the changing morphology of commercial activity in … changing morphology of commercial activity in...

Cities, Vol. 16, No. 3, pp. 181–193, 1999 1999 Elsevier Science Ltd. All rights reservedPergamon

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The changing morphology ofcommercial activity in Istanbul

Nebahat Tokatli* and Yonca Boyaci10 Hiram Square, New Brunswick, NJ 08901, USA

Istanbul’s involvement in the capitalist world economy intensified twice in its recent history:first in the nineteenth century when it acquired a new role as the nodal point of commercialand trade networks with Europe; and secondly since the 1980s when Turkey has experiencedan economic restructuring. Here we discuss these two transformations by narrowly focusingon their impacts on the morphology of commercial activities. More specifically, we elaborateon (1) the reallocation of resources and power within the sphere of urban commerce, (2) theemergence of new consumption landscapes, and (3) the recomposition of urban form in relationto commerce. The first transformation was well represented by the shift of power from thestate and the guilds to foreign capital and local merchants of minority groups. In spatial terms,the transformation was depicted by the shifting of the commercial hub from the Grand Bazaarto Pera’s Grande Rue. The second transformation has been represented by the shift of powerfrom traditional, small traders to large domestic and foreign corporations. The spatialexpression of the transformation has been the new spatial imprint of urban commerce withits free-standing stores, multiple establishments scattered throughout the urban system undera common ownership, and large purpose-built shopping center developments. 1999 ElsevierScience Ltd. All rights reserved

Keywords:Istanbul Turkey, World economy, Retailing, Urban morphology

Twice in its recent history, Istanbul’s involvement inthe capitalist world economy gained a new momen-tum compared with the previous time periods: first inthe nineteenth century when, parallel to the declineof the Ottoman Empire, Istanbul acquired a new roleas the nodal point of commercial and trade networkswith Europe (Kasaba, 1988; Keyder and O¨ ncu, 1994);and secondly after the 1980s, when Turkey hasexperienced an economic restructuring which hasonce again increased Istanbul’s integration with theworld economy (Keyder and O¨ ncu, 1994; So¨nmez,1996).

This article brings the two transformationstogether, calls attention to the remarkable similaritiesbetween the pre-1914 era and the current period, andasks the question of the extent to which the increasinginvolvement of Istanbul in the capitalist world econ-omy has brought changes in its urban form. Theemphasis is on urban form in relation to commercial

*Corresponding author. E-mail: [email protected]

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activities (wholesale trade and especially retailing),and the discussion elaborates on (1) the reallocationof resources and power within the sphere of urbancommerce, (2) the emergence of new consumptionlandscapes, and (3) the recomposition of urban formin relation to commerce.

During both transformations, Istanbul witnessed asimilar intensification of global circuits and flows (ofmoney, goods, people, ideas, and brand names) andof power shifts (between the state and markets, andamong distinct social groups whose existing powerrelations were both reinforced and undermined byglobal circuits and flows). We are interested in findingout how these changes were translated by a specificgroup of urban actors (wholesalers and retailers) intopractices which transformed Istanbul’s commerciallandscape. This specific group of urban actors is ofprimary interest because, through the selling of com-modities, they enlarge money capital and, by creatingnew consumption landscapes, they contribute to therestructuring and control of the urban space.

The first section of the article deals with the trans-

The changing morphology of commercial activity in Istanbul: N Tokatli and Y Boyaci

formation that Ottoman Istanbul experienced in thenineteenth century up to 1914. In the sphere of urbancommerce, in terms of changing power relations, thetransformation was well represented by the shift ofpower from the state and the guilds to foreign capitaland local merchants of minority groups. In spatialterms, the transformation was depicted by the shiftingof the hub from the Grand Bazaar to Pera’s GrandeRue.

The second section starts when, after the FirstWorld War, the power shifted back to the state duringa time of nationalism in the republican era. However,the focus is on the post-1980 period, when the privateentrepreneurial sector looked ready to take the leadingrole in the development process from the state andestablished a large number of world-market orientedconcerns in Istanbul. In the sphere of urban com-merce, in terms of changing power relations, thetransformation has been represented by the shift ofpower from traditional, small traders to large dom-estic and foreign corporations. The spatial expressionof the transformation has been the new spatial imprintof urban commerce in the city with its free-standingstores, multiple establishments scattered throughoutthe urban system under a common ownership, andlarge purpose-built shopping center developments.

Our concluding remarks elaborate on how theincreasing involvement of Istanbul in the capitalistworld economy in two different time periods contrib-uted to changes in the economic and spatial organiza-tion of urban commerce. Of course, participation inthe world economy was but one determinant of thechanges in the commercial landscape. Similarly, thedegree of integration into the world economy alsoaffected other aspects of urban development, not onlyurban commerce. Our intentionally narrow focus onthe morphology of commercial activities leaves manyother spheres open to further research.

A historical account: up to 1914The changing commercial function of Istanbul inthe worldOttoman Istanbul was a world city both in the classi-cal period, up to the sixteenth century when the Otto-mans administered and controlled an expanding worldempire, and later when the overall Ottoman systemdeteriorated but still showed impressive signs ofvitality (Kasaba, 1988). Istanbul had always been amajor consumer market of the empire, the demandoriginating from the civilian population of the capitaland the palace making its bazaars the final destinationof trade (Faroqhi, 1984). Trade linked the sites ofagricultural production with Istanbul’s consumptionand was the main link between the Ottoman Empireand the capitalist world economy (Kasaba, 1988; Far-oqhi, 1984).

