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Mattress pioneer an inspiration to SMEs

Interview - July 30, 2015

From a small family business to a global powerhouse exporting to 44 countries… Yataş’ founding chairman Yavuz Altop shares the secret of his success.

YAVUZ ALTOP, CHAIRMAN OF YATAŞ
YAVUZ ALTOP | CHAIRMAN OF YATAŞ

Last year a new national branding campaign for Turkey and its export produce was launched by TIM (Turkish Exporters Assembly) and the Economy Ministry, entitled: ‘Discover the Potential’. How do you view the ‘potential’ of Turkey to develop as a manufacturing hub, as we move towards the 100-year anniversary of the republic?

The Turkish economy has set a $500 billion target for 2023 in terms of exports. Every public and private sector producer is trying to help us reach this goal.

Turkey needs to be successful in order to reach this goal. 

China had presented itself as the leading manufacturing hub for Western companies as a result of its low labor costs.

However, the growing Chinese economy has led to increased domestic demand and an improvement in working conditions for workers, which eventually drove the production costs up.

Furthermore, China’s geographic location means that it takes up to three months for European companies to receive their products; and it is also difficult to maintain a certain level of quality there.

As a result, European countries have started to emphasize trade with Eastern Europe again, including Turkey. Turkey is conveniently close to Europe so when an order is made they know it will arrive on time.

Also, the quality of our product does not change. Furthermore, European businessmen can come in the morning to check their order and be back in Europe by nightfall if they choose.

This is a very important factor for businessmen. 

You started 40 years ago as a small family company, and you are now exporting to 44 countries. One of the main goals of the G20 Presidency this year is to help SMEs grow and access global markets. In many ways you are a prime example for SMEs to follow. Can you share with us the recipe for your successful growth that saw Yataş develop from a small family company into this multimillion-dollar manufacturing and retail brand with exports worldwide?

Firstly, becoming a global player takes time. You need to write down the mission and vision of your company and make at least a five-year plan.

Where do you see your company in five or 10 years? Make a solid plan, stick to it, and be patient.  Secondly, competition is important.

We are competing against other Turkish companies in the domestic market, and against many more in the international market. 

You need to observe your domestic and international competition very closely.

We compete with companies from all over the world in terms of exports and quality. This means that in order to be a truly global player, you always need to focus on the quality of your product and services.

You never skimp on quality. You also need to meet your delivery times and maintain competitive prices. 

Overall, I would say that the most important keys to success are: patience, quality, innovation, human resources and customer service.

A satisfied workforce is needed for satisfied customers.

When we spoke with two of Turkey’s leading captains of industry, Mehmet Büyükekşi from TIM and Erdal Bahcivan from the Istanbul Chamber of Industry, they both stressed the need for technological innovation to help Turkey enter its next stage of development. Can you elaborate on how Yataş is investing in technological innovation and R&D to improve your product lines, and sales/exports capacity?

You need R&D in order to improve the quality of your product and to reduce the cost of production.

You also need a good R&D department in order to innovate. R&D is very important, not only for Yataş but for Turkey in general.

Because the Turkish government recognizes its importance, they are giving financial assistance to companies in order to stimulate R&D activities.

Since its foundation, Yataş has been number one in its field when it comes to innovation.

Around 29 years ago, when we first started, the quality of mattress production was very poor. 

We believe that when you enter a field, whether it is to provide a service or a good, you are your own competition.

If you do not progress you will not make money. How can you be successful? You have to make a difference.

So in our case, instead of producing the same mattresses that were already in the market, we produced 22cm mattresses using American technology. 

I studied in the United States, so I bought all of our machinery from the US and adopted the American production style.

We were the first company to produce flexible mattresses in Turkey. These mattresses can be rolled up and stowed in the trunk of your car, making it easy to transport. When unfolded they were as good as new.

We also went on to develop a type of mattress base that did not exist in European countries or even the US.

We constructed storage areas within the bed base for people to store an extra comforter, for example. When apartments get smaller, you need all the storage space you can find.

Now, this mattress base that we introduced is being produced all over Europe and the US. 

We are pioneers in integrating new sales channels in Turkey too. Before us, there were no stores specialized in selling mattresses and furniture.

Mattresses were only sold in department stores; they were displayed in windows and when one was sold, the store would contact Yataş and ask the company to deliver the mattress to a particular address.

We realized we could not grow this way, which is how we became the first company to introduce the retail store concept.

We now have two concepts: one is Enza Home and the second is Yataş Bedding. Enza Home includes all types of furniture and accessories for the house.

Yataş Bedding is comprised of smaller stores that sell mattresses and comforters only. 

What are your international plans for these brands?

