Turkish brands to open 700 shops abroad
Turkish brands have been increasingly opening stores abroad in recent years. Some take it a step further: they brand globally and list on global stock exchanges. In 2017, the number of stores operated by Turks abroad reached 3,150 and this year it is expected to reach 4,000. What is the future for Turkish brands globally? Which markets stand out?
According to United Brands Association (BMD) President, Sinan Oncel, the interest for Turkish brands continues and there is no slowdown in store openings. “There is a lot of interest in Turkish brands. We learned a lot. Now others are learning from us,” he told Daily DUNYA. “We closed 2017 with 3,150 stores. There are new players entering the international market. Turks had 2,500 stores in 2016 and added another 650 in 2017. We think that we will close this year with 4,000 stores.”
“Each store represents Turkey,” Oncel added, noting the role the Turquality incentive program has played in helping Turkish brands expand globally. “Mango is Spanish and carries the name of its country wherever it goes. Turkish brands opening stores abroad is also important for Turkey.”
Balkan countries have started to stand out in retailing. The Turkish-speaking population in this region offers an important advantage, making it easier for new employers to find store personnel. North African countries are also showing considerable growth and countries like Russia and Ukraine are still important markets. “For a time, Iran created excitement,” Oncel said. “Tens of brands have announced plans to open dozens of new stores. Important developments took place but there were not as many openings as expected. Iran applied a ‘20 percent Iranian products’ condition. There were also difficulties in customs procedures. A 15 percent tax on one border can be 20 percent on the other. Instead, we do business in Iran with local partners.”
Why do fore gn brands leave Turkey?
On the other hand, there are also exits from the Turkish market by the foreign brands. Many foreign brands such as Debenhams, C&A and Top Shop are either ending or reducing their operations in Turkey. “There are four reasons for these exits,” Oncel said. “The first is taxes on imports. The government has applied tariffs on imports of many products to protect the domestic market. As import duties rise, businesses have to partly produce in Turkey. Secondly, customs waiting times have gotten longer, with serious testing costs. Thirdly, it is more difficult for foreign companies to adapt to the market. Fourth, domestic brands have price advantages so foreign brands can’t compete.”
The other chronic problem in retail is high store rents. Oncel said that rent contracts that are incompatible with the realities of market conditions should be renewed as soon as possible. “Those who want can still pay in foreign currency but the TRY option is absolutely necessary for new projects,” he said. “Renting in foreign currency should definitely be limited by legislation. The retailer should be able to stop the lease without paying any fine provided that it informs the landlord three months in advance. A win-win formula and turnover leases should be adopted.”