In the classical period, not only was the empireever-expanding, but also the Mediterranean and BlackSea commerce was at the core of world trade. Also

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importantly, markets were almost completely subordi-nated to the state (Kasaba, 1988).1 Later on, the grad-ual decline in the economic power of the empire, due,among other forces, to the shift in world trade routesand the sharp decline in the relative importance of theMediterranean during the seventeenth and eighteenthcenturies, changed Istanbul’s position as a world city.As the European economy expanded, Istanbulacquired a new role as the nodal point of commercialand trade networks with Europe and became a majorport of entry for steamships and imports from Europe(Mansel, 1996; C¸ elik, 1993).

In the process, there were consequent power shifts.First of all, as the central administration continued toweaken, the benefits of intensified trade slipped outof the hands of the state and into foreign capital andits partners in Istanbul. Within the indigenous mer-chant class, the shift was towards the city’s Armenianand Greek communities, at the expense of the Muslimpopulation. In spatial terms the translation of theintensification of trade with Europe and the conse-quent power shifts was the transformation of the com-mercial landscape of Istanbul: the northern side of theGolden Horn (Galata and Pera) grew in importanceat the expense of Istanbul proper (the Istanbulpeninsula). We will now present a more detailedaccount of the transformation.

The changing morphology of commercial activity inIstanbulIn the case of commerce, the classical period wasidentified with the Grand Bazaar which stood out ina dense urban fabric of wooden houses and narrow,irregular, semi-private dead-end streets. Istanbul wasa Muslim city with organically developed neighbor-hoods that grew around religious cores. Life was livedindoors, with the outside world excluded. Instead oflarge avenues and large public spaces, Istanbul hadan organic and irregular fabric with “crooked narrowlanes, not one of which deserves the name of street”

1The state’s unquestionable ability to control production and distri-bution could not be overestimated. To support the population, thegovernment wanted all products available in the city. The palacewas a good customer for foreign luxuries, and consumed so muchfood that on one occasion, in 1577, all slaughter of mutton andlamb in the Balkans was forbidden: they were needed for the privi-leged residents of Istanbul. For provincials, goat or beef would do(Mansel, 1996). Similarly, the region around the Sea of Marmarawas organized according to the needs of the capital; the vineyardsof the Aegean coast of Anatolia and their output of grape syrup,raisins and pickles was also reserved exclusively for the needs ofthe Ottoman capital (Faroqhi, 1984: 78). For the Ottoman sultans,supplying their capital with cheap food was a priority: meat andbread corn (from Anatolia and the Balkans), butter and salt (fromthe Crimea), olive oil (from Athens and Crete), sugar (fromCyprus), spices (from Egypt), coffee (from Yemen), and everythingelse came from all corners of the empire, and was distributed andsold by guild members with low profit margins under the closesupervision and control of the government. Cloth, paper, leather,and glass were imported from Europe; perfumes came from Egypt,wool from Salonika, silk from Iran and Bursa, soap from Syria,and gold and precious stones from India and the Far East.


(Walsh, 1836: 266–267, cited in Wheatcroft, 1993:148). Large complexes such as the Topkapi Palaceand the Grand Bazaar, were connected with ordinarynarrow streets. “In any other town in Europe youexpect some better built or more open space, and youcome to it; but here all is the same and the first narrowdirty lane you enter presents you with a specimen ofthe whole city, thirteen miles in circumference”(ibid.).

The Turkish–Islamic character of the city was dueto the ways through which life was organized in thecity rather than its population (Muslims constituted58 to 55 percent of the city’s population for manycenturies). The traditional Ottoman system wasdecentralized and services (ranging from health andeducation to charity and social security) were pro-vided by various autonomous communities calledvakifs (foundations). Private persons established per-manent endowments of their real estate by a deed ofrestraint (vakif system); so that through these chari-table religious funds, mosques could provide theirsurrounding communities with soup kitchens, hospi-tals, hostels for traders, schools, and baths: i.e. privatepersons surrendered their power over the disposal oftheir real estate so that the property could be usedfor the provision of services (Ç elik, 1993; Wheatcroft,1993). In return, people secured their estates fromconfiscations, insured an income for their descendantssince they were entitled to pensions, and even haddirect financial benefits since the religious charitablefunds were empowered to lend money at interest, apractice otherwise prohibited by Islam. “Piety andprudence worked in harmony, and [Istanbul] acquireda huge stock of religious buildings, schools, fountains,markets, public baths and libraries, all endowed bythe Faithful” (Wheatcroft, 1993: 145–146).Vakifsdealt with a very wide spectrum of building types:mosques, educational buildings (medreses, mekteps,and libraries), public works (fountains, roads, aque-ducts, pavements, and bridges), and charitable insti-tutions (hospitals, soup kitchens).

