Retail sector update - July 2014
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Retail sector update July 2014
Selected recent credentials
Deloitte is the world’s leading fully-integrated professional services organization, providing financial
advisory, consulting, tax, audit and risk advisory services in the consumer business industry.
Deloitte Turkey assumed various advisory roles in recent M&A transactions in the Turkish retail sector.
Through an integrated approach, Deloitte Turkey advised its clients during these transactions by
providing M&A Advisory, Financial Due Diligence, Commercial Due Diligence, Tax Due Diligence, Tax
Structuring and Post-Merger Integration services. Our recent deal track record in the retail sector is
presented below:
Financial advisor to Ayakkabı Financial due diligence services Financial advisor to C&J Clark M&A Advisory and full range of
Dünyası to Levant Capital International Limited Due Diligence services to
In its sale to Esas Holding In its acquisition of Panço In its acquisition of Nine West
İn its acquisition of EFA Ticaret, business in Turkey
the exclusive distributor of
Clarks products in Turkey
Strategic and commercial due Financial due diligence services Commercial assessment of Working capital diagnostics of
diligence of ORKA Group to The Carlyle Group Park Bravo Group for Penti
Landmark
In its acquisition of Penti For The Carlyle Group
for Investcorp
Vendor due diligence services Vendor due diligence services Lead financial advisor to Silk & Financial & tax due diligence
to Ziylan Group to YKM Cashmere services to Naspers
In its sale to Eastgate Capital Regarding the acquisition of a
Group private shopping website
1
Industry trends
Macroeconomic Performance Industry Commentary
Even in a turbulent year due to increased socio political As the Turkish economy grows, the Turkish retail sector
tension and the FED’s revised monetary policy, the has been one of the most appealing sectors for both
Turkish economy retained its momentum and achieved investors and consumers. Per capita disposable income
4% growth. GDP reached US$820 billion in 2013 albeit grew with a CAGR of c. 9% over the past 5 years and
the Turkish Lira devalued 20% against the US Dollar reached US$8,895 in 2013; it is expected to exceed
year-on-year to December 2013. US$13,000 in 2018. Despite the significant currency
volatility and tightened credit card regulations in 2013,
Turkey’s growth and its continuing long term potential Turkish consumers remained keen on discretionary
have led to sustained interest from investors, also in spending, which drove activity in the sector and
2014, as evidenced by the BIST 100 index remaining continued to encourage a notable number of global
above 75.000 points as of May 2014. Similarly, growth brands to enter the market. In this context, the
remained relatively robust in the first quarter of 2014 Consumer Confidence Index hit 76.00 as of May 2014.
at 4.3% while a decrease of 30% was achieved in the
current account deficit.
Turkey maintained its investment grade rating from
leading credit rating agencies Moody’s and Fitch
Ratings.
Macroeconomic Performance Consumer Confidence vs. TL's Stand
1,200 10% 90 0.80
9.2% 8.8% 1046
967 8% 80 0.70
1,000 903
845 6% 70 0.60
786 820 792
774 5.2% 5.1% 5.2% 60
800 732 0.50
4.0% 4%
US$ billion
617 3.5% 50
(%)
2.5% 0.40
600 2.1% 2% 40
0.30
0% 30
400 0.20
20
-2%
10 0.10
200
-4%
-4.8% - 0.00
Apr-08
Aug-08
Apr-09
Aug-09
Apr-10
Aug-10
Apr-11
Aug-11
Apr-12
Aug-12
Apr-13
Aug-13
Apr-14
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
0 -6%
2009A 2010A 2011A 2012A 2013A 2014F 2015F 2016F 2017F 2018F
GDP in Current Prices Real GDP Growth (%)
Consumer Confidence (left) TL Basket of US$ and EUR (right)
A: Actual, F:Forecast
Source: Turkstat, EIU Note: Index values prior to Jan.13 are adjusted to Turkstat's new calculation method
which was introduced in Jan.13.
