12.02.07 retail overview turkey e&y presentation

Overview of the Turkish Business Environment & Retail Sector in Turkey

Demet OzdemirPartner, Transaction Advisory Services

February 2012

Turkish Business Environment & Retail Sector in Turkey

Doing Business in Turkey


The business environment to invest in Turkey is quite favourable …

► Situated at the junction of Europe and Asia, Turkey is an important crossroad between Europe, the Middle East and Asia, facilitating easy access to 1.5 billion customers

► 16th largest economy in the world with leading industries; energy, telecommunications, agriculture, automotive, manufacturing, textiles, tourism, transportation and construction

► Booming economy (US$ 305 billion to US$ 749.2 billion GDP from 2003 to 2010) with sustainable economic growth.

Why Turkey is a good market to invest in…

Source: Global Insight, Undersecretariat of Treasury

Source: Global Insight, Undersecretariat of Treasury

F:Forecasted

-15%-10%-5%0%5%

10%15%

2001

Q120

01Q2

2001

Q320

01Q4

2002

Q120

02Q2

2002

Q320

02Q4

2003

Q120

03Q2

2003

Q320

03Q4

2004

Q120

04Q2

2004

Q320

04Q4

2005

Q120

05Q2

2005

Q320

05Q4

2006

Q120

06Q2

2006

Q320

06Q4

2007

Q120

07Q2

2007

Q320

07Q4

2008

Q120

08Q2

2008

Q320

08Q4

2009

Q120

09Q2

2009

Q320

09Q4

2010

Q120

10Q2

2010

Q320

10Q4

Uninterrupted growth for 27 quarters

GDP (US$ billion)

GDP Growth Rate (between 2001-Q1 and 2010-Q4)

GDP per capita and Real GDP growth

392 482,4 528,2646,2 729,8

614,5749,2

885,41.081,5

1.282,11.456,3

0200400600800

1.0001.2001.4001.600

2004 2005 2006 2007 2008 2009 2010 2011F 2012F 2013F 2014F

US$ b

ln

GDP (US$ bln)

10.2418.530

10.054 10.443 9.77311.263

12.48913.734

0,7%

-4,8%

9,0% 8,2%

1,3%

3,6%4,5% 4,9%

-6,0%

-3,0%

0,0%

3,0%

6,0%

9,0%

-2.000

2.000

6.000

10.000

14.000

18.000

2008R 2009R 2010R 2011F 2012F 2013F 2014F 2015FUS

$

GDP per capita Real GDP growth

Source: Global Insight


141

8274 65 62 60

46 3821 16

129

020406080

100120140160

…with the youngest population in Europe and favorable demographics…Strong growth potential…

► 3rd largest country by population in Europe following Russia and Germany► Largest youth population compared with the 27 EU countries ► Youngest in Europe with 43% of it is comprised of under the age of 25► The population between ages 0 and 44 is 55.5 million constitutes 74% of the total

population ► Labor productivity with an annual average growth of 6.1% between 2002 and 2008 ► 4th largest labor force compared to the 27 EU countries ► One of the largest consumer markets in Europe with an increasing number of potential

customers► High level of productivity and highly skilled labor force

26%

17% 17%14%

11%

8% 7%

0%

5%

10%

15%

20%

25%

30%

0-14 15-24 25-34 34-44 45-54 55-64 65+Source: Turkish Statistical Institute

Source: Council of Europe 8,20%6,90%

4,70%

0,70%

-4,70%

8,90%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

-10%

-5%

0%

5%

10%

15%

2005 2006 2007 2008 2009 2010

Private Cons. and Inv Gov. Cons. and Inv. Net Export

Stock Building GDP Growth

Source: Global Insight, Turkish Statistical Institute

Population of European Countries (million)

Population Distribution by Age

Contribution to GDP growth


…and improving macroeconomic stability…

Macroeconomic indicators are strong despite the global financial crisis… ► The Central Bank of the Republic of Turkey (“CBRT”) maintained high

interest rates while the government followed a tight fiscal policy by achieving 5.5% primary surplus in order to decrease inflation to the targeted levels in the past 6 years.