 

We have stores in 44 countries and our customers there have access to the same store concepts we have in Turkey. 

The idea is that, as a customer enters our store, they are transported directly into our universe.

The merchandising and atmosphere are extremely important; when a customer comes in they should be visually pleased and feel at ease.

In our stores, customers have the opportunity to look at a variety of bedroom and living room styles in a relaxed, homey atmosphere.

As Turkish people tend to have trouble making decisions, they often bring their entire family along even to buy just one mattress.

What target countries have you identified as being the most promising for your international growth? 

Iran is a promising market. Right now we already have 20 stores in Iran and Yataş is the most renowned brand in our sector there.

Our representative there says that if an agreement is reached with the American government, the embargo will be lifted and we will have a great opportunity to expand in Iran.

European countries are also important, especially Germany. We started selling mattresses there last year and they are selling well.

The same can unfortunately not be said for the furniture though. German people tend to prefer large furniture; their tastes are different. 

The opportunity for growth also exists in neighboring countries. We are present in Egypt, Libya, Algeria, Azerbaijan and Iraq for example, as well as Saudi Arabia and Kuwait.

Our furniture and mattress business is also being developed in Brazil and Argentina. 

Although this company still has a family element to it, more than half of Yataş’ shares are now traded on Borsa Istanbul. What role will the stock market play in your growth ambitions, and what makes Yataş an attractive, standout proposition for domestic and international investors?   

Here too we were pioneers by being the first company in our sector to go public in the stock market.

The reason we entered was because we wanted to make the company sustainable through time. 

We are the first generation of the family business; I am one of the founders of the company.

Our success is largely due to luck and opportunity; what we now have to think of is the second and third generations.

The capital that is raised through the stock market helps the company grow. 

One banker once told me that, in his opinion, I was not a successful businessman.

I asked him why and he said that I was using my money to make profits, which is easy.

In order to be a successful businessman you have to use someone else's money to make profits. I followed his advice and got a financial consultant.

It has been a long journey from a small family company to a global player. You have been here since the beginning, as chairman of the company. What are the values that you have instilled in this company that have helped it grow into the powerhouse that it is today?

We are the first generation of our family to be in this business. Before us, all members of our family had always worked for the government; so we had no background or experience to learn from. 

Along with my brothers and cousins, we entered into foam production in 1975. In those years, foam production only existed in Istanbul; there was no foam production in Anatolia.

Our headquarters, on the other hand, was in our hometown Kayseri, lying 90km away from Cappadocia. 

We decided to start our production in the center of Anatolia instead of Istanbul because of certain important advantages.

One was transportation links, another was topography. Kayseri is 1,150 meters above sea level, as opposed to Istanbul which is at sea level.

This means that we can produce lower foam densities without using additional chemicals.

For companies in Istanbul to produce low-density foam they have to use additional chemicals, which in turn leads to added costs of production.

In those years we could not buy the sufficient chemicals to fulfill the capacity of our foam factory.

So in order to make more profits, instead of producing foam and just selling it, we decided to add value to the foam by manufacturing mattresses.

We wanted to produce mattresses with quality foam and started producing them in 1980. This turned out to have been the right decision.

In 1983, foam mattresses equaled the price of spring mattresses.

Then, when I realized that the customers who still wanted to buy spring mattresses were going to other companies, we decided to make spring mattresses as well. 

When people buy a mattress they also need bed sheets, bed covers, pillows, and comforters. In 1987 we started producing comforters.

We began by introducing a new product for the Turkish market using polyester fiber. It was light, cheap, warm in the winter, cool in the summer, and washable.

Actually all our products are tested and washable. We are pioneers here too.

When I was in the US once, my friends told me about some sort of “guarantee”: when you were not satisfied with an item you purchased, you could return it.

I bought shoes that had a loose thread so I took them back to the store and easily exchanged them for a new pair.

This was oddly surprising to me at the time; this concept was unheard of in Turkey. So we then became the first company in Turkey to provide a guarantee to our customers.

This came at a time when stores had signs in their windows stating that money entering the till would not be returned.

Imagine that all businesses were using this rule and Yataş came out exclaiming that you could now simply return a product if you were not satisfied with it.

We were also the first company to provide after-sale services. For example, Ikea sells their products with assembly instructions leaving all the work to the customer.

Yataş delivers its goods directly to your home and completes the entire installation for you. In Turkey, many people cannot afford installation so this is a significant benefit.

You need service, guarantee and quality in order to provide customer satisfaction. And in order to be a global player, you need to satisfy your final consumer.

I am always insisting on customer satisfaction; if a customer wants to return something, they get their money back. In that way, the company grows.

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