When we examine Iran’s retail industry carefully, we see that after the regulations the domination of the sector changes from independent and small-scale grocery stores to the structure of organized stores. This is a huge development for the traditional supermarkets which consists on the 99,8% of the sector. This traditional structure affects the distribution channel and pricing.
Iranian Government wants to decrease unrecorded trade. The retail sector can grow average 18% until 2019 and reach in 2020 to 202 billion $. Iran retail sector also offers important opportunities to Turkis brands. With a strong collaboration and a correct distribution channel can play a key role in the retail sector of Iran.
The competitors of the Turkish brands in Iranian market are also other Turkish brands with presence in the country for years. In the last 6 months a lot of Turkish products are being introduced in the market. Also you can observe stores which sell fake Turkish goods.
The biggest opportunity for Turkey is being a Turkish brand, as long as Turkey has a very good approach from the iranian consumer, they are very much trending there. Also the population responds very quickly to innovation and a qualified good product if you keep your strategy away from traditional retail style.
There are some perceptions which keep away the Turkish investors from Iran, especially in ready to wear sector. They are afraid of the current regime and the risks involved. But Iran offers very good incentives and they are open to new brands.
In Iran there are 174 non working days per year. This is a very important fact for retail sector.
Iran needs foreign investments to reach its economical growth target. Within this framework Iran considers the investors from three different perspectives:
- Iran needs a support of 250- 300 billion $ foreign investment to succeed in the economical growth and technology transfer.
- When we think about Iran’s lack of technological infrastructure, the countries with a strong information sector, knowledge and technology will be more successful.
- Foreign investors which can provide local employment have more chances to have the support of the Government.
Iran is a bit different country considering the main players in the world. So, it is necessary for foreign investors to develop their strategy by taking into consideration Iran’s business environment, market structure and culture. The investment strategy should be analised by being careful on taxes, logistics, supply chain management, administration processes and access to technology.
Conexio is a consulting firm in Turkey based in Istanbul that can provide you services and support you in your activities in the region.