Modanisa targets first Turkish unicorn status with Muslim womenswear
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It was conversations with female friends and relatives that gave Kerim Ture the idea for his business. The marketing graduate realised that Muslim women in Turkey who chose to cover their hair and dress conservatively were underserved.
“Women who wanted to be stylish and obey the rules of modesty didn’t have much of a choice,” he says. “There were stories that people were buying two short-sleeved T-shirts and making them into one long-sleeve top.”
Together with four friends who clubbed together and provided a total of $500,000 start-up capital, in 2011 he founded Modanisa.com, an online fashion portal for Muslim women. The name is a reference to the Koranic chapter al-Nisa, which means “women” in Arabic.
Today, the company works with 800 clothes producers — most of them small Turkish ateliers — and links them up with customers around the world.
The past few years have been a whirlwind of expansion and growth. In 2017, the company broke even for the first time, turning a profit the following year. It has received several rounds of investment including from Goldman Sachs and the European Bank for Reconstruction and Development (EBRD).
The business has tapped into a global market of Muslim consumers with growing purchasing power. A report on the global Islamic economy published last year by Thomson Reuters and DinarStandard, a US-based strategy and research group, found that Muslim shoppers spent $270bn on fashion in 2017 — a figure the authors expect to rise to $361bn by 2023.
Shelina Janmohamed, vice-president at Ogilvy Noor, a division of the London-based marketing agency Ogilvy that helps brands target Muslim consumers, says that Modanisa is a prominent success story among a global group of modest fashion retailers that also includes Indonesia’s Hijup and The Modist in Dubai.
“We’ve seen some brands moving to the next step and starting to commercialise on a bigger scale, of which Modanisa is one of the biggest,” she says. “Everyone talks about it.”
Today, the company says that its website — which bursts with ranges in bright jewel colours and sugary pastels — hosts 150m unique visitors each year. Mr Ture says that the company has 3.5m returning customers who have purchased from the site more than once. The site, which takes a cut from each sale, has estimated annual revenues of $120m to $150m, according to analysts.
Part of its success can be attributed to the way Modanisa has taken advantage of Turkey’s longstanding position as an important textiles producer and Istanbul’s reputation as a trendsetting city.
The country’s location — sandwiched between Europe and the Middle East — makes it a natural hub for an ecommerce business with a customer base that stretches from New York to Kuala Lumpur. The company has also boosted its global profile by being the main sponsor for “Modest Fashion Weeks” in Istanbul, Dubai, Jakarta and London.
Bakhrom Ibragimov, a senior banker with the EBRD’s venture capital investment programme, says that the bank liked the way that Modanisa linked up Turkey’s small and medium-sized enterprises (SMEs) — many of which are run by women — with the rest of the world.
“They are really focusing on SMEs that until today haven’t had a global channel; they had been primarily selling offline in small shops in Turkey,” he says.
The EBRD, which in March this year took an equity stake in the group for an undisclosed sum, also valued the company’s “strong team”. Mr Ibragimov says: “The business model seems to be working. We believe and hope that [it] will become a big global category winner.”
Modanisa has seen a slower pace of growth within Turkey after an economic slump in the wake of last year’s sharp devaluation in the lira.
But the domestic market makes up only 20 per cent of total sales, according to the company which says sales in other regions have been “growing well”.
Global fashion brands have begun to wake up to the large market of Muslim consumers who want to cover their hair or wear less revealing clothes. H&M, Banana Republic and Macy’s have all experimented with modest fashion items or lines.
Mr Ture says that he does not see these efforts as a threat, but rather as “complementary”. He wants well-known brands to use Modanisa as a gateway to a new consumer base.
“We are an enabler,” he says. “We have the reach, the marketing power and the capabilities. We know our customers, and who wants what.”
Mr Ture’s ambitions for the years ahead are bold. “We want to be Turkey’s first unicorn,” he says, referring to privately held start-ups that reach a valuation of $1bn or more. His eventual aim is to launch a public offering that would see it listed on the stock market in 2023 or 2024.
The company, which has 550 employees, has moved to a larger office in Istanbul’s Altunizade district. A London office that will focus on marketing to the English-speaking world is due to open before Christmas. “Our aim is to make modest fashion mainstream,” says Mr Ture. “It’s a lifestyle, not a seasonal thing. This is a big market and people need to realise that.”
FT Future 25: Middle East
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