Personal Disposable Income Per Capita Source: Turkstat, CBRT
14,000 13,332
CAGR (2014-2018): 10.2% 12,035
12,000 10,925
9,935
10,000 8,895 9,034
8,035 8,288
8,000 7,484
US$
6,318
6,000
4,000
2,000
0
2009A 2010A 2011A 2012A 2013A 2014F 2015F 2016F 2017F 2018F
A: Actual, F:Forecast
Source: Turkstat, EIU
2The total size of the retail sector in Turkey is Retail Sales in Turkey
estimated to have reached US$303 billion in 2013
400
and is expected to grow with a CAGR of c. 7% 353
373
CAGR (2014-2018): 7.4%
between 2014 and 2018. 350 325
290 303 301
300 275
284 280*
Growth in the retail sector is highly influenced 250 235 210.7 225.2
US$ billion
170.0 191.1
by shopping mall investments and the resulting 174.4
200 149.3 155.6 160.1 159.1
126.0
increase in gross leasable area. In the past five 150
years, the number of shopping malls and total 100
gross leasable area both experienced rapid 50 108.5 125.7 128.0 129.6 133.3 121.0 126.6 133.5
142.4 147.9
growth. Increased competition led investors
-
to build larger shopping malls to create 2009A 2010A 2011A 2012A 2013A 2014F 2015F 2016F 2017F 2018F
differentiation and attract a higher number of Food Retail Non Food Retail
consumers. (*) Slight decrease in 2014 is due to a forecasted devaluation of 14% in average TL/
US$ y-o-y. Sector is estimated to grow by 10% in 2014 on TL based sales.
In line with the increasing number and size of A: Actual, F:Forecast
shopping malls, organized retailers’ share of the Source: EIU
total retail market has been steadily increasing
and has reached 55% in 2013, ending the long-
standing dominance of street shops and stalls in Credit / Debit Card Transactions
food distributorship.
40
CAGR (2009-2013): 14.6%
35 34
Additionally, the use of credit cards continued to
increase at an accelerated pace. In 2013, the total 30 28
value of credit / debit card transactions grew by 24
25 23
US$ billion
21% year-over-year while CAGR for the last five 19
years is now c.15%. 20
15
10
5
0
2009A 2010A 2011A 2012A 2013A
Source: The Interbank Card Center
3Category Commentary
Food and Beverage
Food and beverage, the largest segment of the
total retail market (44%), are expected to grow
with a CAGR of 5% in the next five years and
reach almost US$150 billion in 2018. We expect
to see continued expansion strategies at the
discount retailers as well as a consolidation in the
market.
Home Retailing
The home retailing market in Turkey, comprised
of household furniture and textile products,
reached US$51 billion in 2013. Sustained growth
is expected in the market considering the many
ongoing real estate development projects,
nationwide urban transformation projects and
increasing urbanization. The size of the home
retailing market is forecast to reach US$60 billion
in 2018, corresponding to approximately 6%
CAGR in the 2014-2018 period.
Apparel and Footwear Retailing
One of the most promising segments, which
received a high level of investor interest in recent
years, apparel and footwear retailing is expected
to grow with a CAGR of 8% in the next five years
and reach US$37 billion in 2018.
Consumer Electronics and Technological Goods
Smartphone sales have become an important
component of the market for consumer
electronics and technological goods, which
exceeded US$16 billion in 2013, with 5% year-
over-year growth.
Internet Retailing
Boosted by rising internet penetration, an
increasing number of Turkish companies are
offering online shopping and implementing
(*)
Includes online payments of tax charges but excludes payment on delivery.
alternative payment methods. Therefore, the
Source: Deloitte Research, EIU, GfK, The Interbank Card Center
total volume of online spending* through virtual
point of sales networks grew annually by 40%
on average in the 2009-2013 period and reached
US$18 billion. On the other hand, the total size
of online retail excluding online legal betting and
holiday spending, reached c. US$4 billion in 2013
and corresponded to c. 1.3% of the total retail
sales.
