Özgür Tort, CEO of Migros Ticaret A.Ş.: “This acquisition is a clear indicator of our confidence in our sector and our country. Migros will be doubled in four years”

02 March 2017

Özgür Tort, CEO of Migros Ticaret A.Ş.:
“This acquisition is a clear indicator of our confidence in our sector and our country. Migros will be doubled in four years”

The acquisition of 95.5% of Kipa’s shares by Migros which has been the trend setter of modern retail sector in Turkey for the past 63 years, is completed.

Commenting on the acquisition, Migros Ticaret A.Ş.’s CEO Özgür Tort said, “With the participation of Kipa, our net sales area will reach 1.5 million square meters by the end of 2017. We doubled our sales with a double-digit growth in the past six years. Now we target to double our company in 4 years. Migros will accelerate its growth even more in the near future and will continue its investments to grow in parallel with Turkey. 21 years ago, Migros had been the first retailer which crossed the national borders. Today, we acquired the operations of Tesco, an important global retailer, carried out in Turkey by crossing a new threshold. We gained a new dimension for a regional leadership in Turkey and in nearby geography with our original know-how”.

Özgür Tort stated that “In order for the wheels of a growing retail company to run smoothly, the gears of efficiency, product diversity and product availability need to be strong. We invested TL 20 million to set up a fully smart system in our Gebze distribution center to increase our growth rate and to contribute to our productivity. Migros implemented the first system in Turkey to make automatic delivery to stores using the most advanced technology. This new system offers a wider product range and more affordable prices for the customers by simplifying the operation”.

The process for the transfer of 95.5% of the shares of Tesco Kipa Kitle Pazarlama Ticaret Lojistik ve Gıda Sanayi A.Ş. from Tesco Overseas Investments Limited to Migros Ticaret A.Ş. is completed. Kipa shares owned by Tesco Overseas Investments Limited were acquired by Migros with the total share price amount of TL 199 million after deducting financial liabilities and balance sheet adjustments. This investment expresses the growth resolution of Migros in the sector and the confidence of Anadolu Group and BC Partners’, the co-partners of Migros, to the Turkish retail.

As a result of this acquisition, Migros acquired an additional net sales area of 320,000 m2 including 48 hypermarkets, 48 supermarkets, 72 Express markets and increased the number of its stores to 1782 in Turkey across 73 cities and abroad with Ramstores. Thus, Migros has targeted to increase its sales area including the stores abroad, up to approximately 1.5 million m2 by opening new stores in 2017. By integrating Kipa’s 26 shopping malls into its structure, Migros has also become one of Turkey’s biggest shopping mall investors with a total of 30 shopping malls.

Özgür Tort: “We have been growing in parallel with Turkey for 63 years. We will continue to add value to Turkey’s power”

Migros Ticaret A.Ş.’s CEO Özgür Tort stated that Migros has been making long-term plans for 63 years and that these plans are based on Turkey’s outstanding potential. He said that “This potential includes not only positive expectations but also the country’s strength arisen from our togetherness against potential interruptions. As a 63 year-old company, we may declare that Turkey has a sound economic climate. We are talking about an economy which has grown 6 times in the last 40 years by overcoming all kinds of difficulties. It is expected Turkey to be among the first 10 economic forces in the upcoming periods. This acquisition is a clear indicator of our confidence in our sector and our country.”

Özgür Tort said that Migros’ acquisition will benefit the customers, investors, suppliers, employees, formal economy and industry in the retail sector which is an engine for employment and the economy. He added, “We will accelerate Migros’ growth even more. We will continue to make investments that create synergy by ensuring sustainable growth through our focus on efficiency. We will continue to grow in parallel with Turkey and to add value to Turkey’s power.”

