Sinan Öncel, the President of United Brands Association (BMD) stated that the current situation is not sustainable and that product prices may increase by 30-40 percent in the new season.
The organized retail sector, which has started to repair the damage of the pandemic with the rapid increase in turnover since June, is preparing for the winter anxiously due to the raw material crisis and inflation pressure.
The risk of not being able to replace the product that has been exhausted on the shelf due to delays in production in the sector, which has also had difficulties in accessing raw materials, the cost of which has increased rapidly in recent months, is growing.
“A HARD WINTER IS WAITING”
Sinan Öncel, the President of United Brands Association (BMD) stated that the industry, which closed 2020 with an average of 40-50% turnover loss due to the pandemic, took a sigh of relief with the revival in shopping that started in June. Öncel made statements about the issue:
“According to the survey we conducted among BMD members, our brands achieved an average of 70 percent more turnover in September compared to the same month of the previous year. We observe that the liveliness of both our physical stores and online shopping continues in October as well. However, the problems that arose before we could feel the peace of starting to repair the damage of the pandemic with the increase in turnover greatly demoralized us. For example, raw material costs have increased by over 50 percent on average in the last few months and continue to rise. Moreover, even if we take the high cost into consideration, we have difficulties in finding raw materials. Production is delayed due to difficulty in accessing raw materials. We face the risk of not being able to replace the missing product on the shelves in the coming months. On the other hand, our brands are having difficulty in making costs for the new season due to the level of exchange rate and the increase in inflation fever. The producer takes into account the differences such as the increase in the exchange rate, energy price, the minimum wage and rent increase, hence it has been foreseen since the beginning of the year, as well as the cost of raw materials. We can say that ‘summer is over’ with the end of October for organized retail. A harsh winter season awaits us as of November.”
ÖNCEL: “CUSTOMS TAX MUST BE RESET ON SOME RAW MATERIALS AND INTERMEDIATE GOODS.”
Stating that the retail sector has been trying not to reflect the cost increases to the consumers for months, Sinan Öncel drew attention to the 25-point difference between PPI and CPI as of September. Emphasizing that the current situation is not sustainable, Öncel said:
“The costs will inevitably be reflected on the consumer, and the new season products will be on the shelves 30-40 percent more expensive than last year. This is not a situation we desire. As an industry that has gone through tough times before, we maintain our optimism despite everything. In order to prevent the problem from getting worse, we can reduce the cost pressure by zeroing the customs tax on critical raw materials, especially yarn and petrochemicals, and intermediate goods, at least until 2022. If changes can be made to break the expectations in the markets that the exchange rate and inflation will increase, we can breathe again.”
CUMHURİYET
