Ahmet Sönmez spells out

Setur Duty Free’s global & local ambitions

The most beautiful sea hasn’t been crossed yet. The most beautiful child hasn’t grown up yet. Our most beautiful days we haven’t seen yet. And the most beautiful words I wanted to tell you I haven’t said yet…

-Nazım Hikmet

Setur CEO Ahmet Sönmez is leading Setur Duty Free’s drive to become a top 25 travel retailer within just five years. To deliver on that mission, the company is eyeing merger & acquisition opportunities as well as strong organic growth, he told Martin Moodie in this wide-ranging and candid interview.

Like all travel retail companies, Setur Duty Free has faced a huge challenge from the COVID-19 pandemic over the past year. But Setur CEO Ahmet Sönmez believes that the company is in a uniquely strong position to not only weather the storm but to significantly enhance its presence in both scale and in qualitative terms.

“We at Setur have a strong foundation today and we are ambitious to grow both locally and globally,” he says. “Therefore, we are actively monitoring the travel retail market and seeking opportunities for growth. We are willing to make investments and are open to various different models.”

Sönmez says the company’s priority expansion targets outside Turkey are Europe, the Middle East, North Africa and Turkic republics. “However, we are open to attractive operations beyond these regions,” he adds.

“We aim to be in the world’s top 25 travel retailers’ list within the next five years”

– Setur CEO Ahmet Sönmez

Certainly, Setur is emerging from this crisis more upbeat and confident than many of its peers. In an interview earlier this year with The Moodie Davitt Report, Sönmez said, “The crisis atmosphere, experienced across the world as well as in our country throughout the pandemic, was a period which enabled us to generate fresh ideas and new ways of doing business.”

"Being a Koç Group company and therefore having a solid financial foundation has given us a boost in terms of growing our business – and that is an advantage which we are determined to use"

Pushed for more detail, Sönmez says: “The travel retail sector is a part of the tourism journey and has been downsized as a result of the pandemic in line with what has happened in the tourism sector. In such a catastrophic environment, companies had to learn and adapt in an agile way in order keep their business running as well as seeking new opportunities.”

Such opportunities can lie in existing business – for example, by expanding the product assortment into new categories such as health and wellness products – or by offering digital solutions in-store for contactless and safe shopping, he points out. Along with mergers & acquisitions, Setur Duty Free is also focusing on tender opportunities across multiple markets.

“As I mentioned, our vision is to grow both locally and globally. To achieve this, we have different strategies in local and global markets,” Sönmez continues. “For the local market, Setur is the pioneer in Turkey – we were the first duty free operator in the country and number one in terms of market coverage. Therefore landlords, airport operators and competitors know us and the power of the group within which we are operating. At this point, we are determining the locations for possible future growth.

“For the global market, our first priority is to create a positive image of Setur and Koç Group and underline our ambitions by building a strong communication channel. We have also created the new role of Strategic Planning Director within our organisation and we are actively tracking open and upcoming tenders. We want to share our experience and expertise in terms of a digital and highly analytical approach as well as fostering strong relations with our suppliers and future partners and create what we call ‘value for all’.

Setur Duty Free benefits from the immense and diversified strength of Koç Holding and the parent group is deeply committed to the travel retail sector, Sönmez says. “As Koç Holding’s main operation is based in Turkey, growing in global markets and creating value for Turkey is welcomed and we have our shareholders’ full support in terms of growth and new investments,” he points out.

Digital acceleration

Within Setur Duty Free’s core Turkish business and beyond, Sönmez says that several key dynamics will shape growth. “For mid-term recovery, and as the whole world is going through the same situation, the speed of vaccination is critical,” he says. “We are following the current regulations for pandemic precautions and for the future we are looking forward to a normalisation when vaccination reaches a significant level.

“To meet our customers’ shifting expectations, we have to make the shopping experience in our stores safe and fast by providing digital and online solutions”

“As of today, we are totally focused on giving the best and safest service to our customer,” Sönmez continues. “Digitalisation is the key to enable the fastest and most contactless shopping experience. We are and will be focused on digitalisation both from a safety perspective and to enrich the customer experience.

