Bim – pioneer of discount retail in Turkey

Established in 1995, BIM Birlesik Magazalar (known as “Bim”) was the pioneer of the “hard discount” retail model in Turkey.

Established in 1995, BIM Birlesik Magazalar (known as “Bim”) was the pioneer of the “hard discount” retail model in Turkey.  Established in 1995 by former managers of the German discounter Aldi, Bim embodies the perfect alignment between a firm’s business model and its operating model.  Its business model—offering staple groceries at the lowest possible price—is enabled by its diligent execution of its operating model, which is based on judicious cost management and a superior procurement strategy.

Low cost operating model

At the heart of Bim’s discount supermarket model is its low operating cost base.  The typical store is small and located on secondary or tertiary streets in crowded residential neighborhoods with heavy foot traffic.  This has allowed them to attract large traffic without having to rely on advertising, while minimizing real estate lease costs, which could be 2x as expensive on main streets.  In fact, Bim has spent virtually zero advertising dollars since inception thanks to its strategic placement in crowded neighborhoods.

As you can see in Figure 1 below, the stores employ cheap, portable fixtures (often just cardboard boxes!), allowing them to expedite the opening of new stores (it takes only a couple of days to set up a new store) while significantly reducing costs.  The no-frills atmosphere inside these warehouse-like stores, which are lacking in even the most basic of decoration, further helps to reduce costs.

Human capital is managed judiciously, with each store only requiring 2-3 full time employees (a cashier, an inventory manager, and an assistant in more crowded stores)

Superior procurement and constant price reductions

Low prices are at the crux of Bim’s (and other hard discounters’) value proposition to customers.  This is enabled not only by the shrewd cost management discussed above but also a procurement strategy focused on few SKUs.  While a typical convenience store might carry 2,000-3,000 SKUs and a supermarket might carry 30,000-50,000 SKUs, Bim limits its product portfolio to no more than 600 items.  This means only one kind of orange juice, one kind of eggs, one kind of bottled water, and so on.  By concentrating its supply, Bim is able to consolidate its bargaining power against fewer suppliers and demand constant price reductions.  The bigger it gets, the stronger it becomes in such negotiations.  And as it has become large enough, Bim has gradually shifted production to private label goods – i.e., manufactured exclusively for a retailer, often by the same suppliers from which the retailer had originally procured its goods – thereby further reducing cost, strengthening Bim’s brand name, and improving profitability while enabling Bim to reduce the end price to consumers.  This operating model is perfectly aligned with its business model of low prices.  As we can see from its financials, Bim has maintained a remarkably stable 5% EBITDA margin while reducing prices each year.  Reduced prices, in turn, attract more consumers in what is the ultimate virtuous cycle.

And, as BIM gains even greater control over its supply chain, it is able to dramatically reduce its working capital requirements via more favorable payment terms—typically a few months—while customers mostly pay by cash and sometimes 30-day credit.  This had resulted in large negative working capital which has essentially been the key enabler of Bim’s dramatic growth with virtually no use of debt financing (it has grown from 21 stores since its inception in 1995 to 4,502 by the end of 2014).

Superior results and international expansion

As we see in Figure 2 below, Bim’s diligent exaction of the model I describe above has resulted in some of the highest (and most consistent) long-term growth rates (20%+ per annum) and returns on equity (30-65%), all while growing entirely organically and with virtually no use of debt!

The success of Bim in Turkey is not a one off instance.  They’ve proven that it can work elsewhere and recently expanded into Egypt and Morocco with hundreds of stores.  In Turkey and elsewhere, they have become driving forces in the formalization of the economy, helping to increase the tax base while ensuring sufficient standards of quality.

Ultimately, we can attribute the success of Bim to management’s brilliant operating model that is superbly suited to satisfy its business model.  Its operating model—focused on judiciously low cost and superior supply chain management—enables Bim to offer the lowest price for staple goods, thereby transferring value from large suppliers of these goods (the P&Gs and Coca Colas of the world) to consumers and Bim’s shareholders and employees.

Figure 1: Bim’s “no frills” approach to store layout, with portable fixtures and minimal design

bim store

Source: Bim

Figure 2: BIM’s superior returns and growth since its 2005 IPO

growth roe

Source: Capital IQ



  • / investor relations / annual report and financial statements
  • FT: “Bim rings the changes for Turkey’s shoppers,” October 5, 2010
  • CapitalIQ


Expeditors International – Simply Synchronized


Patagonia: Accidental Success Through a Deliberate Mission

Student comments on Bim – pioneer of discount retail in Turkey

  1. I really enjoyed this post! Your summary very clearly lays out the key elements driving Bim’s growth–attractive payment terms, limited product mix, superior supplier relationships, and cost-control measures. The company’s ability to grow so meaningfully over the past 20 years (averaging ~225 stores/year) demonstrates a compelling business model that is transferable to other communities/countries.

