By Andrew Jay Rosenbaum
ANKARA
A trip to the Panora Mall, outside of Ankara, finds shops full of consumers shopping for expensive European designer clothes, and stopping to munch Godiva chocolates or Milanese ice cream.
So it’s not surprising that the total retail turnover improved nearly 75 percent in 2013, to $285 billion up from $171 billion in 2010, according to the Turkish Council of Shopping Centers and Retailers. As of October 2014, however, sales were up only about .06 percent, but retailing is one of the few sectors that have seen an increase in this difficult economic climate.
But most retailing in Turkey is still done by small, privately owned shops. Only 35 percent takes place in modern retailing – the shopping centers and malls. What this means, writes Istanbul-based Deloitte analyst Ozgur Yalta in his report published October, is that there is considerable room for growth in the market.
According to the Turkish Institute of Statistics, forecasts show considerable growth to $400 billion per year by 2023. Retailers too are confident of continuing sales: the confidence index for the retail trade sector rose to 104.8 points in November from 104.2 points in October.
However, consumers are less and less confident, as the economy faces headwinds like the conflicts in Syria and Iraq, and flat growth in Europe and Asia. Consumer sentiment has been in decline since April when the TurkStat confidence index dropped to 78.5 points, well short of the 100 that indicates an optimistic outlook.
This has not stopped the retailers from expanding. Multi Corporation, which develops and manages shopping centers, on Dec. 19 announced that its Turkish subsidiary has joined forces with Qubicon, a retail real estate investor and manager, to create the largest retail development company in the country. The new alliance has ambitious plans for new projects.
Why are Turkish retailers so confident? “Per capita disposable income grew with a Compound Annual Growth Rate of about nine percent over the past five years and reached $8,895 in 2013; it is expected to exceed $13,000 in 2018. Despite the significant currency volatility and tightened credit card regulations in 2013, Turkish consumers remained keen on discretionary spending, which drove activity in the sector and continued to encourage a notable number of global brands to enter the market,” the Deloitte report explains.
In addition, Turkish consumers like their credit cards, and, even in the challenging economy of 2014, credit card use rose 21 percent from the previous year, the report adds.
Istanbul is the center of the Turkish retail market as it is the location for 60 percent of shopping malls in Turkey, followed by Ankara and Izmir which together represent another 16 percent, the Deloitte report says. Istanbul is expected to attract further shopping mall investments in the coming years and continue to dominate, while other major investments are expected to occur in the emerging cities of the Marmara, Black Sea and Mediterranean regions. Ankara and İzmir are likely to become saturated considering the current investment pipeline, the report says.
“Turkey was Europe’s most active shopping center development market in 2012 and 2013, and is set to take the crown again, beating the likes of Russia, Spain, Ukraine, and Poland,” comments Anthony Khoi, president of the European real estate investment firm Aerium, in an interview published recently at an Istanbul-based business magazine.
One of the most influential factors in future shopping centers in Turkey will be the blending of online shopping and physical shopping center visits, Joanna Tano, an expert at the real estate researcher Cushman & Wakefield, said in November.
“Developers will be trying to blend virtual retail into physical stores and to create a truly personalized experience for each consumer. Developers in mature western markets have already started to recognize the capabilities of Beacon technology in producing targeted advertising in-store and this should begin to permeate through to CEE markets in the coming years,” Tano writes in a note.
-Online retail comes of age in Turkey
Online retail in Turkey is expected to see annual growth of 15.8 per cent in constant value terms by 2017 to reach a market value of $6.6 billion, according to the global market research company Euromonitor International.
Turkey’s youthful population – a quarter was born in the 21st century – is also set to drive the country’s online sales, according to Mehmet Nane, general manager of the supermarket chain Carrefour in Turkey, speaking at a conference in June.
Nane said there was huge potential to expand Turkey’s internet business from its current small percentage share of total sales. Consumer age is important: “It is a very, very young country,” said Nane.
For now, 10 million consumers spend money online. “That 1% must increase as the young population starts to earn its own money,” Nane said.
Turkish consumers spent €5.4 billion on products and services online in 2012, according to TurkStat, and that is an increase of 50 percent from the previous year.
The Turkish ecommerce market seems to be dominated by online marketplaces, multi-category retailers and private shopping sites. Huge online stores in Turkey are Gitti Gidiyor, Hepsiburada, Araba.com and Trendyol, according to Ecommerce News.
All of this takes place with only 53 percent Internet penetration in the country. That is a low amount by European standards. As more and more people get online in Turkey, online sales may be expected to flourish.
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