“On the other hand, being a Koç Group company and therefore having a solid financial foundation has given us a boost in terms of growing our business – and that is an advantage which we are determined to use. We have prepared a grounded long-term plan and we are monitoring all potential locations and projects in Turkey and elsewhere closely.”

Setur Duty Free and its team are better prepared than most. The World Economic Forum (WEF) held up Koç Holding as an example to the world in recognition of its successful human resources implementations, which the Group put into practice for its employees in the arduous process of tackling COVID-19, Sönmez points out.

‘The COVID-19 Workplace Commons’ initiative, founded under the leadership of the WEF and Arizona State University, showcases to the world some of the successful human resources practices implemented by companies which have put their employees first during this hugely complex and difficult period.

Post-pandemic recovery

While not understating the harsh impact of the COVID-19 pandemic on Turkey nor on the Setur Duty Free business, Sönmez does see cause for optimism. “The travel retail market took the biggest hit in 2020 whereby most countries closed up their borders and international traffic almost stopped. As positive improvements about the vaccine came up, the market showed some recovery,” he comments.

“Today, however, the market is still well behind 2019. We believe the market will take until 2024 to reach 2019 figures and keep growing afterwards and this argument is supported by prominent data providers in aviation market. Therefore, growing in the global market is alluring for our business in Turkey in terms of our long-term plans.”

How does he see consumer behaviour changing post-pandemic and how will Setur Duty Free adapt its offer and shopping experience to match their new expectations? “Our customers’ expectations have shifted due to the pandemic from offline to online,” Sönmez replies.

The acceleration of ecommerce has become a prevalent trend worldwide and travel retail, which has been traditionally weak in finding online solutions, has to mirror that trend, he insists.

But it is not as simple as just switching mode. “Since we need to operate in an environment under customs control, we have to remain as an offline store retailer, so our main operations will be within our stores even after the pandemic. However, in order to meet our customers’ shifting expectations, we have to make the shopping experience in our stores safe and fast by providing digital and online solutions,” Sönmez comments.

Digital solutions for ‘fast and safe’ shopping include contactless and mobile payment, self-check-outs, lowering queue times and others. “For online solutions, we as travel retailers have to adapt and offer innovative solutions aligned with the regulations – for example pre-order, delivery to the gate, etc. This way we will be able to adapt the post-pandemic environment.”

Retailers will also have to adapt their product offer in future, Sönmez believes, with new categories emerging and existing ones adapting to a changed consumer reality.

“We see the future of core categories will remain as today in general, yet we expect that perfume & cosmetics will adapt to this new environment and evolve into a wider ‘wellbeing’ category,” he says. “The concept of well-being includes a wide range of skincare items products offering eco-friendly, vegan, clean, cruelty-free to our customers. Well-being will also include products relating to health, such as nutritional plant-based supplements, organic oils and others.”

Such flexibility allied to sound financial backing augurs well for Setur Duty Free, who says the company’s future will be built around a combination of its traditional values and strengths and a newly ambitious mindset.

“We are the pioneer in Turkey’s duty free market and have an expert and experienced team. We have direct and strong alliances with brands. We have strong digital and analytical expertise. Finally, we have a strong financial base and we are ready for future projects. We are looking for long-term and sustainable growth with the support of Koç Group, which is the only Turkish company in the Fortune Global 500.”

Sönmez says that Setur Duty Free plans to cultivate a global reputation built around two key principles. From a customer perspective it wants to be known as “the company which gives the best service within the travel journey”. For business partners Setur Duty Free wants to be reputed as “the company who creates value for all”.

“We want to be in the world’s top 25 travel retailers list within the next five years,” Sönmez concludes bullishly. And his final message for the travel retail industry for this landmark publication? “I want to emphasise that Setur is an ambitious company and eager to grow by creating value for all stakeholders,” he concludes.

Spotlight Series - August 2021

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