4Industry trends:
Shopping mall investments in Turkey
One of the key drivers in the retail sector is Istanbul is the center of the Turkish retail market
the number of shopping malls, which has as it is the location for the majority (60%) of
more than quadrupled in the last decade and shopping malls in Turkey, followed by Ankara and
reached 333 by the end of 2013, spread over İzmir which together represent another 16%.
54 cities throughout the country. Owing to Istanbul is expected to attract further shopping
Turkish consumers’ increasing purchasing mall investments in the coming years and continue
power, improvements in organized retailing to dominate, while other major investments are
and sustained real estate investments by both expected to occur in the emerging cities of the
local and foreign investors, the total amount Marmara, Black Sea and Mediterranean regions.
of shopping mall investments leapt to US$45 Ankara and İzmir are likely to become saturated
billion as of early 2014 (in 2009 the total was considering the current investment pipeline.
US$25 billion), of which one third was realized
by foreign investors.
Number of Shopping Malls and Leasable Area
In the same period, gross leasable area (GLA)
450 14
has exceeded 9 million m2, having risen from 409
2 million m2 in 2003. GLA per 1,000 people 400 368 12
333 11.5
reached 120 m2, but is still below the EU-28 350 10.8
298 310
10
average. However, Turkey is expected to close 300 263 9.3
million sqm
the gap as it has the second largest investment 236 8.3 8
250 7.6
210
pipeline in Europe after Russia, corresponding 200 6.5
166 5.7 6
to an additional c. 2.2 million m2 of expected 133 4.9
150
leasable area by the end of 2015. 93 106 3.9 4
100 81
2.4 2.8
2 2.2 2
50
0 0
Number of Shopping Malls Gross Leasable Area
Number of Shopping Malls per City
Number of Shopping Malls per City
1
101 2 1
3 5 3 4 1
8 1 4
1 4 2
2
2 10 1
34 1 1
7 4
2 1
2 3
2 1 4 2 1
18 2 2
6
7 1 5 1
5
1
6 4 1 1
1 5 2
13
6
2
Source: Turkey Real Estate Reference Book 2013, Shopping Mall Investors’ Association
5M&A snapshot
Global M&A Activity M&A Activity in the Turkish Retail Sector
4,000 3,799 4.5% The Turkish retail sector has been a focus for
4.1% both strategic players and private equity firms in
3,500 4.0%
3.6% 3.6% 3.5% recent years and the eagerness of investors to
2,936
3,000
2,564 2,542 3.0%
exploit the opportunities in the market has been
2,434 3.0% 2,393
2,500 steadily increasing. In this respect, 2013 was a
US$ billlion
2,073 2.5%
2,000 2.0% highly active year for the sector as 31 transactions
2.0% 2.0% 2.0%
1,500
(including e-commerce deals) took place with an
1.5% estimated deal value of US$1.2 billion, the highest
1,000 1.0% deal volume for the sector in the post-crisis period.
500 0.5%
138 59 41 49 77 104 86
- 0.0% Mainly backed by private equity and venture
2007 2008 2009 2010 2011 2012 2013
capital firms, internet retailing continued to
Total Deal Value Retail Deal Value Retail / Total
increase its popularity among investors with 13
transactions out of 31 in 2013.
Source: Thomson Reuters
In the first five months of 2014, 12 deals were
materialized, a much higher number than in the
same period of 2013.
M&A Activity in Turkey
25 25.0%
22.0
20 19.3 20.4% 20.0%
17.3 17.5
16.2
15.0
US$ billlion
15 15.0%
10 10.0%
5.2 6.3% 6.8%
5 3.3 5.0%
1.9% 3.2%
1.2
0.3 1.6% 0.1 0.2 1.2% 0.9 0.7
- 0.0%
2007 2008 2009 2010 2011 2012 2013
Total Deal Value Retail & E-Commerce Deal Value Retail / Total
Source: Deloitte Annual Turkish M&A Review
6Highlighted Transactions
local footwear companies for an estimated
April, 2014 – Naspers, a South Africa based consideration of US$225 million. Ziylan operates
multimedia company acquired the remaining nearly 300 stores in Turkey through its brands FLO,
30% share of Markafoni, a leading e-commerce Polaris, Kinetix and Lumberjack.
platform focused on flash sales. Naspers
initially bought 70% of Markafoni in 2011 for a June, 2013 – Altınyıldız Mensucat, a leading
consideration of US$200 million. Turkish textile and fashion retailer, bought back the
shares of its affiliates Beymen (50%) and Boyner
March, 2014 – Levant Capital, Dubai based (30%), which it had sold to Citigroup’s asset
private equity firm, acquired a majority stake in management platform CVCI in 2007, for US$334
Panço Giyim, a prominent kids retailing brand that million.
operates with more than 80 stores nationwide.