Wholesaling and retailing were controlled byloncas (guilds) which were developed under the pro-tection of the government as an instrument for theeffective control of the population and economy.Guild membership provided security to the bazaarmerchants, which was particularly necessary when somany were producer–retailers. Manufactured goodswere produced in the bazaar, within small workshopswhich also served as retail establishments. Guildmembers rented their shops fromvakifs which usedcarsis (markets) as an important source of income.Carsis with their covered bazaars (bedesten), and hos-tels for traders (hans), which were grouped togetherand formed a business center in the immediate prox-imity of the covered markets, were one of the twoessential elements of the Muslim city, the other beingthe central mosque. In the case of Istanbul, the centralmosque was Aya Sophia (Haghia Sophia); and, as inother Muslim towns (such as Bursa, Ankara, Kayseri,

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and Sivas in Anatolia),bedesten(the central part ofthe Grand Bazaar) together with a sizable number ofhans around it, was the core of its commercial life.Hans were two- or three-story structures built arounda central courtyard, often with a pool in the middle.They tended to specialize in a limited range of goods;the upper floors were used for wholesale transactions,while the ground floors and basements were used forstorage (Costello, 1980).

The Grand Bazaar (Kapaliçarsi), whose construc-tion was started in 1455, continued to be the commer-cial center of the city for the next four hundred years.Another similar bazaar was the Egyptian Bazaar(Misir Carsisi, bazaar for drugs and spices) which waslaid out in 1560, and rebuilt in stone in 1609. Theoldest and largesthans were, and still are, on thestreets leading from harbor to the Grand Bazaar. Val-ide Han, the great resort of Persian merchants withabout 400 rooms; Buÿuk Yeni Han, with 320–350rooms; Su¨nbullu Han; and Mahmut Pasa Han areamong the estimated 200hans which the Encyclopae-dia of Islam likens to the Italianfondachi.

In the city, retailing was conducted under the closescrutiny of the state.2 Every Wednesday, the grandvizier himself inspected the markets of the city: theEgyptian spice bazaar, Galata’s fish market, and ofcourse the Grand Bazaar. The covered bazaar, a labyr-inth of arcaded alleys lined with some 4,000 stallswith every product having its particular street, hadits own mosques, courtyards and fountains, and alsofunctioned as the stock exchange and bank.

In 1546, according to one study, there were 4,730shops belonging to private foundations in the city,along with 987 located in provincial towns but serv-

2As mentioned before, the government’s ability to control agricul-ture and manufacturing in the economy and to ensure the exploi-tation of every other province in the empire just to keep Istanbulprosperous was obvious: “By 1700 [the city] was consuming aboutfour million sheep, three million lambs and 200,000 cows a year,and 500 tons of wheat a day. In winter each of the city’s 133 ovenshad to have a reserve of three months’ supply of wheat to ensurecheap bread. Coffee and rice were forbidden to leave the city sothat abundance shall reign . . . Government policy, and the systemof feeding the poor through the mosques, kept Constantinople oneof the best fed cities in Europe” (Mansel, 1996: 119). Supplieswere guaranteed by a complex system of assigning quotas to regis-tered rural farmers and making sure that they were bought at lowprices, brought to the capital and sold cheap. For example, “theChristian inhabitants of Hemsin [in the Black Sea region] everyyear sent the Palace in Istanbul. . . 7,092 kg of honey,. . . 2,560kg of beeswax and the same quantity of clarified butter. Deliverywas demanded in lieu of head tax. In order to guarantee the punc-tual arrival of these foodstuffs and raw-materials, the adminis-tration of the Sultan’s kitchens even procured a special rescriptprotecting the peasant producers from the exactions of local digni-taries . . . [O]n the entire western coast of Anatolia, the sale ofgrapes to producers of wine was forbidden in numerous rescripts”(Faroqhi, 1984: 77–82). Here we should add that the OttomanEmpire did not interfere with the religious or cultural practices ofits subjects. It allowed them to practice their faith and maintaintheir own identity and patterns of authority. In return, they paidspecial taxes for the privilege. For similar arrangements for oliveoil and grain see Issawi (1980), pp. 24–25.


ing religious foundations in the capital. In addition,there were 2,300 shops belonging to thevakif of theAya Sophia mosque (Barkan and Ayverdi, 1970, citedin Faroqhi, 1984), and many more belonging to theSultan’s own foundations. Thus Faroqhi estimatesthat in 1550, Istanbul must have contained many morethan 10,000 foundation-owned shops actually ten-anted by craftsmen and merchants (Faroqhi, 1984).

All ethnic groups were involved in urban com-merce: Turks were in foodstuffs retailing since evenbefore the Ottoman conquest of Constantinople whenthe hinterland of the city passed into Turkish hands,because it was easier for the Turkish colony to main-tain steady relations with the outlying districts(Johnson, 1922). In contrast to the ethnicallyorganized neighborhoods of the city where religiousleaders had a controlling power, in the commercialareas, people of different religious and ethnic groupsworked side-by-side under the control and supervisionof the guild leaders (Ç elik 1993). This soon changedas the empire started to decline.

The relative economic and political decline is usu-ally explained by the following factors: “the increas-ing cost of armaments and war; population changes;the great inflation of the sixteenth and seventeenthcenturies and the continuing rise in prices in the eight-eenth; technological stagnation in agriculture, trans-port, and the handicrafts; . . . an unfavorable balanceof trade with, and outflow of bullion to, Iran andIndia; and the effects on the Ottoman economy andsociety of increasing contacts with Europe” (Issawi,1980: 1).

