Blamed by ruling alliance over high food prices, Türkiye's grocery chains face attacks, threats

After threats, a shop in Antalya was covered with graffiti reading "father-state." (Photo: Antalya Hakkında)

In another attempt to curb soaring food prices due to surging inflation, a new regulation was published in Türkiye's Official Gazette to ensure price control in supermarket chains on December 7 at midnight. Supermarkets with more than 200 branches must submit their product prices to the Ministry of Commerce, and through "data sharing," consumers should be able to compare prices.

Unseen inflation since the 1990s has not left consumer food prices cold. The official annual inflation rate was 84.39 percent in November. However, ENAG, an independent group of economists, estimates it is more likely to be 170.70 percent. In July 2022, Türkiye's annual food price inflation reached seven times the OECD average, with 93.6 percent compared to the 12.59 percent.

Although inflation has become a global problem, Türkiye's rocketing inflation is partly the result of President Recep Tayyip Erdoğan's unusual interest rate theory. When inflation is high, the orthodox thought is for the central bank to up interest rates. Türkiye's central bank is doing the exact opposite, with high-interest rates, in Erdoğan's eyes, being "the mother of all evil".

The tanking lira caused supermarket chains to reflect the high price inflation in their retail prices. These "exorbitant prices" charged by Türkiye's supermarkets are now considered a "new evil" by the ruling coalition.

The Big 5

In 2021, after a UN summit, President Erdoğan declared war on the country's five largest supermarket chains, BİM, A101, Şok, Carrefour, and Migros, self-referencing his often-coined phrase "The world is bigger than five", referring to the five permanent members of the UN general assembly.

"The market is turned upside down by the products collected by these five grocery chains. If they act more equitably, both citizens will be able to buy products at affordable prices, and the producers will be able to receive profits," he said.

That same year, the government decided to investigate and punish supermarket chains that increased their prices. After a month-long investigation by the Ministry of Agriculture, 6 supermarket chains were fined a total of 2.671 billion TL as they would "fend off competition".

BİM's gross profit margin

As the 2023 elections are approaching, the coalition has upped its rhetoric again, targeting soaring costs and demanding price controls.  "We will tighten the controls on supermarket chains. We will find ways to eliminate price differences. We will follow up," President Erdoğan stated two weeks ago.

Galip Aykaç, President of the Food Retailers Association and the CEO of the BİM grocery chain, attributed high inflation to the exorbitant prices and dismissed any claims that their businesses make huge profits.

"There is actually cost inflation in production. These conversations are speculative as long as we do not focus on cost inflation. Many of our businesses are making a loss."

According to BBC Türkçe, BİM had a profit of 4.8 billion TL in the first nine months of 2022, a 109 percent profit increase compared to the first nine months of 2021. At first glance, this seems like a massive profit increase for the red and white colored supermarket chain with 10,489 stores in Türkiye. However, this is without considering the high inflation rate.

BİM's gross profit margin is more likely to be 18 percent for the first nine months of this year, comparable to 18.7 percent for the same period in 2021. This means that when BİM buys products from a manufacturer for 100TL, it sells them for 118TL. An 18TL ''profit'' from which expenses such as marketing need to be deducted.

The grocery chain, therefore, seems to live up to the "low price" claim in their slogan "high quality, low price". This was also acknowledged in a recent US bank Morgan Stanley report, affirming that BİM is a solid company with a cheap price policy in a high inflation environment.

"FETÖ supermarkets"

Nonetheless, Aykaç's remarks were not appreciated by the People's Alliance, the ruling coalition of the AKP, and the right-wing nationalist MHP.

MHP's leader Devlet Bahçeli at a party meeting on November 22, connected BİM to the "Fetullahist Terrorist Organization" (FETÖ), an Islamic group led by the US-based cleric Fethullah Gülen and held responsible for the 2016 coup attempt.

"We believe that chain markets which constantly raise prices should be investigated carefully for connections and links with FETÖ," he remarked.

Aykaç reacted harshly to these claims on November 30. "We have something to say to those who declared us terrorists, to the salaried television commentators, to the ignorant administrators who say that they will raid the warehouses and distribute oil to the public, and to the party leaders who threatened us with FETÖ," he said.

"The beautiful people of this country did not respect your lies in any way.

"Those with three letters, claim to be Muslim and try to put us in a different place. We have something to say. Please look in the mirror. They will see themselves. They do perception management and hidden agendas," he continued.

Attack on a BİM store

Aykaç's remarks led to death threats by Kürşat Yılmaz, a convicted criminal gang leader, and declared a "hero" by Bahçeli.

In Antalya, the windows of a BİM supermarket were smashed, and another shop was covered with graffiti reading "Father-state" (Devlet baba):

Korkuteli'nde bazı zincir marketlere "DEVLET BABA" yazan şahıslar mağazaya taşla saldırdı. #Antalya pic.twitter.com/uNYu2EcLK7

— Antalya Hakkinda (@AntalyaHakkinda) December 5, 2022

In addition, several people expressed their discontent with Türkiye's big five supermarkets online. One man shared a video on TikTok where he exposed "the high price" of 14.75TL for a pack of milk—choosing an alternative local supermarket instead, paying 18.5TL.

Şok, having over 4,000 shops and touting the slogan "more than enough", eventually had more than enough and demanded that Aykaç resigns from the presidency of the Food Retailers Association.

The red and yellow grocery giant stated that Aykaç, instead of adequately informing the public, moved the debate into the political realm. All the commotion ultimately led to his resignation on December 4.

0.25 lira difference

The price control provisions published yesterday night will likely remain a drop in the ocean. Previously the government used measures such as "all-out fight against inflation regulation tents", selling cheap fruits and vegetables. Other endeavors to provide relief amidst the high food prices included opening a thousand Agricultural Credit Cooperatives, grocery stores that would sell products for fair prices, according to President Erdoğan, while shopping at one in October 2021.

Last week, Ahmet Vehbi Bakırlıoğlu, a member of the main opposition party, CHP, investigated the price difference between these cooperatives, "selling discounted and regulated prices" and the BİM, selling at "exorbitant prices", for 25 basic products, the difference was 0.25 lira (0.013 Euro). (WM/VK)