Effects of the Covid-19 Pandemic on Different Sectors in Turkey

Deloitte Consulting conducted a study on the effects of the Covid-19 pandemic on different sectors in Turkey. We wanted to share the results of this study, which is based on consumer interactions between mid-January and the end of March, with our visitors. The study provides insights into early changes during this time frame but does not represent the complete picture.

In this study conducted across 42 categories, it was observed that interaction rates decreased in more than half of the examined categories. In the first weeks of March, the effects of the coronavirus pandemic were not strong in many categories; however, by the third week, more severe changes began to occur. Some categories managed to reverse the situation with effective discount campaigns they launched during this period.

It is anticipated that categories with increased interactions during the Covid-19 process will naturally recover more quickly than others. Recovery for categories with decreased interactions will not be easy. These categories will likely continue to feel the negative effects of this global pandemic for the remainder of the year.

Initial Negative Effects Were Observed in the Service Sector

The decrease in social interactions among people most affected the categories of events and entertainment, culture and arts, transportation, jewelry – accessories, and sexual health products.

There Was a Significant Increase in the Health Products Category

Products that serve as protective measures against the pandemic, such as gloves and masks, as well as herbal products, vitamin medications, and health-supporting products like honey saw a significant increase in demand.

Consumers Spending More Time at Home Had Various Effects

Consumers who distanced themselves from work life and office environments and started working from home began to show more interest in books and online games. As they preferred to do their own cooking and cleaning during the pandemic, the interaction of companies delivering food and cleaning services significantly decreased.

During this period, consumers watched more news. They spent more on their children and pets. Demand for consumption products offered in large packages saw a rapid increase. Packaged forms of fast-moving consumer goods such as diapers, toilet paper, detergents, and many others that can be stocked for a longer time were preferred.

There was a significant decrease in large-scale expenditures such as homes, cars, land, and furniture. Sales of jewelry and accessories, as well as purchases from abroad, also decreased significantly.

A Surprising Increase in Interaction Was Observed in the Electronics and Clothing – Footwear Categories

Despite the decrease in social interaction and time spent outside, as well as the rise in risk perception, there was a significant increase in demand for clothing and footwear categories in the second half of March, influenced by campaigns. A similar situation was observed in the electronics category, where consumers leaned more towards small home appliances.

How Did the Covid-19 Pandemic Affect Different Sectors in Turkey?

Categories Positively Affected by the Covid-19 Pandemic

Those with Interaction Rates Increasing by More Than 50%

Distance Education – Work

The distance education and work category stood out with a 15-fold growth, clearly differentiating itself from other categories examined in the study on the effects of the Covid-19 pandemic on different sectors in Turkey. It was observed that the fastest development occurred in the Ministry of National Education's distance education system, EBA. Increases in this category slowed down in the third week of March, but it is expected to continue in the following periods.

National Supermarket Chains

National supermarkets that invested in digitalization, had experience in e-commerce, and possessed strong infrastructure in logistics and home delivery experienced nearly a twofold increase in interactions during the pandemic. Many consumers adhered to the call to "Stay Home Turkey" and turned to online grocery shopping.

Supportive Health Products

Demand for health products such as herbal products, vitamins, and honey began to rise at the beginning of March and continued to increase in the last weeks of the month. It is anticipated that the rate of increase in this category will slow down over time.

Hobby Sites

Consumers who spent more time at home during the pandemic showed intense interest in sites that produced content on topics such as handicrafts and knitting.

Those with Interaction Rates Increasing Between 30% – 50%

Media

Traditional media channels offering written and visual content saw a higher increase compared to social media platforms. The increase in interactions on television channels was greater than that of newspapers.

Internet TV

Consumers showed increasing interest in internet TV platforms such as Netflix and BluTV in March. It is expected that the rise in this category, which managed to retain the increasing demand with new content and attractive campaigns, will continue in the coming weeks.

Baby and Children's Products

After the third week of March, there was a significant increase in products such as baby food, children's clothing, diapers, and wet wipes. Demand for large-sized packages of these types of products also increased noticeably. However, sales of durable products like strollers decreased.

Games

Consumers spending more time at home and looking for ways to entertain themselves turned to games, leading to a rapid rise in free online local games. While the performance of sites selling console games decreased, demand for games aimed at younger individuals, such as Brawl Stars and PUBG, increased.

Clothing and Footwear

In the second week of March, as the coronavirus pandemic came to the forefront, a decline was observed in the clothing and footwear category. However, due to the effects of discount campaigns, this situation changed in the last two weeks of the month, but it is anticipated that this increase is related to the limitation of social interactions and will not be permanent. Companies that had started e-commerce long ago and established their systems were not as negatively affected as others.

Pet Products

During this period, consumers stayed home more, thus spending more time with their pets. This situation increased the interactions of sites selling products such as food, treats, toys, and litter for pets. On the other hand, interactions in the areas of live animal sales and adoptions decreased during the pandemic.

