How Turkish Brands Conquered the ‘Rest of the World’

Cities like Tirana, Kampala and Ulaanbaatar are rarely a target for global fashion players, but Turkish brand LC Waikiki sees them as a golden opportunity. As rival fast-fashion giants H&M and Zara prioritised colossal emerging markets like China and India, LC Waikiki filled many of the gaps on the retail map. The company’s decade-long expansion strategy of rolling out stores in high-risk, high-growth frontier markets appears to have paid off.

Today, LC Waikiki generates around $5 billion in annual sales and a significant share of that is down to its sprawling store network in dozens of small countries. Not only did the company cash in on latent demand in far-flung locations like Albania, Uganda and Mongolia, but it also gained first-mover advantage in underpenetrated markets at a critical juncture in their development.

“They are certainly serving a need here for price-conscious locals to access this kind of quality international clothing,” said Moses Lutalo, chief executive of Broll Uganda, a property firm offering brokerage and leasing services for shopping malls in the East African nation where LC Waikiki now has three stores. “They’ve done a really phenomenal job in terms of penetrating the Uganda retail market, partnering with our modern malls — although there are not as many here as in Kenya.”

LC Waikiki is not alone. Other fast-fashion brands from Istanbul such as Koton and DeFacto have made inroads in the world’s most challenging retail markets, often in low- and middle-income countries. Instead of dismissing them as obscure, Turkish brands recognised their untapped potential and bet on their continued dynamism.

“A lot of western retailers do not come to Mongolia, although the consumer culture is strong and welcoming of foreign brands,” explained Nara Naranchuluun, former retail director at Mongolian cashmere fashion brand Gobi, suggesting that LC Waikiki is a pioneer even if it “is still in its early stages here, gaining awareness slowly and figuring out the local market.”

As the battle for frontier market share intensifies, Turkish brands are becoming increasingly bold.

In recent years LC Waikiki ventured into Venezuela, one of the most politically unstable markets and volatile economies of Latin America; DeFacto has expanded its footprint to African markets like Tanzania which score poorly in areas such as retail infrastructure and ease of doing business. Koton, meanwhile, decided to place its bets on Hungary, despite geopolitical tensions which have left the country increasingly isolated from the rest of Europe.

“[Turkish fast-fashion brands] do not try to compete in every single market directly, especially against local European powerhouses in the west. But they recognise their competitive advantage is going to markets where nobody else wants to go. And that’s the value they add in global fashion,” said Jorge Lizan, a New York-based retail expert on Latin America, whose eponymous advisory aided LC Waikiki’s entry into Peru.

Yet the steady rise of Turkish brands has gone largely unnoticed — or at least underreported — in the fashion capitals of North America and Western Europe where they have little or no presence and their competitors maintain home market advantage.

Tapping the Frontier Market Opportunity

The strategies used by Turkish brands are diverse and multi-faceted, but they all have one thing in common: the premise that higher-risk markets can sometimes yield higher rewards.

According to BoF Insights analysis, the projected growth rate of apparel and footwear sales in the ‘Global South’, a region where most frontier and emerging market countries are located, is over three times higher than the rate in the ‘Global North’, which is made up of mostly mature market countries. The two regions are expected to achieve compound annual growth of 1.5 percent and 0.4 percent respectively between 2024 and 2029.

Higher growth, combined with favourable demographics, rapid urbanisation and other factors make frontier markets an attractive opportunity for Turkish retailers. “[We] see the future being in the East, not the West,” Koton chief executive A. Bulent Sabuncu told BoF.

LC Waikiki and DeFacto did not respond to requests for comment.

While they clearly have a knack for retail, Turkish fast-fashion brands have yet to optimise their approach to marketing. In many of the countries where they operate, their brand identities remain as much a mystery to shoppers as their purpose and their origins.

“Marketing and branding is an obstacle,” concedes Sabuncu. “We definitely need more time to define ourselves better, so that more people in the world know about us, not just the people in the industry.”

One of the advantages Turkish players have over western competitors is their ability to harness local production. The strength of the Turkish apparel and textile manufacturing industry is part of their success story in frontier markets. Not only does it have scale, but a reputation for technological innovation and speed-to-market sourcing capabilities.

So much so, in fact, that high-street brands from Western Europe have come to rely on Turkish production, especially as nearshoring production intensifies. Swedish group H&M, Spain’s Zara-owner Inditex, Britain’s Asos and Belgium-based C&A all have multiple Turkish manufacturing partners.

