We report on the latest results at Turkey’s leading retailers, BIM and Migros Ticaret, in the first nine months of 2017. Both retailers report improved results, we look at what drove performance and where the focus both retailers will be in 2018.
BIM’s improved results driven by inflation…
In the first nine months of 2017 BIM reported a year-on-year sales growth of 22.5% to TRY 18.2bn (€ 4.1bn). Across all countries, BIM opened nearly 500 new stores, growing total store number to over 6,600. BIM also reported improved profits and profit margins when compared to the same period in the previous year, with growth rate at 26% in the first nine months of 2017.
Like-for-like sales in Turkey increased by 12.7% most of which driven by more than a 10% increase in basket spend. As shopper traffic to BIM stores grew by less than 2%, much of the increase spend is likley attributed to the 11.2% consumer price inflation.
…but expects to surpass 2017 target
BIM will surpass its 2017 forecast as it nears meeting its store opening target for the year and reports improved sales growth versus last year. During this period, BIM Turkey reported a much lower like-for-like growth of 5.5%, due to a lower growth in basket spend, and declining traffic. However, the retailer operated in more favourable macroeconomic conditions with consumer price inflation at less than 10%.
BIM focuses Morocco and Egypt expansion, and possible Iran entry
BIM remains slow in investing in its multichannel operation and shows no indication of vast expansion of its supermarket format, File. Focus for the Turkish retailer is on international expansion, as it continues to expand store numbers and develop profitability in Morocco and Egypt. BIM sustained store openings in both countries and reported profit Morocco for the first time within a quarter. In addition, BIM announced it will be assessing market entry to Iran in late 2017 for a 2018 market entry.
Migros Ticaret improved results also driven by inflation…
Migros Ticaret also reported double-digit sales growth of 21.9% year-on-year for the first nine months of 2017 to TRY 9.9bn (€ 2.2bn), although this excludes the Kipa acquisition. This is the retailer’s highest sales growth rate in the past four years, but again this is attributed to inflationary prices driving basket spend. The retailer’s profit also reported improved results with a 20.5% growth in gross profit, but marginal drop in margins.
…but will meet 2017 targets
The Turkish retailer opened 151 stores in the first nine months of the year. It is close to meeting its 2017 target and with sales growth improving on the previous year’s growth rate. As a result, the retailer revised its 2017 forecast slightly upward and looks to sustain its growth rate well into 2018 as it integrates the Kipa stores into its Migros banners.
Migros Ticaret focus on small formats and online
Unlike BIM, Migros looks to enhance its multichannel credentials as it continues to focus on proximity stores. Migros’s 1000 plus units in both the convenience and forecourt stores, MJet, and small supermarkets, M, continue to expand.
The Turkish retailer is refurbishing its newly acquired online operation Tazadirekt. It is also and expanding the number of stores and cities that offer direct delivery service to over 100 stores across 24 cities.
Waning interest in international expansion
Migros’s interest in international market expansion is at a minimal as the Kazakhastan operation closed two stores, and the Macedonia one opens two. The overall contribution of both operations dropped to less than 3% of consolidated sales.
Sign up here for our free newsletter to get the latest updates on BIM, Migros Turk, and other leading retailers
Amin Alkhatib, Retail Analyst CEE, IGD International: based in London, UK, Amin is responsible for shaping IGD's research in Central and Eastern Europe; as well as contributing to IGD's broader European research programme. Follow me on Twitter @Amin_IGD for further insight on the region’s retail landscape.