► Turkey has a potential of being a safe harbor in the post financial turmoil; credit ratings improved during global financial crisis.

► 3 Dec 2009, Fitch upgraded rating by two notches from BB- to BB+. ► 8 Jan 2010, Moody’s upgraded rating from Ba3 to Ba2. ► 1 Feb 2010, JCR raised rating from BB- to BB.► 19 Feb 2010, S&P upgraded rating from BB- to BB and revised

outlook from stable to positive

► Very strong banking system and minimum level of distressed companies despite GDP decline in 2009

Source:Global Insight Source: Banking Regulation and Supervision Agency

17,7%

23,4% 19,8%

3,7%

5,3%

3,7%

- %

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

- %

5,0%

10,0%

15,0%

20,0%

25,0%

2008 2009 2010

NPL

ROE

ROE NPLA: Actual, F: Forecast

8,8%10,4%

6,3% 8,6%6,5%

9,8%

4,7% 4,6% 4,5%

6,3%

12,7%

1,2%

8,5%11,1%

7,8%5,1% 5,2% 4,7%

0%

5%

10%

15%

2007A 2008A 2009A 2010A 2011F 2012F 2013F 2014F 2015F

Consumer Price Index(% change) Wholesale Price Index(% change)

15,00%

6,50% 6,50% 5,75%6,75% 6,00% 5,50% 5,50%

0%2%4%6%8%

10%12%14%16%

2008A 2009A 2010A 2011F 2012F 2013F 2014F 2015F

Interest rateSource:Global Insight

Interest Rates of Turkish Government Bonds

Consumer & Price Index (% change) Banking sector, ROE and NPL ratios


… where collaboration and cultural exchange are developing very well

…and a great country to work in

► Ranked the 15th most attractive FDI destination for 2008-2010 (UNCTAD)

► More than 21,000 companies with international capital

► Around US$ 57 billion of FDI inflows in the last 4 years

► “Guarantee of Transfers” and “International Arbitration” available

► New R&D and Innovation Support Law dated February 2007, increased productivity, reduced production costs, commercialized technological knowledge, developed pre-competition cooperation

► Accession negotiations with the EU since 2005

► Customs Union with the EU since 1996, and a total of 12 free trade agreements (FTA).

► High demand for energy, with minimum natural resources

1,1 1,8 2,8

10,0

19,3 19,917,0

6,9 7,8

15,9

0

5

10

15

20

25

Billio

nUS

$

Source: Undersecretariat of Treasury

FDI inflows


Turkey - SWOT Analysis

Strengths

► Largest youth population among 27 EU countries ► Strong geopolitical position which enables the country to be a hub

between the Middle East and Europe► Promising GDP growth rates► Diversity in industrial production► Strong consumer base► Recent structural reforms, especially those aimed at improving

transparency and increasing capitalization within the banking system► Membership in a customs union with the EU, which makes it a very

attractive platform for export-oriented manufacturers► Transparent monetary policy which is geared towards stabilizing

inflation

Opportunities

► Strong growth prospects, in nearly all sectors

► Large and growing consumer base

► Despite the economic fragility in the world, many companies still have strong balance sheets and are eager for foreign partnership

► The government has pushed forward new pension and labor code reforms that should lower labor costs for businesses

► Despite risks to the EU accession process, Turkey remains to be an important convergence play for investors

► The reform program is expected to increase the opportunities for investment in privatized state firms

Weaknesses Threats

► Lack of sophisticated corporate sellers and buyers

► Changing / volatile tax regulations; widespread tax evasion

► Bureaucracy

► Lack of R&D, innovation and high technology in many sectors

► Limited coverage of sector data, especially in non-regulated sectors

► Reliance on foreign direct investment inflows to support the balance of payments highlights a strong dependence on key developed world economies.