In the nineteenth century, the influx of Europeanmachine-made goods devastated local manufacturing,when commercial treaties allowed the cheaper circu-lation of foreign products. The progressively greaterlinking of the city with the capitalist world had furtherconsequences for the organization of retailing withinIstanbul. The effect of European merchants setting upin business in the city and the importation of foreigngoods was disastrous for many of the producer–retailers and the crafts guilds. The number and impor-tance of producer–retailers declined, as the city(especially Galata and Pera) became an outlet forimported European products. At the same time, theminority groups (the Armenians who became themain merchants from the early eighteenth century, theGreeks, and to a lesser extent the Jews) had obtaineda commanding lead in the trade and finance of theempire. In 1838, a treaty opened the empire to foreigncapital; and the minorities became the most dynamicintermediaries between European capital and localmarkets, as well as continuing to be the leading localentrepreneurs. In 1850, there were 36,000 Armenianmerchants, artisans, and shopkeepers in Istanbul insuch important trades as jewelry, many branches oftextiles, gold, silver, copper work, and export busi-ness. Shoemaking, carpentry, masonry, breadmakingand import business were in the hands of the Greeks.

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The antiquity dealers and rug merchants were Jews(Issawi, 1980).

The distinction in function between manufacture,wholesale and retail led to increased land-use differ-entiation and specialization. This, together withefforts to transform Istanbul into a more Western city,changed the commercial landscape of the city byincreasing the importance of the north of the GoldenHorn (Galata and Pera) at the expense of Istanbul pro-per (the peninsula). Galata had been the non-Muslimcenter of the capital since the conquest, and remaineda suburb until the 1840s. “As the empire graduallysubmitted to the economic dominance of Westernpowers, Galata naturally became the first place toaccommodate European tradesmen and to developaccording to their needs, while Istanbul preserved itstraditional and predominantly Muslim character”(Celik 1993: 42). Consequently, the cosmopolitanGalata grew in importance. So did the upper-classresidential quarter Pera (Beyoglu), which was locatedon the hill to the north of Galata. The hub of the citybecame the kilometer-long bridge across the GoldenHorn; and Istanbul proper (the peninsula) became sec-ondary to Galata and Pera across the bridge, andeventually was abandoned to the working class.“Between 1838 and 1847 land values in Pera rose by75 per cent; between 1820 and 1850 rents in theGrand Bazaar fell by 90 per cent” (Mansel, 1996:284). In 1875, a short underground funicular railway(Istanbul Tunel) was opened between Galata and Per-a’s main street Grande Rue de Pera (today’s IstiklalCaddesi), strengthening the importance of Galata andPera as opposed to Istanbul proper (today’s Eminonudistrict).(Fig. 1)

In the nineteenth century Karakoÿ, at the foot ofthe Galata Bridge on the Galata side, developed as abusiness center especially associated with inter-national trade and banking. The strip along the Bosp-orus shoreline from Karakoÿ toward Tophane andKabatas evolved into a commercial waterfront. Peraturned into a up-market Western shopping area.Although Galata and Pera benefited more from theurban reform, efforts to build wide streets alsochanged the commercial core of the peninsula: “theconnection of the Emino¨nu quay [at the other foot ofthe Galata Bridge] via the commercial zones to Beya-zit and the Divanyolu was achieved. Beyazit was alsolinked to the Marmara shore, and the widenedDivanyolu was given a new monumentality” (Ç elik,1993: 80).

The physical reorganization of retailing was butone aspect of a series of changes resulting from a shiftin individual producing and retailing to foreign capitalwith its own organization. In fact, the results of theefforts to establish a more modern city administrationwere more substantial, because they dissolved the tra-ditional decentralization and introduced centralizedcontrol. A more Western administration replaced theold institutions and stripped thevakif and loncaauth-orities of their powers, by forming commissions to


Figure 1 Ottoman Istanbul and the shift of the commercial hub to Pera.

undertake their social service responsibilities includ-ing the provision of basic needs (mainly foodstuffs)and the control of markets (Ç elik, 1993). As the citybecame more and more Western with more and moreinvolvement of European capital, foreign tradersattacked the monopolies of the city guilds and filledthe city with their own shops. French, German andBritish communities, each with its chamber of com-merce, helped transform Pera and Galata. Pera’sstreets were “bordered with shops kept by Italians,Greeks, and Frenchmen” (Smith, 1850: 50, cited inWheatcroft, 1993: 150). Along the Grande Rue, tradeflourished in the shops and department stores stockedwith luxury European goods. Hayden’s store ofEnglish fabrics, Madame de Milleville’s apparel shop,Madame Vapillon’s boutique, Paquin d’Istanbul, LaMaison de Modes Françaises, La Maison de Modes

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et de Fournitures pour Dammes, Salon de Modes, andMadame Trophe’s millinery were the clothing storesthat dominated the Grande Rue (Naum-Duhani, 1947,cited in Celik, 1993). Istanbul hosted quite a numberof department stores such as Louvre, Au Lion, BonMarche, Au Camelia, Bazar Allemand, Carlmann etBlumberg, Orosdi Back, Au Paon, and Baker Busi-ness (Toprak, 1995). The Bon Marche´ specialized inhousehold articles, leather goods, stationary, huntingequipment, cosmetics, jewelry, bronze art objects,toys, optical instruments and eyeglasses, photographicequipment, drugs, gloves, hosiery, women’s lingerie,umbrellas, clothing, china, crystal, wines, and liquors.The Bazar Allemand also had a diverse collection ofarticles, but was famous for its clocks and cuckoo-clocks (Naum-Duhani, 1947, cited in Ç elik, 1993:133–134).