Those with Interaction Rates Increasing Between 10% – 30%

Books

The increase in the time people spent at home led to a rise in book sales. It is anticipated that this upward trend in the book category will continue to decrease over time.

Discount Markets

Discount markets had been rapidly growing by increasing their number of stores in recent years. However, during the Covid-19 pandemic, they were not prepared for the rapid shift of consumers to digital channels, and it was observed that their digital interactions decreased, especially between mid-March and the end of the month.

Personal Care and Cosmetics

This category was strong at the beginning of March, but a performance decline began in the second week of the month. After the third week, with the emphasis on e-commerce and the effects of campaigns, interactions began to rise rapidly, and this trend continues. Hygiene products and home-oriented consumer goods are performing better than cosmetics, and it is anticipated that the gap will widen over time.

Gasoline

At the beginning of March, there was a global decline in oil prices. This led to a rapid increase in interactions for fuel companies. However, from the third week of March onwards, this pace began to slow down. The stagnation in social and commercial activities may soon cause interactions in this category to turn negative.

Underwear

The increase in this category was lower compared to clothing and footwear.

Those with Interaction Rates Decreasing Between 0% – 10%

Social Media

Social media platforms, which have three times the interaction of traditional media channels, did not experience a significant increase during the pandemic. It was observed that Twitter was in a better position compared to other channels in this regard.

Electronics

The decline observed in this category in the first weeks of March turned positive in the third and fourth weeks due to discount campaigns, the needs of couples preparing for marriage, and the impact of currency fluctuations. The largest increase was seen in small home appliances. If the effects of the pandemic increase, it is anticipated that the situation may turn negative.

Home Goods and Building Materials

During the pandemic, consumers did not make significant changes such as renovating furniture in their homes but instead focused on decorative accessories and small-scale changes. The prolongation of the pandemic may lead to a negative turn in this trend.

Categories Negatively Affected by the Covid-19 Pandemic

Those with Interaction Rates Decreasing by 50% or More

Home Services

The study on the effects of the Covid-19 pandemic on different categories in Turkey showed that interactions on platforms providing services such as home cleaning, repair, and transportation significantly decreased after mid-March. It is estimated that consumers postponed these needs to act economically and to protect themselves from the risk of disease. This negative trend seems likely to continue throughout the pandemic.

Health

The spread of the pandemic led to a regular decrease in consumers' tendency to make appointments in public and private hospitals. It was observed that the decline in private health institutions was lower than in public ones. It is anticipated that this negative effect will continue to slow down.

Jewelry and Accessories

Consumer demand for luxury items such as jewelry and accessories began to decline from the beginning of March. It is expected that this decline will continue in the future, and the recovery of firms in this category will take much longer compared to firms in other categories.

Culture and Cinema

The study on the economic effects of the Covid-19 pandemic in Turkey revealed that the sharp decline in the culture and arts category, including cinema, theater, and concerts, began in early March before protective measures were taken and continued in the following weeks. It was observed that consumer interactions in this category decreased by 95% compared to January, and it is anticipated that this negative trend will continue.

Hotels and Accommodation

Due to the effects of the pandemic, domestic and international holiday and accommodation activities began to slow down in March. This decline continued rapidly in the following weeks. It is expected that the negative trend in the hotel and accommodation category will also continue in the future.

Car Rental

The negative effects of the pandemic on trade and accommodation also reflected in the car rental sector. It is anticipated that this situation will continue as long as social and commercial conditions do not change.

Other Transportation

Consumer interactions in categories such as bus, railway, and maritime transport, excluding air transport, followed a fluctuating trend. The downward trend observed in the first week of March increased in the second week, followed by a significant decrease in interactions, especially in the last week of March. It is thought that the negative trend in the sector will increase over time.

Sports Media

Sports media entered a more serious downward trend due to the cancellation of Turkey and European leagues. It is anticipated that this negative trend will continue unless different and creative content is produced.

Betting

A sharp decline was also observed on betting sites, similar to sports media. With the cancellation of Turkey and European leagues, these sites attempted to maintain interaction by highlighting foreign leagues and different sports. The cessation of these activities may lead to an increase in the downward trend on betting sites.

Those with Interaction Rates Decreasing Between 30% – 50%

Real Estate Sector

The increase in consumers' risk perception led to a gradual decline in interactions for sites renting and selling homes, land, and workplaces starting from early March. It is anticipated that this negative trend in the real estate category will continue in the future.

Automobiles

A sharper decline was observed in sites selling automobiles compared to the real estate category during the same period, and it is expected that this situation will continue.

Aviation

After the interruption of education, a significant decline was observed in the interactions of airlines and ticket comparison platforms. The negative trend, which started lightly at the beginning of March, turned into a sharp decline in the last week of the month. Considering the current travel restrictions, it seems that this situation will continue.

