CHANNELS OF DISTRIBUTION

Living in the Netherlands at the time, my first business trip was to Iceland. As a 23-year-old who had just received a master’s degree, I was working for an international casual-wear brand as an export manager responsible for markets where the company did not have any subsidiaries or distributors. After being brainwashed about our brand values and distribution strategy— what other brands we should align with, what type of retailers to sell from and under what conditions, etc.—I was ready to visit my first agent in Iceland.

The agent picked me up with his son, who was a year older than me, and took me to his office in Reykjavik. After seeing me in person—age matters everywhere—and after an initial meeting at his office, he suggested that his son take me around to see which retailers were selling our products.

The first stop was a multi-brand retail store on the only shopping street in the city. Then we went to a department store that, from a visual merchandising perspective, looked like a discount store. Being young and inexperienced, I of course immediately started lecturing him about being lumped together with unknown brands and about our reputation. He said, “Well there are two other locations like this in Keflavik and that’s it. Other retail stores in small towns are totally different.”

I realized what he meant when he took me to the first one. The retail outlet carried everything from hammers to clothing. It was hard to even find similar products, let alone other brands and merchandise. I was shocked. He said these stores were everything to the people living in these towns. When it snows and the roads closed, they carry everything that the residents need. We were making our numbers on a totally different distribution strategy.

I had two choices. One, I could ask the agent to limit his distribution to four stores, which would make our business dealings unappealing to both of us. Two, I could accept things the way they were. I remember my Iceland trip every time I have visitors from abroad and hear the same arguments over and over again about retailing and distribution.

International businesspeople usually come to Istanbul only and then assume that the rest of the country is the same. But it’s not. None of the emerging markets has a homogeneous marketplace; however, this is changing. Every small city has a shopping street or a mall, representative of entertainment and shopping requirements. Stores carry the same merchandise as in big cities, but smaller towns still portray a different picture.

With its population and economic dynamism, Turkey is a fast developing market. Growth expectations are high, but a decision has to be made. Will be you able to maintain the company’s New York or Istanbul retail image in these small towns, or will you “do as the Romans do” and live with the existing distribution? The main differences between options A and B are your growth stages and revenue figures.

Like many other emerging markets, Turkey is not a country where you can put the statistics in front of you and develop a business plan at your headquarters. It is crucial to take yourself, your team and foreign visitors to small cities and towns to understand the country’s dynamics and the changes in consumer behavior before making any decisions. You should also repeat this process at least once every two years. You will be amazed to see how fast things are changing (and for the good). If you already have a presence in the market, you can sustain the change. Of course, you have another option—limit distribution and remain in macro-markets until someone else paves the way. However, then you inevitably become a follower, rather than the market leader.