Having posted 37% growth in revenue between 2015 and 2017, as well as opening an average of three stores per day during that period, it's no wonder that Turkish discounter Şok Marketler Ticaret A.Ş. is talked of in some circles as 'Europe's fastest-growing retailer'.
This week, Şok, as it is known, announced its intention to launch an IPO and to trade on Borsa Istanbul, the main Turkish stock exchange.
Trading of the share is expected to commence in May 2018, subject to the approval of Turkey's Capital Markets Board and Borsa Istanbul.
The IPO is expected to be valued at around 2.6 billion Turkish lira (around €500 million), with the number of ordinary shares to be issued and any sell down of shares by existing shareholders will be determined at a later stage. The proceeds will be used to repay all current financial indebtedness, the company said.
Latest Chapter
It marks the latest development in the story of a retailer that has been able to capitalise on an increase in household expenditure and a limited penetration of modern retail in Turkey.
Founded in 1995, and currently owned by conglomerate Yıldız Holding, Şok (pronounced 'shock') operated 5,100 stores across Turkey as of the end of 2017, as well as operating 24 warehouses.
It employs more than 24,000 personnel, making it one of Turkey's biggest employers, and posted revenue of TL 9.5 billion in 2017.
Where Şok has really been able to drive growth, however, is with its positioning.
A discounter in the traditional sense, Şok seeks to match or beat competitors prices with a series of eye-catching promotions - its current campaign, 'Yeter de artar' has been running since last year, and sees shoppers eyes 'light up' when they see the deals available in store.
It has a presence in every Turkish province, unlike many of its competitors, with a range of around 1,500 SKUs in store, largely comprised of private label goods.
As Turkey's population has grown - it is expected to exceed 84 million by 2023, and to reach 98 million by 2050 - Şok has been able to capitalise on increased urbanisation and a rise in household expenditure (+5.8% per year between 2010 and 2016), as well as appealing to younger consumers with a higher propensity to spend.
The grocery retail market in Turkey continues to be under-developed, with modern grocery penetration of 40%, offering further growth potential for the business.
Revenue Growth
Commenting on its IPO, Uğur Demirel, CEO of Şok said, “Since 2015, our revenue has grown from TL 5.072 million to TL 9.512 million by around 88% and gross profit from TL 911 million to TL 2.034 million by about 123% and we are focused on continuing this trend by growing our footprint, increasing average basket size and boosting like-for-like sales across all of our stores."
Demirel added that Borsa Istanbul is a "natural fit" for Şok's listing, and one that "will give a wide range of both domestic and international investors access to our excellent growth story.
"The listing will enable us to reduce the relatively expensive leverage we accumulated in a number of major acquisitions, freeing up a significant amount of cash previously spent on interest payments, and paving the way for continued strong growth in the years to come."
Expect to hear a lot more about Şok, and Turkish retail in general, in the years to come.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine
