Turkey: A Robust Economy Ripe For Luxury Growth


Fflur Roberts | July 01, 2014

Increasing financial independence amongst women is to drive a luxury goods boom, reveals Fflur Roberts, head of luxury goods at Euromonitor International

Modern Istanbul skyline

Turkey continues to have one of the most robust economies in Europe, with one of the fastest growing luxury goods markets in the world. In 2013, current value growth was faster than in the previous year, due to the overall positive economic conditions and new luxury shopping malls and mono-brand store openings, according to Euromonitor.

Favourable factors such as increases in disposable incomes, decreasing unemployment and a rising middle-class all positively impacted consumers’ spending habits in 2013 in the retail market, including luxury goods. In 2013, the Turkish luxury goods market was worth an estimated $2.9 billion, up 12.3% on 2012. The size of the market increased by 37.4% between 2008 and 2012, and is expected to reach $5.4 billion by 2018 (Euromonitor Passport).

New luxury bars, restaurants and hotels and the large number of tourists from the Middle East and North Africa also benefited luxury goods in 2013. Moreover, Turkish men began to invest in their looks, from skin care to designer apparel; this was another factor increasing demand in several luxury goods categories.

“ Gross domestic product rose from $230bn in 2002 to $800bn in 2013 ”

Local Economy

Until 2013, Turkey had enjoyed a long period of economic stability and growth, with per capita income doubling and the stock market returning 900% in local currency terms in a decade. Gross domestic product rose from $230bn in 2002 to $800bn in 2013.

Euromonitor International estimates that real GDP will increase by an average of 4% per annum by 2018, and unemployment is expected to reduce to 9%. Turkey’s economy is expected to grow by 4% in 2013, in line with government forecasts, due to flexible monetary policies and a recovery in domestic demand.

More recently – amid political instability and a sharp fall in share prices – the country has become associated with volatility and uncertainty (Forbes). Yet prospects for the luxury market remain positive, with increasing local wealth and international interest in both Istanbul and parts of Turkey’s pristine coastlines.

“ Turkey was the 6th most visited country in the world in 2013, attracting 37.8 million tourists ”

The tourism market is booming, as Istanbul firmly establishes itself as a global capital city. Turkey was the 6th most visited country in the world in 2013, attracting 37.8 million tourists – ahead of Germany, the United Kingdom, Russia and Thailand. International arrivals grew by 5.9% between 2012 and 2013, attracting $27,997 million in tourism receipts (UNWTO).

Shangri-La unveiled a 186-room hotel overlooking the Bosphorus in mid-2013. Raffles is set to open its 181-room offering in September 2014, featuring indoor and outdoor swimming pools, a helipad, and a signature Raffles Spa. The 118-room St. Regis Istanbul is set to open in mid-October 2014, nestled in the heart of Nisantasi.

In Nisantasi district, one of Istanbul’s premiere shopping districts, there are many internationally and locally prestigious brands, such as Chanel, Christian Louboutin and Zadig & Voltaire, as well as Beymen and Vakko, the two leading department stores in Turkey.

Shangri-La, Istanbul

Another popular shopping area, Bagdat Caddesi, is a wide, tree-lined boulevard on the Anatolian side of Istanbul, featuring global brands, such as Longchamp, Michael Kors, Louis Vuitton, Prada and Burberry, as well as local Turkish brands including Vakko and Beymen.

Fashion weeks and shopping festivals are also helping Turkey to become an important hub for foreign shoppers, encouraging tourists to purchase luxury accessories from Turkey. The market indirectly benefited from the “Arab Spring”, attracting many wealthy consumers from Tunisia, Egypt and Syria.

The struggle of EU countries such as Greece and Spain, as well as affordable prices for package tours and early reservations in Turkey, also led tourists to consider this as an alternative tourist destination. Moreover, sales of luxury goods benefited from wealthy Russian tourists, who prefer high-quality products and drink in high volumes in the southern part of Turkey.

According to the Boston Consulting Group, Istanbul ranked 10th in 2012 in a list of growth in luxury spending. Indeed, Istanbul is the heart of the economy of a country where shopping malls have increased at a rate of 400 percent in the past 10 years. Luxury spending growth is expected to climb by 15% every year for the next five years.

“ Turkey is home to the 11th largest population of Ultra High Net Worth individuals in Europe ”


The wealth level and the total number of ultra-rich dropped in Turkey in 2013, when global wealth witnessed a remarkable rise, according to a new study by the Boston Consulting Group. However, the report also draws attention to the substantial overall wealth boost that Turkish households have recorded over five years.

The total assets of individuals in Turkey amounted to around 840 billion Turkish Liras in 2013, up from around 500 billion liras in 2008. Income per capita nearly tripled between 2002 and 2011 (Hurriyet).

Turkey was home to the 11th largest population of Ultra High Net Worth individuals in Europe in 2013, according to Wealth-X. 830 individuals with a net worth above $30 million, who control over $95 billion. This population grew by 3.8% in 2013, as the UHNW populations of Germany, France, Italy, Spain and Russia declined.

Turkey has more UHNW indviduals than the U.A.E, South Africa, Indonesia, Nigeria and Malaysia. Yet the 37 billionaires living in Istanbul are the poorest among those in the top 10 billionaire cities. The average billionaire in the only city sitting across two continents is worth $1.7 billion, two times less than the average fortune of a billionaire living in London (Forbes).

“ Luxury accessories have become a must-have for Turkish women ”

Local Luxury Market

Growth in sales of luxury goods continues to attract new brands to Turkey. Major international luxury brands such as Prada, Hermès, Louis Vuitton, Gucci, Burberry, Christian Louboutin, Tod’s, Ralph Lauren and Armani each operate two mono-brand stores in Istanbul, whilst Ermenegildo Zegna and Chanel have three stores each in the capital.