► Differences in development levels of the geographical regions

► Political priorities / concerns

► High degree of exports and dependency on world economic climate

► Relatively high value expectations of sellers

► A global economic slowdown will weigh on foreign investment and the export sector

► Infrastructural issues (especially in relatively under developed regions) and the ongoing transportation problems


Overview of the Retail Sector in Turkey


Retail SectorSector Overview

Sector Overview

► The retail market had been composed of traditional shops in Turkey until 1990’s. For example in the food sector, most Turkish consumers meet their daily shopping needs through a variety of smaller shops, visiting the bakkal(small corner store, which is often family run) for packaged food items, the kasap (butcher) for poultry and meat, the manav (greengrocer) for fresh fruit and vegetables, or the pazar -- a weekly outdoor market found in each neighborhood.

► After 1990, the opening of the supermarkets brought a new era in the retail market in Turkey and this became the start of modern retailing in Turkey.

► Currently the retail market in Turkey is a mix of traditional and modern retailing and the market is similar to the EU market of the 1970s, with an approximately 56% share held by traditional small domestic retailers. In the EU countries, this percentage is around 15% and the market is mature and the market dynamics are not expected to change significantly.

► However there is a large room to grow for modern retailing in Turkey in line with the trends in the market.

► In parallel with the macroeconomic growth and stable economic conditions, retail sales experienced a strong growth between 1998 and 2008 with a CAGR of 27.4%. Retailing saw positive market growth in 2010, as the sector returned to its 2008 levels.

► The TL 304 billion retail sector size of 2011 is expected to reach approximately US$ 345 billion by 2015. The sales volume growth of the retail sector is demonstrated in the figure on the right. Moreover, retail sales are projected to grow with a CAGR of 3.2% from TL 304 billion in 2011 to TL 344.8 in 2015.

► The projected CAGR for the private consumption in Turkey is 11.7%, which points out the potential in organized modern retailing in Turkey and the increase in the household population is one of the major factors behind this growth projection, as demonstrated in the figure on the right.

Overall Retail Sector – Sales Volume Growth

269,7 273,5 289,4 304,0 314,4 325,2 334,2 344,8

3.803

2.806

3.977 4.129 4.220 4.315 4.387 4.478

05001.0001.5002.0002.5003.0003.5004.0004.5005.000

0,0

50,0

100,0

150,0

200,0

250,0

300,0

350,0

400,0

2008 2009 2010 2011 2012F 2013F 2014F 2015F

TL

TL (b

illion

)

Retail Sales (TL billion) Retail Sales per capita (TL)Source: Business Monitor International

Source: Business Monitor International

Private Consumption vs. Population

70,9 71,872,8

73,6 74,575,4

76,277,0

664 681786

8991.000

1.1171.239

1.368

02004006008001.0001.2001.4001.600

67,068,069,070,071,072,073,074,075,076,077,078,0

2008A 2009A 2010A 2011E 2012F 2013F 2014F 2015F

TL (b

illion

)

Popu

lation

(milli

on)

Population (in million) Private Consumption (TL billion)



Sector Overview

► According to the Turkish Council of Shopping Centers & Retailers, the volume of the retail sector is approximately US$ 171 billion in Turkey and the organized retail market constitutes approximately 44% of the overall market. The total sales area and the employment figures are respectively 23 million sqm and 1.8 million employees in 2010 according to the data by the Turkish Council of Shopping Centers and Retailers. Moreover, the Council projects a market size of US$ 279 billion by 2013.

► The retail market in Turkey can be separated into five main sub categories, which are:

► Food Retail► Home Retail► Apparel Retail► E-Commerce Retail

► Electronics Retail

► The food retail sub category is the largest category in the sector and it constitutes 58.7% of the market. The breakdown of the retail sector sales volume in 2010 is demonstrated in the figures on the right. The below figure illustrates the breakdown of the non-food retail sector into the four main sub categories. Home retail is the largest sub category in non-food retail sector.

► In the food sector, most Turkish consumers meet their daily shopping needs through a variety of smaller shops. However, mass grocery retail (“MGR”) outlets have become increasingly popular thanks to the quality and range of their products -- boosting demand for packaged foods and the convenience of one-stop shopping.