Running off the Grande Rue de Pera were coveredpassages lined with shops, typical of nineteenth cen-tury Paris. One of them (the Cite´ de Pera) occupieda surface area of approximately 4,600 square meterswith its two large and nineteen small stores (C¸ elik,1993). “When the luxurious Cite´ de Pera (today’sCicek Pasaji) was opened in 1876, the newspaper LaTurquie called it a monument of which even Pariswould be proud” (Mansel, 1996: 287). Two other gal-leries (the Passage d’Europe with a variety of shopsand the Passage Crespin with its shoemakers) werealso “miniature models of their European precursors,replete with metal structures, glass roofs, and ornateneoclassical interior and exterior fac¸ades” (Celik,1993: 134).

In sum, the Westernization efforts of the 19th cen-tury turned Istanbul into a dual city: Istanbul properon one side and Galata and Pera on the other side ofthe Golden Horn. This was accompanied by thedivision of the urban economy into different sectors—the traditional, small traders and large domestic andforeign capital—each of which having its character-istic retail outlets. The traditional outlets, sometimesstill producer–retailers, survived especially in Istanbulproper. There also appeared a new type of heterogen-eity as the “classical balances of the ethno–religiousdivision of labor and hierarchy were transformed”(Keyder and O¨ ncu, 1994). That is, the Armenian andGreek communities prospered, at the expense of theMuslim population of the city, again yielding anincreasingly bifurcated city.

When the First World War brought about thedestruction of the Ottoman Empire, Istanbul’s role asthe nodal point of commercial and trade networkswith Europe disappeared. The city lost a substantialpart of its commercial relations especially after thenationalists established a new republic from theshards of the old empire. In 1924, Ankara wasdeclared the capital of the new Turkish Republic,partly because of its geographic and strategic position,secure against intrusion of foreigners, and partlybecause of its symbolic value for the nationalist strug-gle.

Istanbul symbolized corruption, insidious tra-ditions, intrigue and cosmopolitanism, and should bereduced to being the second city of a republic, afterexisting as an imperial capital for 1,593 years(Mansel, 1996). Consequently, the foreign capital waseliminated, the dominance of minority groups wasdiminished, and finally Istanbul was stripped from itsresponsibilities as the capital. The result was a dwin-dling of commercial activity as well as of population.By 1922, the population of the city had declined toaround 600,000 from an estimated 1.1 million beforethe war. The upheavals of the 1908–23 period hadalready led to the reduction of its minority groups,leaving the Turkish Republic with the problem of theabsence of a Muslim–Turk bourgeoisie in trade (about150,000 Greeks left the city during 1922–1924).Eventually, more and more minorities left, first after

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1942 when a tax levy penalized minority businesses,and then after 1955 following some serious riots.After all these upheavals, there remained only a Greekcommunity of 2,000. The elimination of Europeancapital and the diminishing of the minority groupstransformed Istanbul into a much more homogeneouscity (ibid.).

A more contemporary account: up to the1990sThe changing commercial function of Istanbul inthe world as a national city of a republicIstanbul’s location, which “seemed to have beenexpressly created to receive the wealth of the fourcorners of the earth” in Mansel’s words (Mansel,1996: 2), did not mean much during the first 6 dec-ades of the republic. Not only did the early indus-trialization efforts of the republic bypass Istanbul atleast until 1945 (Keyder and O¨ ncu, 1994), but alsoits locational advantages became meaningless. Turkeywas surrounded by inward-looking nation states, eachwith their own closed markets, such as Bulgaria,Romania and the Soviet Republics. Neither did hav-ing easy access to the Black Sea mean much; nor toAfrica, the Mediterranean, the Danube, or theEuphrates for that matter. The government had to cre-ate a Muslim–Turk bourgeoisie which would startproducing for the domestic market.

The creation of the business class became anofficial project of the republic. The state started, inthe 1920’s, to construct an entrepreneurial bour-geoisie out of returning Turkish e´migres from the lostprovinces of the empire, especially the Crimea, whowere given properties and enterprises left by departingor dead Greeks, Armenians, and Jews (Keyder, 1979).In the post-1945 period, Istanbul finally emerged as aparticipant, this time as part of a national developmentprogram through state-protected import-substitutingindustrialization. Many Anatolian merchants transfor-med themselves into an industrial bourgeoisie andmany of them located in Istanbul. This wasaccompanied by a remarkable influx of Anatolians.The population began to grow at an overwhelmingrate reaching 3 million in 1970. The state not onlycreated the business class, but also protected itthrough the growth strategy of import-substitutionindustrialization. Consequently, the city became anindustrial center producing more than its share for thewhole country: in the late 1970s more than 30 percent of the country’s industrial value-added was real-ized in and around Istanbul. The large domestic mar-ket, the oligopolistic structure, and strong support andprotection from the state made easy profits possible,especially for the newly emerging industrialists. By1973, 44 per cent of all private manufacturing estab-lishments employing more than ten workers werelocated in Istanbul, accounting for 51 per cent of totalemployment in Turkish private industry (Keyder andOncu, 1994). This was accompanied by the prolifer-


ation of a large number of small, labor-intensivemanufacturing and commercial enterprises includinga large number of wholesalers and retailers.

