Tesco swells Turkish business

By Anita Awbi

- Last updated on GMT

Related tags Supermarket Hypermarket Turkey

British grocery giant Tesco has announced expansion plans for
Turkey to double retail space and push out from the core city base
of Ismer, as international competition mounts.

The world's fourth largest supermarket chain said it will open another eight hypermarkets and four smaller stores in Turkey this financial year, extending its present standing of eight Kipa-branded stores.

A further eight more are planned for 2008.

In recent years a number of the world's leading supermarket chains have been investigating the huge potential of the Turkish market, with Carrefour, Migros, A S Watson and Metro all setting up operations there.

Tesco - which made a £2.25bn profit last year - increasingly sees international expansion as the key driver of long-term growth, with Turkey becoming a new strategic area for the firm.

"We opened five stores in 2002, all in Turkey's third city Ismer, that are trading really well. Now we are growing our business outside this area,"​ said Tesco's international corporate affairs director Greg Sage.

"It's a big market - with more than 70 million people there is huge opportunity. But it's a competitive market,"​ he added.

The company intends to head off competition by experimenting with smaller formats too. It will expand its Express convenience offering after the first Ismer-based store was successfully opened in March. The trial will eventually extend to a further 10 stores.

The firm revealed in its end-of-year financial statement that Turkey has delivered very strong performance over the last 12 months. Profits doubled and sales rose sharply.

The three new stores in the smaller cities of Canakkale, Bodrum and Antalya all recorded strong sales performance, encouraging the firm to spread its catchment areas.

The Bodrum store was the first designed by Tesco, and will act as a blueprint for future expansion.

The new stores will carry the Kipa Value brand, which was launched last year and contrains more than 400 products.

Currently Turkey has a growing population of 72m and has what analysts describe as an underdeveloped retail market.

Gross domestic product (GDP) per capita hit €3,332 last year and the grocery market is thought to be worth €36.6bn.

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