The Ready-to-Wear Sector Fell Below Expectations in 2023

Expectations in the Ready-to-Wear Sector in 2023

The CEO of İpekyol Group, Uğur Ayaydın, evaluated the current situation in the sector, emphasizing that this year has fallen short of expectations. He noted that as a result of the government's policies aimed at reducing inflation, household budgets have shifted towards housing and food and beverage expenditures, significantly restricting the share of consumers allocated to ready-to-wear.

Financial Situation and Expenditures

Data on consumption reveals that credit card spending has increased by approximately 50 percent compared to last year, but spending on ready-to-wear has remained at around 40 percent of this increase. This situation indicates a significant loss of market share for the sector. However, it is also observed that growth has been recorded at approximately 8 percentage points above inflation.

Cost Increases in the Sector

Over the last three years, the minimum wage has reached 600 dollars in dollar terms, and fluctuations in the exchange rate have made it difficult for Turkish suppliers to compete on price. Producers have started to shift towards more affordable markets such as Egypt to reduce costs.

Export Performance

In ready-to-wear exports, a 8 percent decrease has been experienced this year. Rising labor costs are the main factor behind this situation. Turkey's ready-to-wear sector has a significant impact on employment, so ongoing government support is expected. The value per kilogram exported symbolizes the sector's success in selling value-added products.

Growth Strategy and Future Goals

İpekyol Group closed the year with a 5 percent real growth in line with its expectations and opened a total of 275 stores nationwide and 55 abroad. The share of online sales in total revenue has reached 15 percent, and they aim to increase this rate to 20 percent.

Store Openings for Next Year

In 2024, the plan is to open ten new stores in Turkey and abroad, with a focus on Middle Eastern markets such as Saudi Arabia, UAE, Kuwait, and Qatar.

Store Rental Increases and Economic Outlook

It is noted that store rental increases have been approximately 10 percentage points above the CPI in the last two years. However, it is stated that this situation is manageable. A revival in demand in the sector is expected with the decline in interest rates beginning in the second half of 2026.