Istanbul — “We’re completely sold out on classic bags in all colors if any of you are waiting for them,” a woman hastily announced Tuesday, stepping out of the Chanel store at Istanbul’s high-end shopping mall, Istinye Park, and disappointing several shoppers in a long line of luxury consumers.
“I really wanted one of those classic bags. They never go out of fashion,” said Amal Al Enizi, 20, visiting from Kuwait.
She was patiently waiting for her turn as the rapid devaluation of the Turkish lira against the U.S. dollar presented a fortuitous opportunity for tourists who chose Turkey for shopping.
The doors of Dior, Louis Vuitton and Fendi were equally busy even though almost all adjusted their price tags in line with the lira that plummeted by 18 percent against the dollar in a matter of hours on Friday.
Even the opponents of President Recep Tayyip Erdogan’s Justice and Development party, who have long cautioned about a looming economic crisis in light of the fiscal policies they criticized, failed to anticipate a tremor of such magnitude.
Money markets so far have remained indifferent to reassurances of calm by Berat Albayrak, the new economy minister and Erdogan’s son-in-law as well as the Central Bank’s move to ensure liquidity in the banks.
Although the rapid spiral seemed to have slowed on Monday, anxiety still ruled the streets — with the exception of the store aisles that tourists frequent.
“I have been working here for five years and never seen such a crowd or such high sales in such a short period of time,” said Nazan Altuntas, sales director for Fendi at Istinye Park.
“With the current exchange rate, our most expensive items come to half of their original prices in Europe. We will be adjusting our tags tonight but we’re already sold out on many items.”
The currency crisis came at a time of rejuvenation in the tourism sector after it suffered several terror attacks, a military coup attempt in 2016 and an emergency rule that superseded it.
In recent years, tourists from Western countries have been replaced by Middle Eastern tour groups in line with the pro-Islamic President Erdogan’s foreign policy that aligned the country closer to Muslim nations.
Although the currency crisis offered an advantage for shoppers, it upset Arab tourists who chose destinations in the Turkish Mediterranean and Aegean regions when many hotels refused their early reservations and demanded a modification on hotel tariffs in line with currency rates.
“Almost 25 percent of Arab tourists cancelled their reservations with hotels in these regions,” said Huseyin Kirk, chairman of the Istanbul-based OTSAD, Middle East Tourism and Travel Agencies Association.
“Such opportunism already scared off Western tourists and now we’re left with Arabs only. We should not forget that it was the Middle Easterners that kept coming despite terror attacks, explosions and in the aftermath of the coup attempt. We cannot afford to lose them.”
In five years, around 7 million tourists visited Turkey from Middle Eastern countries and tourism agents aimed at attracting 3.5 million this year. Already 850,000 have arrived from the Gulf countries, according to OTSAD.
The organization estimates the average daily spend of one tourist from a Gulf nation to be around $1,500 which corresponds to 9,750 Turkish lira at Tuesday’s currency rate in a country where the monthly net minimum wage is 1,603 TL, or $264.
For some retailers, the heydays at malls like Istinye Park will soon be over as Arabs are expected to return home in 15 days at the end of Muslims’ Eid Al Adha (Sacrifice Feast) holiday.
“Such festivity in front of luxury shops you see today is not sustainable,” said Zeki Gonuldok, the manager of an Emporio Armani store, as he mechanically folded shirts while customers kept pouring in.
“When they leave in 15 days, we will be left with our collections purchased in foreign currencies but we sell in Turkish liras and we will be dependent on a local clientele that will not be able to afford them.”
For apparel exporters that traded in hard currencies, the situation was not as appealing as it seemed.
“The hike in foreign currency affects everything. Inflation goes up because you rely on foreign suppliers for electricity, petrol, natural gas, which then reflects on your own prices and sales figures,” said an import representative of a large U.S. textile group who asked not to be identified.
“Exporters might be dealing in foreign currency but their costs are also adjusted to foreign currencies. In most of the production these days, raw material comes from China in U.S. dollars or euros, so the cost automatically goes up, plus the addition of heavy taxes.”
Istanbul’s Textile and Apparel Exporters’ Association, IHKIB, strived to bypass the crisis as it encouraged members to trade in Turkish liras despite their 80 percent dependence on foreign suppliers for raw material.
“The increase in the foreign currency seems to be on our side but it is definitely not, especially in long term,” Mustafa Gultepe, the chairman of IHKIB, said in a phone interview.
“Because at times of heavy currency fluctuations, manufacturers do not want to sell in fear of losing money the next day, or not being able to replace their stock. We do need to trade in Turkish liras but they all want to shift to hard currency, which then brings about market opportunists.”
Uncertainty in prices would also hamper landmark events like Mercedes-Benz Fashion Week Istanbul, scheduled to take place between Sept. 11 and Sept. 13, the chairman added.
“Istanbul Fashion Week is already booked and prepaid for this year but if the currency is not stabilized, and keeps changing, it would be impossible to do pricing at events like that let alone increasing costs of such top-scale organizations.”
The organization represents an annual revenue of $17 billion and members vowed to increase it up to $19 billion in support of the government’s efforts to overcome the current currency crisis.
For tourists who lined up in front of luxury shops, however, it was serendipitous timing to have a trip scheduled.
“This will not be always like this. I bet the currency will get stabilized in two to three months,” said Joey Chen, 35, a trader from China, who joined the long queue in front of Louis Vuitton on Tuesday.
“I just feel lucky to have come here at the right time.”