June, December 2013 – Bimeks, a prominent
December, 2013 – Esas Holding, a Turkish electronics retailer in Turkey acquired 100% of
conglomerate focusing on private equity, asset Electroworld, an electronics retailer operating
management and real estate investments both 32 stores in Turkey and the Turkish operations
in Turkey and abroad acquired Ayakkabı Dünyası, of Darty, a UK based electronics retailing firm
a leading player in Turkish footwear retail sector operating stores worldwide.
operating in 15 cities through 39 stores.
April 2013 – Sabancı Holding, one of the leading
November, 2013 – A consortium led by the Turkish conglomerates, purchased a 12% stake
leading discount retailer BIM Birleşik Mağazalar of Carrefour in CarrefourSA for a consideration of
and two of the most active local private equity US$79 million. Following the transaction, Sabancı
firms Gözde Girişim Sermayesi and Turkven Holding became the 51% majority shareholder in
acquired 50% of Ziylan, one of the largest CarrefourSA.
7Transactions in the Turkish retail and
e-commerce sectors
Stake Acquired
# Acquirer Origin Target Area of Business
(%)
Jan-May 2014
1 CarrefourSA Turkey Genpa Marketler (15 stores in Antalya) Food Retailing 100%
2 Inventures Turkey Tazemasa.com E Commerce N/D
3 Kaplan Giyim Turkey Herry Hazır Giyim Apparel Retailing 38%
4 Kazançlı İstanbul Marketleri (KIM) Turkey Denmar Marketleri Food Retailing 100%
5 Levant Capital UAE Panço Giyim Apparel Retailing N/D
6 Naspers South Africa Markafoni E Commerce 29%
7 Private Investors Turkey UCZ Magazacilik Food Retailing 60%
8 Private Investors (Aydin Family) Turkey A101 Food Retailing 18%
Private Investors (Hasan Aslanoba, Alp Saul, Can
9 Turkey Vivense.com E Commerce N/D
Yücaoğlu, Evren Üçok, Gamze Yücaoğlu)
Private Investors (Muharrem Ender Karvar, Numan
10 Turkey Nezih Kitap Specialty Retailing 100%
Lir)
11 Pupa Bilişim Turkey Elmacı Pazarı Electronics Retailing 100%
12 Verimed A.Ş. Turkey Uyum Gıda Food Retailing 23%
2013
1 Altınyıldız Mensucat Turkey Beymen Mağazacılık Department Store 50%
2 Altınyıldız Mensucat Turkey Boyner Büyük Mağazacılık A.Ş. Department Store 30%
3 Aslanoba Capital Turkey Modanisa E Commerce N/D
4 Aslanoba Capital Turkey Buldumbuldum.com E Commerce 20%
5 Aslanoba Capital Turkey OnlineMarket.com.tr E Commerce N/D
6 Aslanoba Capital Turkey Ehil.com E Commerce 94%
7 Aslanoba Capital Turkey Hazinem.com E Commerce N/D
8 Aslanoba Capital Turkey Fit&Color E Commerce 25%
9 Aslanoba Capital Turkey Lilakutu.com E Commerce N/D
Aslanoba Capital and Private Investors (Fabrice
10 Turkey Vivense.com E Commerce N/D
Grinda and Jose Marin)
11 Bancroft Private Equity UK Tatilsepeti.com E Commerce N/D
12 BIM Birleşik Mağazalar; Gözde Girişim; Turkven Turkey Ziylan Group Shoe Retailing 50%
13 Bimeks Turkey Electro World Electronics Retailing 40%
14 Bimeks Bilgi İşlem ve Dış Ticaret A.Ş. Turkey Kesa Turkey Limited (Darty) Electronics Retailing 100%
15 Boyner Büyük Mağazacılık Turkey YKM; YKM Pazarlama Department Store 37%
16 C&J Clark International Limited UK Efa Ticaret ve Pazarlama Ltd. Şti. Shoe Retailing 100%
17 Demsa Group Turkey Emoda Hazir Giyim (Beyazkutu.com) E Commerce 100%
18 Dixons Retail UK Electro World Electronics Retailing 40%
Elektronik Bilgi İletişim Hizmetleri Reklamcılık ve
19 Doğan Müzik Kitap Mağazacılık Pazarlama A.Ş. Turkey E Commerce 100%
Ticaret A.Ş.