Being based in a lower-cost country means some overheads Turkish brands incur are lower than competitors in Western Europe. A snapshot of products across several categories suggests that retail prices at Zara and Mango are typically higher than LC Waikiki and H&M whereas Koton and DeFacto prices are lower than the others.

Avi Alkas, a former mall manager who witnessed LC Waikiki’s first Istanbul store open about 30 years ago and now operates Alkas Consulting, confirms the price positioning of the three brands. “If LC Waikiki was trying to fill the void of a Zara in Turkey, affordable brands that are akin to it like Koton is equivalent to a Turkish H&M, cheaper in price [and] trendy…[and] DeFacto, one could say is our Uniqlo, making affordable everyday wear for the region.”

But how did Turkey’s fast-fashion brands become global contenders in the first place? Some, like LC Wakiki, were originally local partners for foreign fashion companies before moving up the value chain to evolve into vertically integrated brands. Others have a more intriguing origin story.

From Local Heros to Global Contenders

Although LC Waikiki is one of Turkey’s largest retail brands today, with around 15 percent of the domestic market share and 1,300 stores worldwide across 65 countries, according to the company’s latest figures, it was originally founded in Paris in 1988 by French designer Georges Amouyal.

Back then, the founder bought textiles from a Turkish company owned by the Kucuk family which eventually became their local partner. In 1997, Kucuk’s consortium Tema Tekstil, a company affiliated with Taha Group, acquired LC Waikiki from its founder.

Based out of Istanbul ever since, LC Waikiki is now led by Mustafa Kucuk, with the Kucuk family as its largest shareholders and the Dizdar family owning a smaller stake. By 2023, the company swelled to reach annual sales of 144.7 Turkish lira ($3.7 billion), with Mustafa’s older brother and board member Vahap Kucuk telling Türkiye Today that he estimated 2024 sales would surpass 207 billion Turkish lira ($5.3 billion). Earlier this year, Mustafa hired former Inditex executive Javier Villar to be a transformation coordination leader at the company.

Koton’s story is more straightforward. With operations dating before LC Waikiki’s stronghold in Turkey, Koton was founded as a small store in Istanbul in 1988 by husband-and-wife Yilmaz Yilmaz and Gulden Yilmaz.

Currently, Koton has around 450 stores, of which 207 are located overseas in 32 countries across Eastern Europe, Central Asia, North Africa and the Middle East. Its largest footprint abroad is in Russia with 42 stores. The company reported consolidated sales of 25.1 billion Turkish lira ($649 million) in 2024, the same year it listed on the Istanbul Stock Exchange and four years after Sabuncu became CEO. This year, it is planning to enter India through a partnership with Myntra before exploring a physical store rollout.

The newest of Turkey’s fast-fashion giants, DeFacto, was founded in 2003 by textile entrepreneur Zeki Cemal Ozen who later brought on former LC Waikiki employee Ihsan Ates as CEO. The Istanbul-based company, which reported turnover of 30.3 billion Turkish lira (about $ 783 million) in 2023, operates nearly 500 stores across 35 countries today, including a significant presence in Central Asia, Sub-Saharan Africa and Eastern Europe.

In tandem with their international ventures, the three companies have also built a vast Turkish business from sprawling nationwide store networks and e-commerce. However, domestic growth has stalled with some brands approaching saturation point amid an increasingly challenging market environment.

“With Turkey’s economic situation being volatile, it disturbs the middle classes most [which is] the main customer base of fast fashion brands,” said Alkas, referring to declining consumer demand and purchasing power in Turkey amid inflationary pressures and other headwinds. “This has made the international success of all these brands all the more important.”

In the face of these and other headwinds such as rising production costs, LC Waikiki, Koton and DeFacto have doubled down on international markets by focusing on what made them popular back home in the first place: being a more affordable and localised alternative to western brands.

Putting Down Roots in Africa

When LC Waikiki touched down in Kenya in 2018, its biggest foreign competition came from the likes of Mr. Price and Woolworths, South African value apparel retailers that are well-known across the continent. Seven years on, LC Waikiki has improved its brand recognition in Kenya, thanks in part to a merchandise mix that is tailored to local trends and communities.

“They’re super popular now [in Kenya] because, yes, they offer trendy clothing at an affordable price, but also because they adapt everything to the local market, customising product [offerings] differently even between Nairobi and Mombasa,” said Connie Aluoch, fashion editor at Kenyan newspaper Daily Nation. “It’s kind of like, if you need something for [occasions like] a themed party or a birthday or even for work? Go to LC Waikiki.”

