Warc Blog

Turkey poses retail challenge

3 January 2013
ISTANBUL: Major retailers like Walmart, Carrefour and Tesco are still attempting to crack the Turkish market, where indigenous players such as Bim and Migros currently lead the food sector.

Ekspres Invest, the financial research group, has stated that Bim, a discounter with over 3,500 stores, yielded sales of TL7.3bn in the opening nine months of 2012, the highest amount of any chain.

The Migros chain run by Migros Ticaret delivered sales of TL4.8bn in this period to claim second spot. Migros Ticaret runs 883 outlets, including 597 under its Migros banner as well as 219 Tansas stores.

Walmart last year considered purchasing Migros Ticaret, which is owned by UK-based private equity firm BC Partners, for a fee of some $2.7bn.

Tesco, the biggest retailer in Britain, has similarly been linked with taking over Migros Ticaret, and held talks with Uyum, another Turkish chain, about acquiring a stake last year.

Carrefour, the French hypermarket giant, is also reported to have shown interest in buying the same company to bolster its joint venture in the country, operated in partnership with Sabanci Holding.

Four directors resigned from the board of Carrefour's local arm in 2011, arguing its overseas parent had failed to provide the "necessary support and assistance".

Guler Sabanci, chairman of Sabanci Holding, shared the view that change was needed, saying: "We are not happy with the performance of our joint venture and they are not happy with the performance."

Izzet Karaca, who heads up the Turkish operations of Unilever, the FMCG manufacturer, said indigenous retailers were enhancing their capabilities at the right time, given that shopper habits are in flux.

"Discounters are growing and the locals are getting stronger," Karaca told the Financial Times. "Locals are learning how to be better supermarkets, learning about positioning, about what to put on the shelf. With petrol prices where they are, people don't want to drive 20km to do their shopping."

Yildiz Holding, a diversified conglomerate, acquired Şok, a discount supermarket chain boasting over 1,200 branches, from Migros for TL600m in 2011, and believes this segment has a specific advantage. 

"It is very difficult to find smaller sized stores anywhere in Turkish cities, let alone sites of 5,000 or 10,000 square metres," said Cem Karakas, chief financial officer of Yildiz Holding.

"The key thing is that you can increase the prevalence of small-size hard-to-soft discounters much faster than you can larger hypermarkets or supermarkets."

Data sourced from Financial Times/CNBC; additional content by Warc staff

 
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