Luxury players increased their focus on new media channels to communicate with consumers. The most popular brands increasingly used internet social networks such as Facebook to develop brand recognition, but also to support new launches.

In designer apparel, Gucci, Armani, Ermenegildo Zegna, Dolce & Gabbana, Valentino and Hugo Boss are the most popular brands due to their high brand awareness. Whilst there is strong demand for established brands, Turkish consumers are also very close followers of up-and-coming designers and styles.

There is also a tendency towards affordable luxury, such as Tory Burch and DKNY, as well as affordable lines such as Marc by Marc Jacobs and See by Chloé. Chanel and Gucci have started to produce affordable lines, which supported their growth in Turkey.

Istanbul’s Bosphorous River

In luxury jewellery, the sales performance of domestic luxury jewellery brands such as Molu, Sevan Bicakci and Gilan proved better than that of international brands, due to their wide national coverage, the offer of high-quality products at fair prices and the loyal consumer base. Cartier, Bvlgari and Tiffany & Co are the most popular international brands in luxury jewellery.

The most coveted international timepiece brands are Rolex, Omega and Patek Philippe, due to their strong brand image and long existence in the Turkish market. The leading luxury brands usually sponsor high-profile events such as golf tournaments and sailing competitions, to reach their target customers directly.

The most popular fine wines/champagne and spirits brands in Turkey are Chivas Regal, Moët & Chandon, Dom Pérignon, Jonny Walker blue, red and black label, Remy Martin XO, Hennessey Macallan and Petrus, due to strong brand awareness and wide distribution.

Due to new alcohol regulation the advertising of alcoholic drinks was banned from June 2013, as well as sponsorship of sports/arts events, so sponsorship is no longer seen as a marketing tool.

“ Advertising of alcoholic drinks was banned from June 2013 ”


Changing demographics, such as higher levels of education (leading to higher incomes), and increasing female employment, are factors that are increasing demand for luxury goods. Turkey continues to see strong urbanisation, with the urban population reaching 74% in 2012, leading to changing cultural attitudes and increased brand awareness.

As disposable incomes rise, Turkish consumers are increasingly purchasing more premium products. A number of categories benefited from this trend, increasing both volume and value sales. Many new luxury brands entered the market due to the positive economic environment, increasing demand over the 2012-2013.

It is expected that Turkish consumers who do not have the financial power to purchase large luxury products will prefer to buy affordable luxury products to enter into the world of luxury. Turkey’s large young population, strong media coverage of celebrities and ongoing urbanisation are expected to further fuel consumers’ aspirational attitudes.

“ Turkish consumers are increasingly purchasing more premium products ”

Turkey is expected to record one of the highest percentage increases in terms of the working female population. As the levels of education of women increase in Turkey, they are able to find better jobs; this brings financial independence and translates into spending on more luxury purchases, such as luxury accessories and designer apparel.

Luxury accessories have become a must-have for Turkish women, with luxury bags and footwear considered the most important accessories for women, as they are a symbol of status and economic power.

Designer apparel, luxury accessories, women’s luxury jewellery, women’s luxury timepieces and super-premium beauty and personal care are categories which will continue to benefit from the increasing financial independence of Turkish women. Supported by ongoing increases in single-person households, as more women begin to prioritise career over family.

Istanbul’s Zorlu Centre, where Raffles is set to open

In general there has been a rise in the number of high-income businesspeople in Turkey, with luxury writing instruments and stationery being popular gifts for this group during religious festivals, birthdays and New Year, increasing sales of luxury writing instruments by 12% in current value terms in 2013.

Montblanc, Marlen, Visconti, Parker, Cross, Waterman, ST Dupont and Montegrappa are the most popular brands in luxury writing instruments and stationery benefiting from a long presence in the country, strong brand awareness and a strong image of quality. These brands are sold through local distribution channels, and therefore have warranty and spare part availability.

“ In general there has been a rise in the number of high-income businesspeople in Turkey ”

The Future

Economic growth lost momentum in the course of 2013, as capital market tensions pushed interest rates up. Credit and private demand decelerated. Export growth fell, notably due to rapidly declining gold sales.

Political tensions have dented confidence, provoking capital outflows and forcing the central bank to raise interest rates sharply in early 2014. Growth is projected to remain subdued through mid-2015, while the current account deficit will remain very high (OECD).

Turkey’s economy is expected to expand by 2.3% in 2014 according to the International Monetary Fund, which reduced its previous forecast of 3.5% amid a sharp slowdown in private consumption, driven by tighter monetary policies, a significant lira depreciation and higher interest rates (Nasdaq).

“ Turkey’s economy is expected to expand by 2.3% in 2014 ”

Despite overall economic pessimism, luxury goods is expected to see a dynamic constant value performance, due to ongoing economic recovery and rising disposable incomes, as well as the development of luxury retailing and the increasing number of high-income tourists.

Affordable luxury products in Turkey, such as Tory Burch and Michael Kors, are expected to make efforts to penetrate the middle-income population. Even middle to low-income consumers are expected to have one piece of luxury apparel, depending on the need and occasion.

With the opening of new luxury shopping malls, several international luxury brands are expected to open more stores, benefiting luxury goods over the coming years. Michael Kors is planning open its third store by 2014, and Vertu announced the opening of a Vertu boutique in Turkey by the end of 2014.

Moreover, luxury brands will increasingly be looking for wise strategies to expand their products without harming their perception and image.

All data (unless otherwise credited) has been taken from Euromonitor’s Luxury Goods in Turkey report, released in May 2014

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