Turkey has been one of the priority markets of foreign investors for the last 10 years with its young and dynamic population and its performance in retail sector. We observe that the sector has moved away from this position over the past two years. The difficulty of competition with Turkish brands leads to the exit of foreign retailers from the Turkish market.  We see that there are usually two reasons for the decisions of foreign brands to leave Turkey. First of all, brands that cannot reach the capacity to produce in Turkey cannot compete with local brands. In the understanding of Fast fashion, local stores renew their storefronts in 15 days, while customs processes of imported goods do not allow foreign brands to renew products at the same speed. Second, the fact that customs duty loads increase costs, fixed costs along with rental costs prevent profitability damages the competitiveness of foreign brands. 

As we assess opportunities and threats in the retail sector, we will analyze the sector for all traditional, organized, food and non-food categories. Although there are differences in food and non-food trends in light of economic developments, the sector will be evaluated by basic common parameters such as consumer trends, profitability and growth.

Opportunities

* The retail sector is shaped according to the behavior of Generation Y and Z, the generations that best understand, direct, manage and use technology. Effective use of the possibilities of technology to reach the consumer and improve the experience while there is still time seems to be the most important opportunity in front of the sector.

* The era of great opportunities in E-commerce continues. The fact that the number of internet consumers is still at a low level indicates that there is a very large potential customer base to be reached.

* Investments in e-commerce also create an opportunity for retailers to reduce their operational costs.

* Configuring customer-specific services, providing a “perfect shopping experience” for each customer entering a physical or virtual store is still an opportunity that has not been fully evaluated in the retail sector.

* When the customer enters high discount markets, he draws his expectations to the price level. It focuses on price, not Service. Despite this, getting a quality and special service is an important opportunity to increase customer loyalty.

* It is very important to create employee loyalty to increase customer loyalty. In the retail sector, where employee circulation is quite high, all employee investments have an opportunity for the future.

* In response to skilled labor and circulation problems, population demographics ensure that the labor force pool is sufficient.

• In recent years, when the sector has begun to question the concept of efficiency more seriously, it is important to enter into a trend of increasing the chances of competition in Featured Products and services, rather than an aggressive growth strategy.

* It is an important opportunity for the sector to turn the work aimed at increasing the efficiency of square meters and baskets into a benefit in all categories.

* Not being in all shopping malls, but being in the right location and correctly configured shopping malls is an important opportunity for long-term investments.

* The reputation of Turkish brands abroad is very high, especially in the surrounding markets. Opening up to new markets with the strength of this reputation is still an important opportunity for the sector.

* Turkey's geographical location allows consumers in close geography to have easy access to shopping opportunities in Turkey.

* It also brings opportunities for retailers who are gaining momentum in their branding work to take an example and make brand investments.

* Food retailers follow the more conscious consumer, creating solutions such as healthy products, small packages that can be consumed quickly. In this way, the daily exchange of employees can be accelerated.

* Thanks to Private Label applications implemented with the right strategy, consumer confidence in this area has increased, Private Label products create a high profitability opportunity for retailers.

* Turkality supports 50 percent of the store rents, marketing and promotion expenses of Turkish brands that open stores abroad also create opportunities for industry players.

Threats

• Due to rising inflation rates, high interest rates applied by banks, fluctuating exchange rates and a high current account deficit, the possibility of the state pursuing a policy to reduce consumption and increase savings is the most important threats to the sector.

* Deterioration in consumer confidence, security concerns, and a constant environment of political and geopolitical stress affect the sector.

 * Losses in the tourism sector continue to negatively affect the retail sector.

* The trend of being in the right location makes it more difficult and costly for good retailers to access a good location.

* Although there is an increase in turnover, profitability rates fall every year. High competitive conditions have an effect on this. It's not easy to project cost increases to the customer.  This has a negative impact on profitability in general.

* There is still interest in the sector, but the foreign investor does not have the old motivation. The fact that some of the foreign investors have left the Turkish market jeopardizes the investment opportunities that are likely to turn to Turkey in the future.

* High and foreign currency-related external debt of the organized retail sector is among the threats.

* The rise of e-commerce poses a risk for retailers who are lagging in entering this area.

• The retail sector is still the most important source of human occupation, retailing is not considered despite being a defined, high school and Post-employee development and training opportunities to the growth of the sector is a very important obstacle in front of it.

* Geopolitical tensions can damage the image of’ Turkish goods'.

* Shopping from abroad has started to become widespread in Turkey. E-commerce users can supply products at very affordable prices, especially from China. The withdrawal of the 75 euro limit on purchases made abroad last year from the 30 euro limit has an effect on preventing unfair competition, but the increase in foreign purchases for the domestic Sunday is a threat.