This week, Turkish hard discounter BIM’s CFO Haluk Dortluoglu said he saw great potential for rolling out its no-frills concept to other markets in the region.
This week, Turkish hard discounter BIM’s CFO Haluk Dortluoglu said he saw great potential for rolling out its no-frills concept to other markets in the region. Dortluoglu said if its two-year pilot in Morocco was successful, any Middle Eastern or North African market - Saudi Arabia especially - could be a candidate for expansion.
BIM launched in Morocco in spring last year, its first market outside Turkey. The Moroccan venture is not yet profitable, and BIM is still getting to grips with Moroccan tastes, according to the Financial Times. However, if it can crack the market, BIM could emerge to be a major discount store player in the region.
In its home market it has proven to be massively popular. Modelled on the Aldi operating model by former Aldi Nord senior management, it has seen virtually unprecedented growth, with its store network growing from two stores in 1995 to 2,665 in March.
In general, BIM has benefited from the economic conditions over the past decade and a half, which have favoured discount stores. In addition, the lack of any established rivals, such as Aldi or Lidl, has meant that BIM has been able to secure leadership in the sector. Moreover, its continuing rapid growth means that, according to Planet Retail forecasts, it should overtake Migros Ticaret to become the largest retailer in Turkey as a whole by 2011.
In its home market, the retailer is still able to grow by more than 300 new stores annually. However, competition is becoming tougher, with discount store rivals such as Migros Ticaret’s SOK and Carrefour’s Dia also expanding.
In addition, seeing the success of BIM, a number of other local discount players have emerged, each with their own ambitious store opening plans. A101, for instance, only opened for business in 2008 but already has more than 500 stores.
By BIM’s own admission, all of this competition is exerting increasing pressure, which is understood to mean the forcing down of customer traffic and basket sizes and the erosion of margins.
With this in mind, BIM’s move overseas is a way of safeguarding continued strong growth in the future. If BIM can be a success in Morocco and then expand across the Middle East and North Africa, it could become a regional powerhouse - establishing a presence in markets that discount store rivals have so far ignored.
Robert Gregory, Global Research Director, Planet Retail. For more information contact us on:
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