stronger merchandise depth of the category in the stores
39
40
41

The involvement of Sabancı Group in consumer electronics and

Transcription

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