At the end of this month German home shopping giant Otto Group will take its first steps into Turkey by testing newly acquired private shopping site Limango there.
Otto bought the site, which allows members to buy branded children’s goods for up to 70 per cent off the recommended retail price, in January. The site presently only operates in Germany, where it is popular among young families, but will offer more fashion for its Turkish launch with brands including Adidas and Mandarina Duck.
Otto believes Turkey offers a huge opportunity for online. It has a young population – 57 per cent are aged between 15 and 34 – and Otto has hired Turkish E-Commerce Association chair Gülfem Toygar to run the Turkish venture.
Managing director of Limango Germany Sven van den Bergh says: “Limango offers Turkish manufacturers in the entire fashion segment access to a customer base with purchasing power. By entering Turkey, we are able to transfer our recipe for success to a young and attractive market.”
However, Murat Suner, partner in Turkish retail consultancy firm Eurosis, warns that online is still very much in its infancy in the country. “It may be a good way of testing the market, but online is still significantly lower here and in early stages,” he says.
Suner adds that testing the online market “will not be easy”.
MHE chairman Edward Whitefield points out that computer ownership is still lower than one might expect in Europe. “Turkish retail is having a very tough time at the moment. The Turkish lira has fallen quite sharply,” he says.
Other foreign retailers have left the country after failing to secure a strong foothold in the market. River Island, for example, was hit by the faltering economy and the sharp rise in business rates there.
Suner says: “There has been a 60 per cent decrease in demand for some brands compared with a year ago.” He adds that there is also a battle going on between retailers and landlords over rents, as many retailers in Turkey are failing to meet payments in
Whitefield says that if Otto enters Turkey with a long-term view, and without the same overheads as bricks-and-mortar retailers, it could succeed. But he cautions: “If the short-term objective is for profit, they are investing in hope over reality.”