In the last five years, the company’s regional division has opened stores in Zambia and Ghana, furthering its presence in markets such as Morocco, Algeria, Libya, Tunisia, Cote d’Ivoire, DR Congo, Tanzania and Mauritius; most recently it entered Uganda.

“They were clearly drawn by the Ugandan government’s new tax regime that encourages international investment, and from July 2026 will offer tax breaks to companies that set up factories here. But I think it was also a strategic decision, noting the country’s growing middle class and geography in reaching [other] sub-Saharan markets,” said Lutalo.

In Morocco, where the brand has a significant presence and “is the flagship among all the other Turkish brands that come with it like DeFacto and Koton,” LC Waikiki has “outcompeted” H&M, contends Giles Devendeville, a Casablanca- and Cannes-based retail property expert for the North Africa region who advised LC Waikiki during its entry into Kenyan malls.

“The smart thing Turkish brands did is direct management in North Africa instead of extending partnership with GCC (Gulf) businesses to oversee the operations — which is a massive mistake [that western fast fashion brands] made [because they] brought in more modest and Arab styles for a Northern African, French-speaking [urban] demographic that [typically] prefers European styles and trends.”

The GCC subregion of the Middle East comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. In the subregion, H&M has partnered with Kuwait-based Al Shaya while Zara owner-Inditex has joined forces with UAE-based Azadea Group. North African markets are commonly included in the territorial scope of such partnerships.

There is one Western European brand that can match the size of the Turks’ retail footprint in at least some frontier markets. Spanish fast-fashion giant Mango has been much bolder than H&M and Inditex in regions like Africa. Currently, it operates 43 franchised mono-brand stores in 18 countries on the continent, including 2-3 locations in large markets where its rivals are less present, such as Algeria, Angola and Nigeria. It even has a foothold in smaller markets like Gabon, Burkina Faso and Equatorial Guinea.

In Africa, LC Waikiki also faces competition from its compatriots. Besides Kenya, DeFacto has stores in South Africa, DR Congo, Mauritius, Somalia, Cameroon, and most recently in Tanzania. Koton operates physical stores in Kenya, Egypt, Morocco, Algeria, Cote d’Ivoire and DR Congo.

All three Turkish brands face fierce competition from unbranded and second-hand clothing sold in informal retail channels such as bazaars, souks and outdoor markets.

Betting on Central Asia and the Caucasus

The Central Asia region has historically been a target market for Turkish businesses across the board thanks to linguistic, cultural and historic ties between Turkey and the five former Soviet republics.

Off the back of this trading relationship, DeFacto chose Kazakhstan as the location for its very first store outside Turkey in 2013, followed by LC Waikiki and Koton. Today, the three brands have a combined 60-plus stores in the country, with Koton operating 26 of them. DeFacto and LC Waikiki also have stores in neighbouring Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan and Caucasus region countries Armenia and Azerbaijan.

“There are brands like Zara, Bershka, Stradivarius and H&M here in Kazakhstan, but they’re not necessarily affordable [in terms of local purchasing power parity],” explained Aika Alemi, an Almaty-based fashion industry veteran and director of Central Asia Creative Incubator. “But what we don’t have here, and nor do the neighbouring countries — most of which don’t have Western brands like we do — are local or home-grown mass market brands.”

“Turkish brands have taken advantage of this lack of [local] competition and are catering to the fashion-conscious middle-class population, especially because the cheapest alternative to higher priced items exists in bazaars or markets far from the city centres, which are full of Chinese apparel and knockoffs…So in addition to being affordable, in Turkish brands are also meeting a demand for convenience and accessibility [as they’re] located in malls.”

Last year, LC Waikiki announced plans to build a Central Asia logistics centre in Kazakhstan. Investment in a distribution hub often signals a brand’s long-term commitment to the region.

LC Waikiki is also active on the periphery of Central Asia, having become the first Turkish brand to open a branch further east in the Mongolian capital, Ulaanbaatar.

“To succeed [in Mongolia], the right marketing is key [so] if LC Waikiki is able to focus on its Turkish quality, which is well appreciated here, that would be the best way forward,” said Naranchuluun, noting patterns of consumer behaviour that the brand will need to overcome. “Most Mongolians prefer to buy from Chinese brands on social media and are drawn to Russian fashion trends.”

On top of Chinese brick-and-mortar retailers, Turkish brands also face intense competition from China-founded ultra-fast fashion e-tailers Shein and Temu in many markets around the world.