20 EBRD, 212 Capital Partners UK Evim.net E Commerce 38%
21 Esas Holding Turkey Ayakkabı Dünyası Shoe Retailing N/D
22 Hubert Burda Media Germany Lidyana.com E Commerce 22%
23 İsmar Marketler Turkey Eko Hipermarketçilik (Reyon Market) Food Retailing 100%
24 Kim Marketler Turkey Efeler Market; Memar Market Food Retailing 100%
25 Landmark Group UAE Park Bravo Apparel Retailing 90%
26 Magrabi Optical Company Ltd. Saudi Arabia Şişli Optik Eyewear Retailing 100%
27 Metro Ticari Turkey Herry Hazır Giyim Apparel Retailing 32%
28 Sabancı Holding Turkey CarrefourSA Food Retailing 12%
29 Şok Ucuzluk Marketleri Turkey Onur Ekspres Mağazacılık Food Retailing 100%
30 Templeton Asset Management USA Şok Marketler Food Retailing 10%
31 Yıldız Holding A.Ş. Turkey Diasa Dia Sabancı Süpermarketleri Ticaret A.Ş. Food Retailing 100%
Source: Deloitte Annual Turkish M&A Review, Deloitte Research
8This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited,
its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this
publication, rendering professional advice or services. Before making any decision or taking any action
that may affect your finances or your business, you should consult a qualified professional adviser. No
entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person
who relies on this publication. Information and data, whether actual or forecast, contained in this
publication is derived from publicly available sources and is not verified by Deloitte Network. Deloitte
Network can not be held responsible for the accuracy and reliability of the information provided in this
publication.
9For more information about this publication contact: Başak Vardar Integrated M&A Services Leader Partner bvardar@deloitte.com + 90 (212) 366 63 71 Özgür Yalta Consumer Business Industry Leader Partner oyalta@deloitte.com + 90 (212) 366 60 77 DRT Kurumsal Finans Danışmanlık Hizmetleri A.Ş. İstanbul Office İzmir Office Çukurova Office Groupama Plaza Punta Plaza 1456 Sok. Günep Panaroma İş Merkezi Reşitpaşa Mah. No:10/1 Kat:12 Reşatbey Mah. Türkkuşu Cad. Eski Büyükdere Cad. No:2 Daire:14 - 15 Bina No:1 B Blok Kat:7 Maslak, İstanbul 34398 Alsancak, İzmir Seyhan Tel: +90 (212) 366 60 00 +90 (232) 464 70 64 +90 (322) 237 11 00 Ankara Office Bursa Office Armada İş Merkezi Zeno Center İş Merkezi A Blok Kat:7 No:8 Odunluk Mah. Kale Cad. Söğütözü, Ankara No:10 d 06510 Nilüfer, Bursa +90 (312) 295 47 00 +90 (224) 324 25 00 www.deloitte.com.tr Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 200,000 professionals are committed to becoming the standard of excellence. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. No entity in the Deloitte network shall be responsible for any loss whatsoever sustained by any person who relies on this communication. © 2014. For information, contact Deloitte Turkey, Member of Deloitte Touche Tohmatsu Limited. 10
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