Food Delivery

Due to the pandemic, people are spending more time at home, and many employees have started working from home. Demand for food delivery platforms and national fast-food restaurant chains decreased during the pandemic. This decline is thought to be related to hygiene concerns, consumers looking for things to do at home, and the need for savings.

International Marketplaces

In the last weeks of March, it was observed that consumer demand for international marketplaces significantly decreased regardless of the country. A parallel decline in imports is expected in the coming months.

Careers

The slowdown in trade life led to a decrease in interactions on job and employee search platforms starting in early March, with a sharp decline in the second half of the month. It is anticipated that this negative situation will continue.

Other Corporate Services

The Covid-19 pandemic also showed one of its negative economic effects on interactions in insurance, tax, tender, and B2B portal services. The interactions of firms in this category providing services in areas such as e-commerce consulting and digital payment systems followed a positive trend due to the influence of companies trying to quickly shift from physical trade to e-commerce. However, this was not enough to eliminate the strong negative impact observed across the category.

Sexual Health Products

The decrease in social interactions during the pandemic led to a decline in demand for condoms and other sexual health products. It is anticipated that this negative trend will continue in this category.

Those with Interaction Rates Decreasing Between 10% – 20%

Furniture

During the pandemic, the increase in consumers' risk perception was not unexpected to lead to a decrease in demand for durable consumer goods. The furniture sector also suffered from this downward trend. If the pandemic further affects consumer expectations, this decline may continue.

Sports Shopping

There was no increase in interaction in the sports shopping category as seen in clothing and footwear. Despite the positive effects of campaigns in the last weeks of March, it was observed that the performance in this category is still lower than in January.

Marketplaces

Sites in the marketplace style sell products from various firms in different categories. The interactions of these types of sites during the pandemic varied significantly based on the subcategories they featured. Sites focusing on durable consumer goods such as homes, cars, and furniture were more negatively affected. Sites that emphasized daily household items, clothing, and footwear, and provided their own distribution services experienced a softer decline in interactions.

Public Services

The slowdown in social and commercial activities and the reduction of some public services led to a decrease in interactions on public service platforms, especially e-government. It was observed that the Ministries of Health and Education were not affected by the pandemic like other institutions.

Those with Interaction Rates Decreasing Between 0% – 10%

Banking Sector

The impact of the pandemic on all banks was not the same. However, as a natural consequence of the slowdown in commercial activities, interactions in the banking sector began to decline, especially between mid-March and the end of the month.

Cargo Services

The declining performance of marketplaces and the activation of companies' own logistics capabilities led to a smaller increase in interactions for cargo companies. It was observed that small-scale firms were less affected compared to larger ones. The negative trend accelerated in the last weeks of March and is expected to continue in this manner.

Educational Institutions

The interruption of schools and universities in early March led to a decrease in interactions for various levels of private and public educational institutions. This decline was compensated in the last weeks of the month. It was observed that the performance of universities was lower than that of K12 institutions. With the widespread implementation of distance education, a strong positive movement is expected in public and private educational institutions.

Efficient Practices Observed Before and After the Pandemic Process

Aggressive Discount Campaigns and Other Advantages

In the first half of March, there was a decline in demand for most consumer products other than food items. The attractive opportunities such as large discount campaigns launched from the third week, along with change guarantees and free delivery, changed this situation.

Consumer Pivot

Companies providing corporate services and selling products managed to avoid a sharp decline in consumer interactions through certain practices. Companies that implemented promotions related to products used as precautions against the Covid-19 pandemic, such as masks and disinfectants, as well as offering some consumer products in large packages and highlighting fast-moving consumer goods in multi-category marketplaces received positive responses. Firms that shifted from professional customers to individual consumers also managed to prevent interaction loss. Companies experiencing a sharp decline in demand also implemented practices such as free content and webinars to avoid being forgotten by consumers.

Hygiene in Delivery

During the pandemic, consumers experienced concerns about hygiene and determined many of their behaviors and preferences accordingly. Companies that offered products packaged without physical contact, ensured that delivery personnel took protective measures, cleaned delivery vehicles daily, and paid attention to similar matters were able to reduce consumers' concerns in this regard.

Care in Order Tracking and Delivery Processes

During this period, e-commerce entered a rapid upward trend. Companies that were not well-prepared to manage order tracking and delivery processes lost customers, while those that had fully digitized these processes or received support in this area performed better. Companies that established their own distribution networks and invested in their teams to eliminate problems during peak sales periods received positive responses during the pandemic.

Positive Effects of Early Digitalization

Companies that recognized the trend towards e-commerce and digitalization and made early investments in this area reaped the benefits of their investments during the pandemic.

(Source: Study by the Deloitte Consulting team)