Investing in the Middle East and Eastern Europe

In other regions, Turkish brands are in battle with local mass market labels. Across Eastern Europe, for example, they are confronted with LPP, a Polish fashion retail giant offering a wide range of brands including Reserved, Sinsay, House, Cropp and Mohito across a vast store network in around 40 countries.

“In Europe…there is great competition from [companies] like LPP and also some Chinese manufacturers,” concedes Ahmet Eroglu, head of Koton’s European operations, adding that Koton operates a mix of direct and franchise stores across the Balkans, Ukraine and Russia.

Koton CEO Sabuncu emphasises the need to use flexible business models to penetrate many of these markets. “With every country our strategy is different. In some we feel confident about direct [operations] like in Hungary where we already have four stores and are opening three more this year, while in other countries like in DR Congo and GCC countries we are stronger with franchisors and partnerships.”

The GCC “is our most important growth region,” said Sabuncu, noting its footprint in the UAE, Saudi Arabia and Bahrain. “Currently, we have 18 stores…and our aim is to bring it up to at least 60 over the coming five years” including “adding stores in Qatar, Oman and Kuwait over the next few months,” bolstered by Koton’s new partnership with Dubai-based Apparel Group.

As Koton started investing in the Gulf, DeFacto doubled down on larger, less developed markets in the wider Middle East region, such as Iraq and Egypt, where it currently has 26 and 31 stores respectively. In Eastern Europe, the brand has added stores in Ukraine and Bosnia and Herzegovina, to its existing network in Serbia, Albania, Montenegro and North Macedonia.

But it is LC Waikiki that has the strongest presence in both regions. In Central and Eastern Europe, it operates in 16 countries, and in the Middle East, it partnered with Apparel Group to be master franchisor in Gulf markets where it has seen strong growth such as the UAE, Qatar, Kuwait, Bahrain, and Oman. In Saudi Arabia, however, it went down a different path, pursuing a joint venture with Cenomi Retail (formerly Fawaz Abdulaziz Alhokair & Co Company).

Gaining a Foothold in Latin America

The final frontier for Turkish brands is Latin America. In 2021 LC Waikiki made its regional debut in Peru. Since then, the brand added two more stores in the country and expanded to Ecuador, Panama, Costa Rica, the Dominican Republic and Venezuela.

Last year, it expanded to the Caribbean subregion, opening in Curacao’s largest mall owned by Caracas-based company Sambil, which also runs the brand’s local operations in Venezuela.

“LC Waikiki operates using two models in Latin America,” explains Lizan. “Outside Peru, where they have direct corporate operations, the company has gone into partnerships with local mall chains or retail real-estate companies in all the other countries.”

In some Latin American markets, brands with LC Waikiki’s profile are challenged by a scarcity of suitable and affordable retail space, Liza notes. “Most malls do not have capacity to open up, say 2000 sq. ft of space, for a fast-fashion brand. So, the local partnerships have been good for them to overcome that challenge.”

Turkish players face the same challenge in other regions. It is often compounded by the fact that mall operators and landlords tend to give priority to brands that are already famous in the local market or brands from countries where there is an historic affinity.

“In general, Latin consumers love Spanish brands and the Spanish aesthetic, so that’s difficult to compete with,” said Pablo Pulido, the manager of Mall Plaza Oeste in Chile, where LC Waikiki opened a 1500 sq. m store. “Chileans and locals in the region are not familiar with [Turkish] brands [like LC Waikiki yet]. Most people don’t recognise it despite the moderate reception.”

But Lizan argues that LC Waikiki is doing well considering the uphill battle it faced in an entirely unfamiliar region far from Istanbul. “Even without huge recognition, LC Waikiki is reaching its goals and breaking even in Latin America [with around 20 stores across the region],” he asserts. “In any case their plan was never to become the biggest here, but to become an option.”

In some overseas markets, Turkish fashion retailers have been helped by the Turkish government’s support of the sector which local media Kohan Textile Journal describes as “banking, tax, export incentives...[and] subsidies for [promotional activities such as] attending international exhibitions.” Their continued reliance on this support is a concern for experts like Lizan and Devendeville who question the companies’ future performance without it.

Still, retail experts admire the agility, flexibility and enterprising drive of Turkey’s fast-fashion brands, in particular their resolve to enter markets where many European and American fashion companies have shied away from, sometimes informed by outdated or preconceived notions.

Making trend-led, affordable clothing available in frontier markets is a big undertaking for any brand. Even if they never become as well-known as the Zaras and H&Ms of the world, plucky Turkish challengers like LC Waikiki, Koton and DeFacto are giving the incumbents a run for their money in some of the world’s most vibrant and rapidly growing economies.