► The economic growth, an expanding population, especially in urban areas, rising levels of disposable income, and the continued development of organized retail infrastructure, are the major factors for the expected growth in the retail industry in Turkey.

► Furthermore, Consumer Confidence Index has reached 90.99 at the end of 2010 in Turkey.

Retail Sector Breakdown (Food vs. Non-Food), 2010

Source: Turkish Council of Shopping Centers and Retailers


Breakdown of Non-Food Retail Sector, 2010

58,7%

41,3%

Food Retail Non-Food Retail

39,3%

36,0%

13,9%

10,8%

Home Retail Apparel Retail E-Commerce Retail Electronics Retail



Major Trends in the Sector

► As with the EU countries, which saw organized retail grow from 51% to 85% of the market in two decades, there is clear scope for rapid Turkish expansion. In 2006, there were just three hypermarkets and 17 supermarkets per 1 million of population in Turkey, against 15 hypermarkets and 150 supermarkets in EU countries.

► Analysis of retail market share in countries before and after EU accession shows that traditional retailers lose almost half of their market share shortly after entry to the EU. However, with negotiations having only started in 2005, actual EU accession for Turkey is still a very long way off and is not expected until 2015 at the earliest.

► The growing competition in the market is leading to an increase in brand choice and improvement in brand quality, resulting in growing demand for retail products. This in turn is attracting a large number of leading retail chains to Turkey.

► The consumer spending per capita has decreased by 14.7% in 2009 in Turkey as a result of the global financial turmoil and it increased again back to 2008 levels in 2010. Furthermore, it is estimated that the consumer spending per capita is projected to increase with a CAGR of 16.7% during the time period between 2010 and 2014.

► Market penetration is rising in parts of Istanbul and Ankara and these cities still offer major opportunities for retailers and developers. However there are even more opportunities in the untapped markets in the rest of Turkey.

► Entertainment and leisure have become a crucial aspect of the new wave of retail developments. In addition to cinemas and restaurants, developers are being more adventurous and including entertainment and leisure aspects in the shopping malls.

► Retail sales constitute 24.2% of total GDP in Turkey and the share of organized retail is 9 – 10% of the total GDP in 2011.

Consumer Spending per Capita

Source: TURKSTAT, Business Monitor International

6.315 6.8975.883

6.9778.188

9.888

11.55112.948

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

2007A 2008A 2009A 2010A 2011E 2012E 2013E 2014E

US$

2010 - 2014 CAGR: 16.7%


Retail SectorMergers & Acquisitions Activity (2008-2011)Significant M&A activity has been observed in the retail sector in Turkey recently

► The mergers & acquisitions (“M&A”) deals in the retail sector in Turkey in the period between January 1, 2008 and June 31, 2011 are demonstrated in the below figure. 34 deals have been closed in this period and the deal values of 15 deals have been disclosed with a total disclosed deal value of US$ 2.65 billion and an average deal value of US$ 176.6 million.

► Furthermore, according to the survey results in the 2011 M&A Report of Ernst & Young, Turkish business world is optimistic regarding the future of the retail sector in terms of M&A activity in 2012 and approximately 11% of the participants believe that retail will be the most promising sector in 2012. The survey results are illustrated in the below figure.

Source: Ernst & Young M&A Reports 2008, 2009, 2010 and 2011

Number of Deals - Retail Sector vs. Turkey (2008 –2011) Expected M&A Activity by Sectors in 2012

Source: Ernst & Young M&A Report 2011

23,7%

15,1% 14,0% 12,9%10,8% 9,7% 8,6%

2,2% 2,2% 1,1%0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

13 9 712

172

115

241264

0

50

100

150

200

250

300

2008 2009 2010 2011

Retail Sector Deals Total Deals in Turkey


Retail SectorSWOT Analysis

Strengths

► Attractive Demographics: population of 74 million with a 1.5% growth rate annually. Average household size of 3.9 people vs. EU average of 2.5

