‘Closure’ notice creates new business model

A Turkish entrepreneur has created a business model by taking over goods from companies that face closure and selling off their products.

Mehmet Koçoğlu, a businessman from the northern city of Rize, decided to close Lazelli, his furniture-production facility, during the 2001 Turkish economic crisis. He hung a “kapatıyoruz” (we are closing down) sign at his workplace, which he found attracted a lot of attention. Inspired by this, he has been making sales nationwide for eight years.

“I collect everything, including furniture and textile products, from facilities in distress. Sometimes the goods are raw materials and I produce [finished products],” he said.

Noting that his company does not deceive consumers in any way, Koçoğlu said, “Once the goods are sold out, we really close down.”

Koçoğlu developed the business model with the capital he earned after selling leftover goods from the firm he closed. With a marketing strategy that triggers consumer purchasing excitement, he purchases goods from people whose businesses are in distress and then opens short-term stores in different locations.

He has been traveling with his “kapatıyoruz” sign for eight years, from the southeastern city of Mardin to the northwestern city of Sakarya. In one of his latest sales in Sakarya, the firm announced the sale of furniture at one third the retail price, drawing significant interest. The firm is preparing to facilitate sales in Istanbul’s Hadımköy district on Nov. 14.

Hard times in 2001

Going-out-of-business signs proliferate during periods of crisis, Koçoğlu said, adding that his firm’s major difference that the stores really do close down. “We were working with Turkey’s leading furniture brands, but we faced tough times in 2001. However, a canvas banner announcing the closure, which I hung to sell the goods on hand, suddenly changed the prevailing winds. Customers were buying until we did not have any goods left. Seeing this, we developed a new business model.”

Noting that the firm sells a living-room set worth 8,000 Turkish Liras for 1,250 liras, Koçoğlu said: “We collect cash as well as goods and raw materials from the market. We are working with around 70 plants and suppliers, all of which are in distress. I buy clothes worth 10 liras for 1 lira. I seek end-of-line and surplus raw materials, and make a profit from them. ‘Kapatıyoruz’ is a brand now. I also deliver two-year guarantees.”

Koçoğlu, who currently owns four companies as well as production plants in İzmir and Istanbul, aims to reap 40 million liras in turnover this year. “My turnover seems high but my profit is low,” said Koçoğlu, who is now also eyeing opportunities in Athens.

Praising the business model, Fatoş Karahasan, an academic from Bilgi University said, “I do not think there are any ethical problems so long as the goods are not faulty... I do not find the title misleading.”

Meanwhile, Selime Sezgin from Bahçeşehir University called the “Kapatıyoruz” concept a creative idea. Major sales at locations in the suburbs are crucial sources of goods for unsophisticated customers, Sezgin said.

However, Işıl Karpat Aktuğlu, an academic from Ege University and an author of a book on brand management, regarded marketing with closure notices as a strategy that aims to benefit purely from the consumer’s sensitivity to low prices. Arguing that this does not mean creating brands, Aktuğlu said the tactic results in unfair competition.