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MIGROS CHAIN BOLDLY ENTERS WHERE OTHERS FEAR TO TREAD

By Curt Hazlett

When it comes to emerging markets, many retailers are content to dip a cautious toe into the water — or they keep well clear if things look too risky. Not Turkey’s Migros Türk Ticaret. The intrepid, Istanbul-based supermarket chain just dives right in.

From its start 50 years ago, Migros, part of the Koç Group industrial empire, has become one of the most fearless retail companies in the world. It operates some 500 stores in Turkey, ranging from groceries to hypermarkets, and 61 Ramstore hypermarkets throughout the emerging markets of Bulgaria, Kazakhstan, Macedonia and Russia.

Migros’ strategy is to be an early mover in such markets, sources say. “They are the retailer that’s pretty much on the leading edge,” said Fari F. Farra, a principal at the New York City office of international consulting firm A.T. Kearney. “It’s one of the ones that’s entering most of the risky markets. They set up an office in Iraq two years ago, and they set up some shops in Iran. They are in Afghanistan. They are anticipating these becoming larger markets over the next few years.”

Indeed, Migros took the lead in developing hypermarkets in the former Soviet Union. It opened its first Ramstore, in Azerbaijan, in 1996, and then moved into Russia. As of last year the company operated 64 Ramstores, including 49 in Russia.

Such risk-taking has produced a big payoff for Koç Group Chairman Rahmi Koç. The family of the 75-year-old Koç, a graduate of Johns Hopkins University, is worth an estimated $5 billion, making it Turkey’s wealthiest.

Migros is one of many Turkish companies experiencing robust growth. Having shaken off a financial crisis in 2001, the Turkish economy is now at its healthiest in years, with gross domestic product growing about 8 percent annually in recent years.

All that growth has generated attention overseas. Newspapers in the United States as well as Turkey have written about Wal-Mart’s holding talks with Migros, possibly about a joint venture, though neither company will confirm that. Meanwhile, Migros is sticking with its aggressive plan to spend $100 million a year on new stores for at least the next few years.