► Strong GDP growth outlook resulting in an increase in purchasing power

► Grocery consumption are relatively immune to economic downturns► Compared to EU countries, a relatively low cost qualified workforce

supports the expansion of the sector► With their increasing purchasing power, organized retailers have a

lowering effect on inflation► Strong domestic production in grocery and limited share of imported

goods

Opportunities

► Organized retail sector is still under-penetrated despite the sector’s higher than market growth and constitutes 44% of the grocery retailing vs. 80% in EU

► Only 20% of cities of Turkey over 1 million population. Other cities are growing with the economic expansion which means a huge potential for new organized grocery retail stores in the country

► Increasing number of shopping malls

► The government may support organized retailing expansion

Weaknesses Threats

► Fragmentated traditional retailers may attract customers during economic downturn with the ability to provide late payments and tax-free shopping

► IT infrastructure in logistics is not developed and manual management affects the efficiency of the sector

► Price can vary from region to region and players can suffer from margin pressure

► Most customers still prefer to purchase unpackaged foods fromgroceries and bazaars instead of organized retailers

► Although the organized retail sector is relatively immune to economic downturns, an unforeseen economic crisis may slowdown national players’ investment programs and hence new space additions

► Politic and economic uncertainties in the eastern part of the country may limit growth prospects in this region

► The draft retail law may bring additional bureaucratic layers to organized retailers’ new stores with a sales area higher than 400 sqm in addition to limits on working days as well as operating hours


Retail SectorShopping Malls► Turkey has the third highest number of shopping malls in Europe, after Spain and Russia.

► The young population of Turkey (nearly 75 million) attracts the establishment of several department stores and shopping malls with large foreign investment. In addition, such shopping malls make the process of shopping easier for consumers as they get the opportunity to shop for lots of items under one roof.

► Increasing competition in the market leads to an increase in brand choice and improvement in brand quality, which inevitably results in growing demand for the retail products. This in turn attracts a large number of leading retail chains to Turkey.

► The current demand for convenience shopping keeps increasing and the number of shopping malls surges, especially in Istanbul and other large cities. Retailers are also investing in medium-sized cities by introducing smaller formats to improve market access

► According to Council of Shopping Centers, there is still a big potential for shopping mall development in Turkey due to the fact that there are currently 49 cities which don’t have any shopping malls.

► While İstanbul is ranked #1 with 102 shopping malls, it is followed by Ankara with 32 shopping malls and İzmir with 17 shopping malls.

► The sector created employment for 350,000 people as of 2011. With the developments until 2015, it’s expected that this number would increase to 500,000 people.

Number of Shopping Malls


Total Leasable Retail Area in the Shopping Malls

1.100 1.300 1.400 1.700 1.900 2.100 2.5003.500

4.9005.700

6.500

01.0002.0003.0004.0005.0006.0007.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Th

ousa

nds

Total Leasable Retail Area (in sqm, per year)

CAGR: 19.4%


10 12 14 18 25 35 46 53 60 81 93 106133

166210

236263 270

344

050

100150200250300350400

CAGR: 21.3%


Retail SectorShopping Malls

0 50 100 150 200 250 300 350 400 450

Greece

Bulgaria

Russia

Belgium

Turkey

Hungary

Germany

Slovakia

Poland

Czech Rep.

Italy

France

Portugal

Spain

UK

Finland

Luxembourg

Sweden

Ireland

Netherlands

Gross Leasable Area per 1,000 capita in Europe



Food RetailSub-Category Overview and Major Players

Major Organized Retailers by Format

► Turkey is the 5th largest country in the world in terms of spending on food. The Turkish food industry is enjoying continuous growth trends due to the young population of the country, high urbanization rates, and rising income levels. The food retail sub-category has also seen robust economic growth in the last years. The sales of large food retailers have risen and new hyper and supermarkets are continuing to be opened at an incredible rate. Moreover, the discount store concept has been developing rapidly in Turkey and the number of discount stores have increased rapidly in the recent years.