The changing morphology of commercial activity inIstanbul in the pre-1980 periodFor the first 6 decades of the republic, the economywas producer-driven; the basic concern was that ofproduction and availability of goods. Distribution wasa secondary concern and was left to a traditionalsmall-scale network of traders. Agricultural goodswere produced by a large number of growers, anddistributed by a great many wholesalers and brokerswho determined the price and enjoyed high profitmargins (more than 70 per cent of the selling priceof vegetables according to Erem, 1989). Goods wentthrough channels in which growers and manufacturerssold to wholesalers, and wholesalers to several levelsof sub-wholesalers before reaching the city’s retailers.Small-scale, capital-weak, independent, family-owned and single-location retailers dominated theindustry. Without the guilds, retailing became a tradeknown for its high turnover, characterized by ease ofentry and a high rate of attrition.

A further distinction in function between manufac-ture, wholesale, and retail led to increased land-usedifferentiation and specialization. During the 1950–1965 period, the city’s up-market commercial stripslid towards the north as far as Osmanbey along Hala-skargazi Caddesi via Taksim-Harbiye. Also, as anextension from Karakoÿ and Kabatas joined thebranch coming down from Taksim via Gu¨mussuyuCaddesi, the up-market commercial strip expanded.Meanwhile the separate centers of Mecidiyekoÿ andBesiktas began to attract commercial activities. Theopening of the Bosporus Bridge between Asia andEurope and its beltways in 1973 further increased theaccessibility of the Taksim–Sisli–Mecidiyekoÿ–Buyukdere axis, thus adding to the importance of thearea. Between 1965 and 1984, up-market commercialactivities reached Mecidiyekoÿ (Tekeli, 1994).

All these developments were at the expense ofIstanbul peninsula and Pera, especially in terms ofprestige; but as long as warehousing activities con-tinued to be a very important part of urban commerce,Eminonu and Karakoÿ remained part of the centralbusiness district. Despite a decrease in the relativeimportance of Emino¨nu, for example, this area con-tinued to be the most important center of wholesalingwith 48 per cent of the area between the Atatu¨rk andFatih Bridges being covered with open and closedstorage areas. Even in 1980, 25 per cent of wholesaleand retail establishments (72 per cent of all wholesaletrade establishments) were located in the Emino¨nuarea. The same year, 11.6 per cent of wholesale andretail establishments were located across the bridgein Karakoy (Tekeli, 1994).

The government’s influence on retailing and distri-bution systems through participation and regulationwas also notable in the city, but did not undermine the

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private sector. The government controlled the entiresupply of certain products, such as tea, tobacco andalcoholic beverages, for which it enforced uniformprices: and encouraged the formation of consumercooperatives for government employees (such asOrdu Pazarlari) or for urban populations in general(such as supermarkets with municipal ownership).However, despite government-supported efforts largeretailers were never widely diffused nor adopted byconsumers as their main food retailing institution. By1975 the city had a population of 3.9 million. Smallretailers remained the main retail institution for mostof the population.

Multinational retail firms were almost unheard of.The only exception was the Migros-Tu¨rk supermarketin Istanbul, which remained as the unique exampleuntil the withdrawal of the Swiss Federation from theTurkish market in 1975. Migros-Tu¨rk’s Swiss partnerleft Istanbul just before a deep economic crisis hit thecountry in 1978–79. This crisis caused the govern-ment to take important steps toward stabilization ofthe economy. Much of the burden fell on imports,which resulted in severe shortages of basic commodi-ties. The following years brought deep economicproblems, reflected in black markets and scarcity ofeven the most basic consumption items. In the late1970s, a large number of basic necessities, fromliquid fuel to coffee, were only available on the blackmarket. This was the time period when Tahtakale (inthe Covered Bazaar area) developed into a center forthe blackmarket in foreign exchange.

By 1980, the city’s population was 4.7 million; andeven though the ministries and government organiza-tions were all located in Ankara, the largest domesticconglomerates such as Koç, Sabanci, and Ç ukurovahad their headquarters in Istanbul. The city was show-ing promise that in the future it could easily becomeas at the height of the Byzantine and OttomanEmpires, the largest city in Europe. However, thedemographic growth had not been accompanied withinflux of wealth. Moreover, much of the domesticproduction was crucially dependent on the availabilityof imports. It soon became clear that the import-sub-stitution strategy, which was largely successful in theearly phase of creating an industrial base in consump-tion goods, would find it increasingly difficult to per-form well in the phase of intermediate and capitalgoods (Senses, 1986, 1991). A new model of develop-ment with an outward-oriented strategy emergedwhich aimed to develop the export potential of thecountry by recognizing and coming to terms with glo-bal competitive conditions.