    I was curious about a few aspects of the business after reading your post:
    1) With expansion into Egypt and Morocco, Bim’s has proven its ability to grow in markets marred by political and economic upheaval. GDP growth in Turkey, Egypt, and Morocco has fluctuated significantly over the past ~10 years, but Bim’s growth has been stable. What elements of its business or operating models are able to support that sustainable growth despite broader economic instability? Are its suppliers not impacted? Despite their superior supplier relationships and savvy cost measures, I would have thought a consumables retailer would feel the impact of recent declines.
    2) Thus far, Bim’s growth has been achieved through geographic expansion. With its expanding footprint and private label products, I wonder if Bim’s will transition into serving as a low-cost brand in the Middle East? As you noted, it seems to be generating significant brand recognition through its private label goods and will soon come to be synonymous with “lowest cost” goods?
    3) Is Bim’s facing competition from international “low cost” retailers such as Costco? Wholesalers have undergone significant international expansion and are increasingly looking to emerging markets to achieve growth targets. There is a (mistaken) perception that American brands offer higher and more consistent quality. I wonder if Bim’s will face competition from these wholesale behemoths or if the populations they serve are fundamentally different?

  2. This is a great post summarizing one of the most successful business models in Turkey and maybe one of the most successful retail models in the world.

    BIM followed a completely new operating model in Turkey when it commenced its operations in mid 1990s. Instead of acquiring or renting convenient store areas already designed or used for retail, BIM pursued the best location with the best price by negotiating with home owners to turn their unused space into a retail area. With a nationwide specialist network, the company expanded its store network rapidly and economically.

    To respond Baker’s Dozen’s questions raised above:
    BIM, since its inception, has followed almost a counter-cyclical growth in a country where perception of an hard-discount retail brand was not that high. In time, the company has proven its products’ high quality. The perception towards BIM changed drastically as it was now a stop for both mid-lower income segment and mid income segment, making most of the one-shop convenience stores irrelevant and go out of business.
    Many would agree that geographical expansion played a key role in BIM’s growth. In addition to geographical expansion, BIM achieved its success by eliminating some of the traditional one-store retail segments in many of the regions it started operating.
    BIM is strategically located on a market segment / geography where only local players with great knowledge and experience in the area could do business and make positive cash flows. Many global and US-based retail giants are entering emerging countries without partnerships or co-name joint ventures. Costco, Wal-Mart, and many others tried to enter Turkey and the region many times but became unsuccessful because of the operating model misalignments. And also, many times these players were shocked by the very high valuations they were asked.

  3. Good job! This is a great example of a business that is able to align its business and operating models.

    I was especially interested in the way that BIM manages a limited SKU portfolio in order to consolidate its bargaining power among suppliers. Although this strategy makes sense from their perspective, how does it impact the customer experience? Do you think this model would be successful in markets where customers expect more choice? Do you think it is sustainable in its existing markets as consumer expectations may change?

    ALDI (the parent company) also owns Trader Joe’s in the US. There are some similarities between the two concepts around their emphasis on private label, but Trader Joe’s maintains a focus on in-store merchandising and product variety that BIM does not. Do you think that ALDI believes that the BIM model is transferable to the US market, or is Trader Joe’s the most palatable concept to the US consumer?

  4. Thanks for writing this piece, really enjoyed learning about this incredibly successful low-cost model. They’re obviously doing a lot with product costs and vendor negotiations to drive lower prices, but as we’ve seen in a few cases this Fall, distribution is incredibly important for grocery chains so would be interested to learn about how they have managed to build out their logistics network to reach the ~4,500 current stores. Are they contracting with third party providers or do they maintain in-house?

    The difference in SKUs between Bim and traditional convenience or grocery stores is remarkable. Are they carrying well-known brands (just less of them) or just carrying a mix of private label and lesser-known brands? Ultimately, I think brand still matters, so would be interested to see what happens as many of the major CPG brands make a stronger push into these countries.

    Pretty amazing what they’ve done, would love to see the payback period on these stores. Think this business is also an example of altruistic capitalism, as positive externalities abound from being able to, as you mention, make high-quality and inexpensive food readily available to a large portion of the population.

Leave a comment