► As the largest category in the Turkish retail sector, food retail had a market size of US$ 96 billion in 2010 and has grown with a CAGR of 6.3% in the last 5 years.

► The food retail sub-category is classified into two major groups, organized and unorganized retailers. Organized retailers are mostly chain stores that have a corporate entity and are fully registered. Unorganized retailers, also called the traditional market, constitute smaller, single stores and bazaars. As mentioned before, the market is evolving in Turkey and the organized modern retailers are gaining more importance in the market.

Source: Analyst Reports

Migros Bim CarrefoursaTesco Kipa Metro Group Şok A101 Kiler Bizim Toptan

Hypermarket X X X XSupermarket X X X XDiscount X X X X XCash&Carry X X

► The hypermarket segment is dominated in Turkey mainly by international retail giants and there is more room for growth in the segment. The selling space per 1,000 inhabitants increased from 6 sqm in 2004 to 10 sqm in 2010. However, the penetration is much higher in developed countries at 80 sqm.

► Among the four formats, supermarkets are expected to have the slowest growth rate in the following years since the supermarket segment is already mature in Turkey and supermarkets are small enough to benefit from higher return and penetration prospects.

► The discount format is relatively new in Turkey compared to its European peers. With establishment of BIM in 1995, the discount format started to evolve, and until today, the segment achieved an overall penetration of 11% within the grocery retail market in Turkey. In order to compete with the growth trend in the discount segment, major retailers are changing their strategies and going for concepts such as fast shopping, gourmet and boutique stores.

► The cash & carry segment is quite under-penetrated with organized cash & carry having a 5% market share. The biggest players are Metro Group (German) and Bizim Toptan (Turkish).

Segment Breakdown of Food Retail Revenues

Source: Analyst Reports

3,0 4,3 4,4 5,019,0 22,8 25,1 27,64,9

7,2 8,9 9,933,3

33,7 33,9 33,018,1

18,2 18,4 17,8

0,0

20,0

40,0

60,0

80,0

100,0

2006 2007 2008 2009TL

billio

n

Hypermarkets Supermarkets Discount Stores Small Groceries Specialist Stores


Home RetailSub-Category Overview and Major Players

Major Drivers of the Home Retail Market Growth

► Home retail sub-category is the second largest category in the retail sector in Turkey with a market size of US$ 26.5 billion in 2010.

► The growth in the Turkish home retail market accelerated in the beginning of the 1990s when international players such as Tefal penetrated and widened the product variety in the market which was formerly dominated by local manufacturers.

► Altering the tastes of Turkish customers and forcing the existing local players to adapt to the new product range, international players also created an environment where new Turkish competitors emerged.

► Entrance of discount retailers such as Bauhaus and Ikea and their respective growth implied the vast market potential for the household goods retail industry.

► Today there are several domestic and international players in Turkey each differing from others in terms of their product range and retailing strategy.

► Main players in the home retail market are

► Home improvement product retailers: Koçtaş, Bauhaus, Praktiker, Ikea, Tekzen

► White goods retailers: Arçelik, Vestel

► Medium scale home retailer companies: Esse, Güral Porselen, Kütahya Porselen, Zara Home, Tepe Home, Mudo Concept, Paşabahçe, Boyner Evde, YKM, Karaca, Tefal, Evkur

► Small scale home retailer companies: Bernardo, Jumbo, Monev, Tantitoni, English Home

► New Household Additions: New marriages, changes in the Turkish family structure and an increasing number of people living alone, such as students and single professionals, create a significant growth in the number of Turkish households. As of 2010, there are approximately 19 million households in Turkey and it is expected to have 2 million new additions within 3 years.

► GDP per Capita and Consumer Spending: In line with the GDP growth, per capita consumer spending level of US$ 6,977 in 2010 is expected to reach US$ 12,948 by 2014. Retail expenses constitute 35% of the overall spending and the spending growth is expected to remain at its fast pace.

► Gross Leasable Area in the Shopping Malls: Home retailers tend to locate their stores in shopping centers since the shopping centers have large catchment areas including the target consumer group of these retailers. Therefore, new shopping centers represent a potential to extend retail business into new markets.