The consequent transformation reshaped Istanbuland made it the “capitalist” capital of the country, ifnot the administrative one. The private sector wascalled on to play a more dynamic role in nationalgrowth, and to gradually take the leading role fromthe state, even though state funding never lost itsimportance. On the contrary, in the 1980s, Istanbulreceived a major influx of state funding for the first


time in the history of the republic (Keyder and O¨ ncu,1994: 397). In the late 1980s and the 1990s, againwith the help of the state, business relationships withEurope were tightened through both direct foreigninvestments and the formation of European–Turkishalliances, which were explicit responses to the per-ceived threats posed by the 1992 program (The SingleEuropean Market—for the European investors) and tothe threats posed by the 1996 factor (the customsunion with Europe—for the Turkish firms) (Tokatliand Boyaci, 1997). Moreover, in the post-1980 per-iod, Turkey began to promote itself as a prospectivebridge between the capitalist world and the formerSoviet republics. Consequently, large Istanbul-basedcompanies such as Koç, Sabanci, and Ç ukurovaopened businesses with global concerns (with or with-out the cooperation of foreign companies) in a largerange of areas from manufacturing to producer ser-vices and retailing.

Between 1983 and 1989 the local government con-ducted numerous projects designed to enhance theglobal image of Istanbul and thus encourage invest-ment. Among them were a series of ambitious infras-tructural investments and urban renewal projects dur-ing which, among others, Istanbul’s wholesale freshproduce market and the hardware/industrial spareparts district (Persembe Pazari) was also dislocated(Keyder and O¨ ncu, 1994). This was just one exampleof how enhancing the global image of Istanbul hadthe potential of hurting small businesses. Since 1989,and especially after 1994, when an Islamist politicalparty with anti-Western themes won the mayoralty ofIstanbul after successfully building a nation-widegrass-roots party organization and establishingespecially successful contacts with the low-incomeresidents and small businesses, urban renewal effortshave slowed down. Even though “globalization” con-tinues to be a highly used phrase in administrativeand business circles, the threat posed to the smallbusinessmen by large domestic and European cor-porations in many areas, including retailing, has prob-ably played an important role in the rise of the Isla-mist party which has a protectionist attitude.However, the rise of the protectionist attitude doesnot really undermine the fact that Istanbul’s economyis now firmly linked to the developed economies ofEurope and the rest of the world. Retailing is onlyone area demonstrating this. We will now turn to amore detailed account of the commerce-relatedchanges in the city.

The changing morphology of commercial activity inIstanbul in the post-1980 periodIn the 1990s, Istanbul has experienced some changesconcerning the reallocation of resources and powerwithin the sphere of urban commerce, as the domesticcomponents of commerce (wholesaling and retailing)have started to receive attention from large domesticand foreign capital. This has led the emergence ofnew consumption landscapes, and changed the recom-

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position of urban form in relation tocommerce.(Fig. 2)

Even casual observations reveal a reallocation ofresources and power within urban commerce whichindicates that a change from a national to a globalscale of integration is under way. A minority ofpeople in Istanbul are truly enjoying the change. Inurban commerce, these people have been those groupof capitalists and managers of retail outlets, infor-mation offices, international trade companies, and realestate businesses and developers who are connectedto networks of similar businesses in other parts of theworld. Through them, the city’s distribution systemseems to be stumbling towards a more Western distri-bution system relying on a small, wealthy and West-ern oriented upper class, together with an expandingmiddle class of salaried workers and small businessowners. As a growing and sizable consumer market(in 1990, Istanbul was a large metropolitan city witha population of over 7.3 million) is providing retailerswith a large, steady and consistent demand for pro-ducts, the transition is bringing an uncritical importof Western culture. The transfer of Western capitaland technology to both the manufacturing andretailing ends is now obvious in Istanbul. The rapidtransmission of the Western consumption culture, atleast among some segments of the population, is astandard one, thanks to the inevitable McDonaldsand Benettons.

One very visibly successful group has been thoseinternational, mostly European, retailers who enteredinto the Istanbul market, mostly with partnershipswith large domestic corporations and to a lesser extentwithout. Given that in the late 1970s there weredoubts as to whether distribution should be left to theworkings of the capitalist market, the emergence ofthe biggest capitalists in retailing in the late 1980sand the 1990s has been quite a change. The examplesinclude Metro International, Carrefour, Promode´s, LaFayette (whose subsidiary Monoprix has very recentlysigned a partnership agreement with Transtu¨rkHolding), McDonalds, Wendy’s, Sicily’s Pizza, PizzaHut, Benetton, Sisley, Stefanel, Marks and Spencer,Toys R Us, and Bauhaus.3 Another visible develop-ment has been the involvement of large domesticcapital (mainly manufacturers) in the retail market(such as Koç Holding, Sabanci Holding, Transtu¨rkHolding and Dogus Holding). Together, large foreignand domestic retailers have created a demand for sup-port industries (from information companies such asInfoscan and Zet Nielsen to shopping mall developersor professional real estate companies).

One factor that has particularly increased theattractiveness of the retail market for large domesticand foreign companies has been the significant

3The description of the internationalization of the Turkish retailsector, and the explanation as to why it happened in the late 1980sand the 1990s can be found elsewhere (see Tokatli and Boyaci,1997).