“Migros crossed a new threshold with this acquisition. The leadership of Migros gains a new dimension in nearby geography through its original know-how”

Özgür Tort who stated that Migros, founded and grown in Turkey, provides an original know-how in the retail sector, added that “This 63 year-old know-how has grown strength with the contribution of our customers, investors, suppliers and employees. 21 years ago, Migros was the first retailer from Turkey, which crossed the national borders by investing in developing retail markets. Our growth in the developing retail markets at those times in nearby geographies, such as Russia, Kazakhstan, and Macedonia, proceeded from this original know-how. The main principle of success in retail is to be local”.

Özgür Tort pointed out that the best formula in retail is carrying the reinforced local success in domestic country a step forward and then targeting regional leadership. He said that “Migros which is founded in Turkey and spread in nearby geography, today acquired the operations of a global retailer, carried out and reached a certain size in Turkey. This is an important threshold both for Migros and for Turkish retail sector. At current situation, we got from our locally positioning competence to our original business model, Migros gained a new dimension to continue its leadership in Turkey and in nearby geography. That makes Turkish retail to cross an important threshold.

“We increase our sales area growth target fivefold with the new openings in 2017. The system integration process will be completed in the fastest manner possible… By means of the acquirement of Kipa and our organic growth, the total employment of Migros will be more than 45.000 people”

Özgür Tort said that after the acquirement of Kipa’s share, Migros increased its sales area growth target fivefold which was previously planned by opening new stores in 2017. He stated that the company invests in the diversity created by the different shopping habits and styles of consumers and that the company now has bigger targets. Mr. Tort said that the acquisition of Kipa is an initiative focused on a vision for the future and on strategic plans; “This is not Migros’ first acquisition of this size. The integration process will be completed in the fastest manner possible thanks to the customer focus, communication experience, dynamism and technological facilities of both brands. Migros is one of the largest employment centers in the retail sector. According to our growth trend and this year’s new store openings, we aim to grow our family by employing 5,500 new people. One of the most meaningful results of this acquisition is that we will provide a total employment to more than 45,000 people thanks to approximately 6,000 employees who have become a part of our company, in addition to our organic growth in 2017”.

Özgür Tort said that Migros’ 63 years of experience enables it to look at everything with a fresh perspective; “Our strategic targets, i.e. growth, accessing households, efficiency and shopping experience, will help us manage this acquisition process in line with customers’ expectations by basing on a model that enables the multidimensional development. We will further strengthen our competitive and pioneer position in the sector”.

“Retailer’s recipe is to be right next to customers at the right time”

“The recipe for all retailers who take their work seriously is to be right next to customers at the right time and to listen to their voices,” said Özgür Tort. He added that Migros got closer to its customers with various store formats in existing and new provinces; and even brought its services to the customers’ doorsteps with Sanal Market. He stated that “We make sure that our customers can reach us anytime and anywhere; and we make their lives easier. We also make a significant contribution to the family budget throughout Turkey. The ties with our customers grow stronger and our customer loyalty levels increase consequently as we offer alternative solutions through multichannel usage. The best proof of this fact is that the growth rate of Sanal Market is 2-3 times more than the company’s growth rate.”

“Migros will be doubled in four years”

Özgür Tort said that Migros focuses on sustainable growth and continued that “We have been achieving double digit growth rates for last six consecutive years thanks to Migros’ organic growth power. We also almost doubled our sales. This growth was due to new store openings, as well as new customers and increasing sales in existing stores. We expanded our coverage area by reaching 80% of households in Turkey. Our domestic sales grew by approximately 20% in 2016 in comparison with the previous year. Our consolidated sales exceeded TL 11 billion. We keep emphasizing the fact that productivity is the main vein that feeds the retail business. A majority of the approximately 200 stores that we open every year use the sources we generate through operational productivity. We exceeded our targets in 2016 by opening 232 new stores. We increased our targets for 2017 with the Kipa acquisition by investing in customers’ different shopping habits and in the wealth of diversity. This time, we aim to double our size in four years”.