Apparel RetailSub-Category Overview and Major Players

► Apparel sector reached a market size of US$ 24.3 billion in 2010, which constituted around 27% of non-food retail market in Turkey.

► This ratio was 22% in 2005 and it is expected to be realize around 33% by 2014.

► In Turkey, demand of apparel retail is forecasted an increase by 11% per annum between 2011 and 2015, with this growth Turkey can be the largest markets in Europe by the end of this period.

► Top leading apparel and footwear retailers companies are:

► LC Waikiki, Koton,

► Zara, Network

► Mavi Jeans

► Sarar Giyim

► Damat Tween

► İpekyol

► Vakko, Beymen

► The number of outlets increased in mixed retailers considerably in 2010. Local companies such as Boyner and YKM increased the number of their outlets year-on-year. Expected growth value of sales for mixed retailers is around 18% by 2015.

► Some of the mixed retailers are:

► Boyner

► YKM

► H&M

► C&A

► Another highlight of the apparel retail area is the increasing demand for children apparels. 15% of Turkey’s population is comprised by the people under the age of 12 and such a young population attracts investors to make investments in children apparels, which managed to grow by 15% within 2011.


E-Commerce RetailSub-Category Overview and Major Players

► In Turkey, there are numbers of e-commerce sites that offer services as sale of second-hand goods, real estate, ticket purchases and food delivery.Fashion, media, jewellery and auto parts are other important product categories for the leading E-Commerce players.

► Sahibinden.com was the leading e-commerce player in Turkey as of September 2011, followed by Gitti Gidiyor. Multi-category retailer Hepsiburada.com is ranked third, as the company distributed more than 330,000 products in more than 36 categories in 2011.

► Private shopping site Trendyol is also within the Top 10 of the ranking. The website already had 2 million registered users in the beginning of 2011.

► E-Commerce sales in Turkey increased by 52% over the first nine months of 2011 compared with the same period the year before, to stand at TL16.9 billion (more than €8.5 billion).

► The total amount spent on e-commerce sites reached US$ 9.4 billion in 2010 (which was US$ 5.8 billion in 2009) through 96.1 million (67.3 million in 2009) transactions.

► The sector with the biggest online growth is services sector with a total turnover of TL 2.3 billion which is a 69% increase compared with the year before.

► As of 2011, some of the important M&A transactions:

► A major multimedia player, Naspers, has penetrated the Turkish internet market by acquiring approximately 70% of the shares of Markafoni

► Amazon has acquired a minority stake in Ciceksepeti, which operates an online flower and gifts store in Turkey

► Kleiner Perkins Caufield & Byers and Tiger Global invested between US$ 25 million and US$ 30 million in private shopping site Trendyol

► Swedish investment company Quants Financial Services recently bought a majority stake in Grupfoni.


Electronics RetailSub-Category Overview and Major Players► In 2010, the size of the consumer electronics market in Turkey

realized US$ 7.3 billion and is expected to increase by more than 52% to US$ 11.1 billion by the end of 2014. The distribution of consumer electronics by main product segments is presented in the figure on the right.

► The large global consumer electronics vendors prefer to set up local offices in Turkey due to relevant costs.

► Electronic devices had US$ 8.71 billion demand at the end of 2011, and it is expected to have an increasing demand thanks to the growing popularity of digital lifestyle devices such as LCD TV sets, notebook computers and digital cameras, as well as rising incomes and lower prices.

► Digital camera penetration is expected to reach 80% by 2012 and PC penetration is projected to reach 33% by 2015 while mobile subscriber penetration has reached 80%. In consumer electronics sector, the main market players are;

► Teknosa

► Bimeks

► Media Markt

► Electro World

► Darty

► Gold Computer

► Vatan Computer

62,0%22,0%

16,0%

Computer hardware related Audio-visual equipment Mobile phones

Distribution of Electronics Retail by Segments, 2010

Source: Business Monitor International

12.02.07 retail overview turkey e&y presentation

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