Crumbling lira pressures Turkish retailers as economy slows

ISTANBUL: Turkish businessman Tekin Acar had contracts to open branches of his leading cosmetics chain in ten new shopping malls this year.

A few days ago he cancelled nine of them after sharp falls in the lira meant he would struggle to afford the rents.

Turkey’s currency has lost around a quarter of its value since the middle of last year, causing havoc for retailers selling imported goods or paying rent pegged to the US dollar.

Many were already suffering from a sharp economic slowdown and dwindling tourism numbers after a spate of deadly bombings.

Foreign brands in Turkey are also suffering. Dutch clothing chain C&A, Britain’s Topshop, German cosmetics firm Douglas and USbased dietary supplement retailer GNC have disappeared from shopping centres in recent months.

Retail spaces in some of Istanbul’s biggest malls stand empty.

“Since many brands have closed up stores one by one, people don’t notice it,” said Acar, who founded the cosmetics chain that bears his name in 1979 and has 76 stores across Turkey.

“In my 46-year career, it’s the first time I’m having trouble paying my rent, utilities and salaries. I’ve put all my income from other businesses into this, I’ve increased capital but it isn’t enough. I’m not George Soros, this is it for me.”

Hundreds of malls sprung up across Turkey in the past two decades, symbols of the rapid consumption-led growth that helped build President Tayyip Erdogan’s reputation when he was prime minister from 2003-2014.

But that growth has left structural weaknesses in the economy, and the suffering retail sector and wider economic malaise come at an awkward time for Erdogan.

He is expected to seek popular support in a spring referendum for bolstering the powers of his office and can ill-afford a sharp slowdown. — Reuters