‘Products that automatically know which store to go to’… Investment of TL 20 million from Migros to the Smart Distribution Center…

Özgür Tort explained that, in an effort to enhance Migros’ growth, the company implemented a comprehensive logistics system that contributes to productivity and ensures that customers get more diverse products at the quantities and locations they want. He said that “In order for the wheels of a growing retail company to run smoothly, the gears of efficiency, product diversity and product availability need to be strong. You can ensure this by setting up a strong logistics system in the retail sector. Keeping this in mind, we have transformed our logistics system comprehensively over the years.”

Özgür Tort said that Migros set up a system of alternative distribution centers which give support to stores from other distribution centers within 2 hours, in case the deliveries are prevented due to negative weather or road conditions. Today, Migros guarantees the diversity and availability of products with 22 distribution centers. Mr. Tort also shared the details of the Smart Distribution Center Project, the first of its kind in the food retail sector in Turkey. The Gebze Distribution Center which sends shipments to 40% of the Marmara region became fully automated with an investment of TL 20 million. He added that “Migros implemented the first system to automatically make delivery to stores using the most advanced technologies in Turkey. Products are automatically put on rail systems and loaded onto trucks according to the stores the products will be delivered to. We call them ‘products that automatically know which store to go to’.”

Migros took the first step to optimize its distribution center processes in 2014 and implemented a rail pallet transportation system. In 2016, this advanced smart system was improved and the process was automated whereby the stores’ orders determine product quantities on a unit basis and the products are placed in crates automatically. Özgür Tort said that the system enables the stores to make choices based on their real needs; “The sales of certain products can vary from one store to another. With the new smart system, we have the power to automatically deliver shipments not only in boxes, but also on a piece-by-piece basis. We also have a crating system that provides multi-use instead of delivery with boxes”.

“The formula for the affordable prices by also keeping variety goes through the simplicity of retail. The less you touch the product, the cheaper the price until it reaches the consumer”

Expressing that advanced technology is being used for simplification in Migros, Özgür Tort said, "Simplification means efficiency for the supplier and retailer, reasonable price and plenty of variety for the customer. It is relatively possible to create simplification in a limited number of groups of products. But it is indispensable to have a strong technological infrastructure to capture this simplification in hundreds of thousands of different varieties and size. The less the product is touched until it reaches the consumer, the cheaper the price becomes. Touching the product less, brings a win-win situation for all sides. In the past, it had been touched 12 times before a product reaches to a consumer, and now this figure goes down to 5 in Migros. Now, the goods produced are directly delivered to our distribution center and then, from here to the stores respectively not only in parcel, but also in pieces, and are put directly on our shelves.”

Stating that the system has the feature of optimizing the future orders of the stores according to the previous orders and preparing to the shipment process, Özgür Tort said "In our Gebze Distribution Center, seven thousand parcels are being separated with this system. This intelligent system that allows 200 thousand tons of products to be delivered every day to our store, gives a great speed to our business. In our constantly growing business, we invest in the future and provide our employees with more opportunities to produce more business in a shorter time, and we increase our efficiency. Stating the Migros’ big pleasure of presenting this system used by the world's number of retail giants to the Turkish food retail industry, Özgür Tort said that in the first place this system comes to life in Gebze and would be spread to other distribution centers over time.

“The legend of ‘running on water’ has become reality”

Özgür Tort emphasized the contribution of Migros’ productivity focus to sustainability and stated that Migros has been the first and only representative of the food retail sector in the BIST Sustainability Index for three consecutive years. In addition, Migros became a “Climate Leader” based on the assessment of CDP (Carbon Disclosure Project) in 2016 due to its Combatting Climate Change Plan. Mr. Tort said that “The most advanced practices are being tested in Migros with the aim of minimizing environmental impacts along with operational efficiency. Finally, we hold the patent for a system which cools the store coolers with water rather than gas. Thanks to this system which is the product of Migros’ hard work, the legend of ‘running on water’ has become reality. Thus, we are able to decrease the carbon emission risk from ten thousands of kg per store to almost zero by using water and 100% natural coolant. We will maintain our leadership in the retail sector due to these kind of systems that we implement with our innovative vision and our drive to be a pioneer.”