Turkey’s top two retailer’s, BIM and Migros Ticaret, reported improved sales growth in the first half of 2017. With Turkey’s inflation reported to be higher that year, it is expected to drive almost half the growth rate for H1. We illustrate the force behind the two retailers’ better 2017 sales growth, beyond inflation, and the impact on the two retailers’ guidance target for 2017.
Migros Ticaret reported better than expected H1 2017 sales…
Migros Ticaret reported on the first half of 2017 to grow by 23% growth in sales revenue to reach TRY 6.2bn (EUR 1.9bn) - without Kipa sales - and 38.5% growth to reach TRY 7bn (EUR 2.1bn) with Kipa. The non-Kipa figures highlights an improvement from the 18.6% reported in 2016. Migros Ticaret new store openings in 2017 are expected to be less than the previous year, but with inflation expected to be higher so far into the year. So, growth improvement is partially attributed to robust performance of existing stores in Turkey, especially in Q2 2017 when sales growth was near 25%.
…and so, did BIM
BIM sales revenue reported a growth of 22%, year-on-year, to reach TRY 11bn (EUR 3.3bn) in the first half of 2017. Same as Migros Ticaret, inflation explains away almost half the growth rate, along with a 2% growth in traffic, a single-digit growth in real basket spend, and 9% growth in store openings. As a result, like-for-like sales were reported at a growth rate of 12.7% for that period.
Migros Ticaret and BIM revise 2017 guidance target
With the Kipa sales, Migros Ticaret reported a 38.5% sales growth in the first half of 2017 to reach TRY 7bn (EUR 2.1bn). Migros Ticaret improved performance of its existing stores Migros Ticaret revised its 2017 guidance target from a range of 30%-35% to above 35%. The retailer will also open 180 stores that year, up from a range of 120-150. BIM store opening plans for 2017 remain unrevised at 500 new stores in Turkey. But expects a revised growth in sales up from between 15%-18% to between 20%-23%.
BIM and Migros Ticaret outpace competitors and drive consolidation
BIM and Migros Ticarets’ improved like-for-like performance and opening of more new stores than most of their competitors improved their H1 2017 performance. Outside of inflation, outpaced almost all their top competitors, which indicates growing market consolidation in Turkey’s grocery retail market. Market consolidation is likely to endure over the 2018-2021 period as the top retailers are expected to outpace their competitors and the market.
Migros Ticaret invests in convenience and online, BIM in supermarkets
The retailer is in collaboration with Petrol Ofisi to expand presence in the convenience channel via forecourts. Migros Ticaret also looks to develop online grocery channel with Tazedirekt.com with the launch of same day delivery and mobile ordering. Whereas BIM invests in expansion of its supermarket chain File from its current 33 stores to 46 by end of 2017.
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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.