United Brands Association Proposes a Two-Point Solution to Combat Inflation

Sinan Öncel, the President of the United Brands Association (BMD), stated in a written announcement that the decline in retail sales continued in terms of quantity last month, evaluating the March survey conducted among association members.

Emphasizing that the common complaint among member brands in every category, from ready-to-wear clothing to electronics, furniture, cosmetics, and food and beverage, is input costs, Öncel stated:

“Especially in categories such as ready-to-wear clothing, textiles, and shoes, raw materials and intermediate goods are procured at approximately twice the world average price. Reference price application in some finished products doubles the cost. VAT taken over the reference price cannot be subject to discounts. In addition to input costs, there are demands for 4-5 times rent increases at shopping malls in contracts expiring after 10 years.”

Öncel underscored that no company can reflect the 4-5 times increase in rent in their prices, otherwise, they cannot sell products.

Pointing out the decrease in sales to foreigners, Öncel reported that while approximately 10% of card spending in Turkey was made by foreigners two years ago, this rate fell below 4% in the first two months of this year.

“We Have a Two-Point Solution Formula Ready” BMD President Öncel stated that the retail sector has a two-point solution proposal to combat inflation, saying:

“In order for the sector to breathe easily, cost increases must be stopped immediately. We have a two-point solution formula ready for this: Customs duties should be reduced to provide retailers with competitive access to imported raw materials and intermediate goods, and a way should be found to ease domestic raw material producers through incentives. In addition to fixed rent in shopping malls, we also pay turnover rent. Failure to take this into account in rent adjustment lawsuits leads to retailers facing 4-5 times fixed rent increases and unnecessary increases in rent costs per product. Relevant legislation should be updated to consider turnover rent to rectify this injustice.”

Öncel noted that if the proposals were implemented, both retailers would be relieved, and there would be a rapid decline in inflation due to costs.

source: prepared by Melisa Beğiç

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