Inflation driving retailers’ growth in Turkey | Progresiv
BIM, Migros, and Carrefour report a double-digit sales growth for the first half of 2018. We expect a strong revenue growth to continue in the second half of the year. This is due to increased inflation in the grocery market driven by a drastic decline of the Turkish Lira. Retailers may be looking for cheaper alternatives among domestic suppliers. They will instead buy imported goods as the disposable income of shoppers will drop. 
Inflation registered at over 10% in 2018 is boosting retailers’ revenue. BIM reported 23.9% in year-on-year sales growth and to 2,141 million euros. Its like-for-like revenue growth was up 14.2%, driven by a 13% growth in basket spend. Migros reported a similar growth rate at 20.3% year-on-year and with revenue of 1,227 million euros). It plans to maintain the 20% revenue growth for the rest of the year. Both retailers grew in line with the market and maintained their market share.
BIM increased its capital expenditure by 32.4% to 64 million euros while Migros’s grew by 75% to 39million euros. In the first half of 2018 BIM opened 446 stores to reach 7,211 outlets, a growth of 6.6%. But the discounter revised down its guidance for 2018 from 730 to 651 store openings. Migros opened 134 stores including the acquisition of 73 Makro Market outlets. In total, it operated 2,011 outlets, up 7.1%. The retailer plans more than 200 store openings in the second half of the year.
French retailer Carrefour reported revenue growth of 10.7% to 343 million euros for the first half of 2018. Its performance improved in comparison to the same period in 2017 when its sales grew by 3.5%. Carrefour closed 32 unprofitable stores and opened 19 stores. It also has another 50 store openings in the pipeline for the rest of the year.
Turkey's national bank revised up the inflation forecast. This follows a drastic drop in the Turkish Lira that raised prices of imported goods. Inflation will stay at double-digit levels in 2018 and 2019 at least. As a result, retailers may be looking for cheaper goods among its domestic suppliers. They are likely to ask suppliers to absorb some of the price increases, while some level of price inflation will pass onto shoppers. (www.igd.com)
