From all the countries neighboring with Turkey, Ukraine has the best prospects – interview with CEO LACOSTE and SuperStep Can Ugurlucan
Can Ugurlucan – CEO of Retek, which develops the LACOSTE and SuperStep brands in Ukraine, a Board member of the Union of Industrialists and Entrepreneurs of Turkey and Ukraine “TUSIB” said in an interview that in Turkey it is easier to conduct business, there are fewer bureaucratic procedures, and more retail properties for retailers on the market. The company “Retek” believes in the prospects of the Ukrainian market, so “Retek” expands its presence on it
What segments of the Ukrainian market attract representatives of Turkish retail?
There are many segments on the Ukrainian market that attract Turkish business. For us it’s LACOSTE and SuperStep – clothes, shoes and accessories. Although the purchasing power still leaves much to be desired, consumer approach is improving – after the political and economic cataclysms of recent years, people are finally starting to actively purchase again. Accordingly, the market becomes even more attractive for investments and development of certain sectors. Retail has good potential, and it’s not just a segment of clothes and shoes. It can be predicted that the cooperation of economies will expand – and this is a very positive dynamic.
What is the difference between doing business in Ukraine and in Turkey?
All markets have their own dynamics. For us as a representative of a global corporation that operates in 16 countries, the difference in markets plays a big role. We comprehensively assess existing and potential markets for activities, both when planning entering a particular market, and when developing programs for them. Such analysis provides for economic, political and social realities.
Of course, Ukraine has its own peculiarities. Unfortunately, the purchasing power is still lower than in other countries of our activity. However, own production is extremely limited, so the dependence on imports is high. Prices are rising because of the devaluation of the national currency.
As for consumer behavior, in this case our countries are similar.
What are the features of the entrance the shopping malls and the conditions for renting commercial real estate?
In terms of shopping and entertainment centers, Turkey is more developed: there are many existing centers, as well as objects under construction. Accordingly, the tenants have the opportunity to choose the best projects. In Ukraine, this is more difficult: finding an object that is suitable for all parameters is quite difficult. We represent brands that are very demanding in terms of locations for their stores. Respectively, for us it is always a challenge – to find a really good place: the location is also important, the quality of construction and design and qualified professional management. When we find an object that meets all these criteria, we are always glad to cooperate.
Is there a difference in the speed of decision making?
As already mentioned, the markets have their own dynamics. In general, doing business in Ukraine and in Turkey is different. First, there are certain procedures – a certain sequence of steps – and this is square for any country and any business. But in Turkey, for example, the number of such steps will be less than in Ukraine. Accordingly, the time from the decision to its implementation in Turkey will be shorter. Not because of different speed of decision-making – in Ukraine they too are taken quite quickly. But here your decision must pass a large number of various instances, because in Ukraine everything is strongly regulated. And although the positive dynamics are observed and bureaucratic obstacles are getting smaller, work on optimizing processes and facilitating the life of business is still needed a lot – this should be a priority for the government and local authorities.
The regulation and old bureaucracy regime scare away investors, therefore both representatives of foreign companies already operating on the market, and potential investors are waiting for the reform of the old system.
Are the taxation systems different?
Although VAT in Turkey is lower, in general, taxes in the country are higher than in Ukraine. At the same time, the tax rate for local production is low, but for imported goods, on the contrary, it is very significant.
In case of Ukraine, the main problem is not with the size of the tax rate, but with the system for collecting these taxes – the country does not have a normally functioning tax system that is convenient for taxpayers. In Turkey, there is such a system, and this greatly simplifies the life of business. In this regard, I would point out the development of such a system as a priority area for attracting foreign capital to Ukraine. In addition, it will benefit both local businesses and the state everyone will benefit from this.
What problems do you face in Ukraine and what do you think are the ways to solve them?
The most serious problem for us as a retailer is the “black” and “gray” markets. This applies to the fakes of our premium brands, as well as the original products that were illegally brought into the country. We, as business representatives, suffer from this. But the key here is that the economy suffers – illegal market players do not pay taxes, so the state receives less than a huge portion of the income. First of all, the state should be interested in combating “black” and “gray imports” – this will help to restore the economy as soon as possible. In addition, this encourages legal business – that with 100% “white” activity and payment of taxes fully provides the functioning of the country’s economy.
Legislation needs to be changed. But the dialogue between the authorities and business representatives is also important – regular sectoral meetings are important for the understanding sectoral problems and for joint search of solutions.
What makes the Ukrainian market interesting for Turkish companies?
First, the size of the market is more than 40 million of people. Secondly, the demographic portrait – the population of Ukraine on the average is quite young. Accordingly, it creates a great development potential and the ability to grow its consumer. Third, geographically, Ukraine is located close to Turkey, and this significantly simplifies logistics. Fourth, the market shows a positive dynamics of growth – the crisis “bottom” is over, and a gradual recovery begins.
So from all the countries neighboring with Turkey, Ukraine has the best prospects – we understand this and therefore increase our presence here.
What are your company’s plans for expansion and development in Ukraine?
We always – even at the peak of the crisis – believed in this country, so we did not reduce investments, but on the contrary – increased. Since my arrival in Ukraine at the beginning of a difficult year for the country in 2014, we have opened more stores than there were in all the years before. We launched a new shoe multi brand – SuperStep. It is already clear that our faith and economic instinct justified themselves.
Over the past 2 weeks we have opened two LACOSTE stores – in Kiev Lavina Mall and the first boutique of the brand in Odessa, within three weeks we will open a new big SuperStep store in Lavina. The way of discoveries continues – there will be new LACOSTE, and active development of SuperStep as networks across the country – the brand will actively open in the regions.