“We Shall Grow Through New Brands”

In recent years rising consumer demand for luxury goods has resulted in an increase in the number of luxury stores being opened all over the world. Turkey is one of these countries. Burç Cemiloğlu, the head of Unitim Holding, has come to prominence as being one of the successful names when it comes to bringing to Turkey luxury brands which were not previously here. Last year Cemiloğlu brought Harvey Nichols to Turkey. “Clothing retailing in Turkey is worth $8 billion,” he says. “Luxury products account for $500 million of this. Turkey grows by 5 percent every year but the luxury market grows by 10 percent.”

Burç Cemiloğlu is an entrepreneur who has recently come to prominence in Turkey; firstly with the İmteks textile manufacturer, which he launched in 1988 and which is one of the manufacturers for globally important brands such as Nike, Tommy Hilfiger, Adidas, Marks&Spencer, Debenhams and Zara. In 1998 he decided to go into retailing and after the 2001 crisis he brought the most famous brands in the world to Turkey one after the other. Tommy Hilfiger, Accessorize and G-Star to name but a few. He was the one who managed to persuade Harvey Nichols, one of the most luxurious brands in the world, to come to Turkey in 2006. Within one year Harvey Nichols’ turnover exceeded expectations by 20 percent and reached $48 million. At the same time it was selected as having the best internal design of any store in the world.

Capital spoke with Unitim Holding Board Chairman Burç Cemiloğlu about the future of luxury products in Turkey and the rest of the world, the results of the democratization of luxury and the opportunities that will be created in this field.

In Turkey you are active in the luxury products sector in particular. How big is your target market?
We don’t have any reliable statistical study. But, according to the information we have, the luxury market in Turkey consists of 17,000 households. We can conclude that these 17,000 households represent 30,000 consumers of luxury goods in Turkey. I believe that with Harvey Nichols we are targeting 100,000 people. We don’t regard Harvey Nichols as being solely a luxury brand because we sell many products to different segments. We even have products which sell for YTL 20 at Harvey Nichols.

Which luxury brands will come to Turkey in 2008-2009?
I can’t divulge the names as they are confidential but as far as I know nearly 20 new luxury brands will come to Turkey. We are conducting negotiations with 2-3 of these.

How big is the market? What size will it reach in the future?
The global luxury market is estimated to be worth $220 billion. The biggest luxury market is in Japan. It is followed by the US. The third is in China. Europe is also an important market. Even though it opened its doors after China, India has also become one of the largest markets. Russia and former Soviet companies are expanding rapidly. The consumption of luxury goods is increasing in the oil rich countries of the Middle East. Qatar, Dubai and Kuwait are experiencing a real boom. In Turkey we should take our share of the growing luxury markets in neighbouring countries. According to a forecast by Merrill Lynch, in 2014, China, India and Russia will account for 32 percent of global sales of luxury goods. This means €160 billion.

How do luxury brands see the Turkish market?
The retail clothing market in Turkey is worth $8 billion. Luxury goods account for $500 million of this and are forecast to grow by 10 percent every year. Turkey as a whole is growing by 5 percent a year while the luxury market is growing by 10 percent. At Unitim we have grown by 70 percent over the last two years.

How do you explain this rapid growth?
The economy is continually growing. An important indication of this are the developments in İstanbul in particular and the change in shopping habits. The shopping malls which have been opened in the last three years inevitably attract both foreign and domestic brands and investors. Luxury is no longer just about luxury. In the last 2-3 years we have seen a rapid increase in the number of stores opened by the major luxury brands in developing countries. These countries are headed by China, India and even Turkey. Brands have begin to position themselves more accessibly. Previously it was very difficult to find luxury products.

How has luxury become democratized?
The concept of luxury has changed a lot. I shall give you a very simple example: In their main markets in Europe the luxury brands have just one store. In London there are two Chanel stores. These brands are now applying a very different strategy in the newly developing markets. In China, Chanel is planning 20 stores, Armani 40. Luxury has become more accessible. Louis Vuitton will begin sales through three outlets in Turkey. Their target is to raise this to five. Luxury is expanding rapidly but we need to look at how we are going to expand our own segment of the market.

What do you believe is the right strategy when it comes to luxury?
In Turkey the luxury target market is clear. We should expand this market. What needs to be done in Turkey is to make the shopping malls into destinations. We should take Milan as an example. In Turkey 3-4 percent of retail turnover is from purchases by tourists. In London. Paris and Barcelona it is around 40-50 percent. As long as we do not develop this, it will never be possible to raise brand sales to the desired level.

What are your targets for Unitim over the next five years?
Our plan is to grow by an average of 30 percent a year not just in Turkey but in all of the markets in which we are active. Another important target is corporate institutionalization.

 “We Shall Reach Ytl 420 Million In 2008”
We Have Increased Profitability By 98 Percent”
In 2007 our retail turnover was YTL 200 million and in production our turnover at İmteks was YTL 100 million. We increased our consolidated sales by 74 percent and our net profitability by 98 percent. Our target for consolidated turnover in 2008 is to grow by 46 percent. Our target for turnover in 2008 is YTL 420 million.

“We Are Nike’s Best Producer”
İmteks was chosen as the firm with the best performance and the one which gave the greatest importance to human resources out of all of Nike’s producers in Europe and Northern Africa. We have received numerous awards. Our production is very advanced. We have come a long way. Our factory in Düzce produces almost eight million items. It has a turnover of $70 million.

“We Shall Have 260 Stores In 2008”
After we entered retailing, two very important crises occurred in Turkey. During the crisis everybody put things on hold for 1-2 years. In fact, we made our big move in 2002. We did not pause at all during the crisis because we trusted our brands. Our real growth occurred after 2001. We have nearly 200 stores and 44 corner outlets. In 260 we shall increase the number of our stores to 260.

Özlem Aydın
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