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increases in per capita income in the country since1980. This was partly thanks to the new industrializ-ation strategy which brought the liberalization offoreign trade and exchange transactions, provision ofgenerous fiscal incentives to exporters, encourage-ment of foreign private investment, and increasedreliance on market forces in line with the privatizationobjective. In 1982, the per capita income was $1,152for the country; in 1995 it rose to $2,685 per capitawith total consumer expenditure of $1,406 per capita.Istanbul has been associated with a disproportionateshare of the increases in national income, due to thefact that the increase had come from interest, rent andprofits, whereas there had been a sharp decline in theshare of both agricultural incomes, and wages and sal-aries (Boratav, 1986; Senses, 1991). The consequenttransfer of resources from rural areas to Istanbul prim-arily, as well as to the other large cities of the country,has created a segment of relatively well-off urbanpopulation; much better-off than the average statisticsimply. This has meant substantial improvements inthe standard of living, at least for some segments ofthe population, even though the rate of unemploymentincreased in the 1980s (nationally 15–20 per cent ofthe active population of the country, depending on thesource) and there have been absolute declines in thestandard of living of large segments of the population.

All these developments have been playing animportant role in the recomposition of consumptionlandscapes, as well as in the recomposition of theurban form. First of all, large domestic and foreigncapital has introduced a new spatial imprint to Istan-bul with their large and free-standing stores, multipleestablishments scattered throughout the urban system,and large, purpose-built shopping center develop-ments.

Up-market retail ribbons of the Sisli/Mecidiyekoÿcommercial strip such as Vali Konagi Caddesi andRumeli Caddesi reveal the new participants in urbancommerce by accommodating quite a number offoreign retailers such as the Marks and Spencerdepartment store or Max Mara and Gianni Versaciboutiques (Figs 3 and 4). Around these commercialareas, well-to-do Besiktas neighborhoods such as SisliMerkez, Etiler, Tu¨rkali, Bebek, and Nispetiye houseaffluent residents of the city supporting abundantshopping possibilities. Besiktas’s Akmerkez shoppingcenter (Etiler), which was opened in 1993 with its55,000 square meter sales area, does not share muchwith the Grand Bazaar. Its claim to fame is the doubleawards that it received from ICSC-Europe and ICSC-International for the best shopping mall in 1995 and1996.4 Apart from shopping malls and retail ribbonsalong main streets, some free-standing large retailerssuch as Migros supermarket, MFI furniture store,Carsi department store and Office 1 stationary store

4Akmerkez has so far been a successful shopping center with novacancy in 1996 and rent rates as high as $150 per square meterand sale rates as high as $1,400.

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Figure 3 Foreign retailers on Sisli’s up-market retail ribbon:Marks and Spencer and McDonalds.

are also affecting the recomposition of the urban formin this part of the city. Their major influence has beenthe launching of the commercial areas even furthernorth towards Levent-Maslak where transportationand the availability of large pieces of land for retailersoffer new possibilities. (See Fig. 2)

On the other side of the Golden Horn, Istanbulextends westward all the way to Bakirkoÿ, anotherlarge residential area with its affluent Yesilkoÿ, Yesi-lyurt and Atakoy neighborhoods. This district’s up-market retail ribbon, Istasyon Caddesi, accommodatesmany up-market retailers. In Bakirkoÿ area, threeWestern style shopping malls house large foreignretailers such as Printemps and Toys R Us, large dom-estic retailers such as Migros and Begendik, and manyother up-market retailers. Galleria shopping mall withits 79,000 square meter sales areas, was opened in1987; Atrium in 1992 and Carousel in 1995. Here, aswell, following the major transportation routes, free-standing large retailers push the commercial areas inseveral directions: towards Gu¨nesli (Spectrum station-ary store, Metro Hypermarket, Mr. Bricolage DIY,Contour Hypermarket), towards Merter (Migros Hyp-ermarket, Tem Hypermarket, Go¨tzen DIY), andtowards Avcilar (Kiler Hypermarket).

On the Anatolian side, there is Kadikoÿ with its up-market commercial strip Bagdat Caddesi, and affluent


Figure 4 Foreign retailers on Sisli’s up-market retail ribbon:Max Mara and Gianni Versace.

neighborhoods such as Bostanci, Caddebostan, Cafer-aga, Erenko¨y, and Fenerbahc¸e. The commercial centeron the Anatolian side is now sliding towards Altuniz-ade and Kozyatagi, thanks to locational choices ofsome of the largest corporations for their head-quarters. Carrefour Hypermarket has been locatedthere since 1996, together with Bauhaus DIY. Evenfurther to the south-east along the Marmara shore,there are now important commercial developments,once again thanks to some free-standing largeretailers. Ismar Hypermarket, AS2000 DIY, andSpectrum stationary store are all located inKartal/Pendik area.

Despite all of these up-market supermarkets, hyper-markets and department stores, the average citizen ofIstanbul, together with the urban poor a step furtherdown in the hierarchy, make sure that more traditionalforms of retailing (such as small-scale retailing, streettrading and hawking) still persist in almost all neigh-borhoods of the city. Many small retailers, whichserve these groups, have already slipped down the

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hierarchy due to the imposition of larger retailers onsmaller ones; some have found ways to accommodatethemselves at lower levels. Others used the new econ-omic opportunities and challenges to lift themselvesup somewhat in the hierarchy. There are now con-cerns as to whether small retailers will suffer morefrom the imposition of larger retailers on smaller onesin the city. As large retailers utilized their strengthsand successfully captured an increased market sharein the late 1980s and early 1990s, the complaints ofsmall business organizations have concentrated on theemergence of big and medium-sized local chains andtheir disruptive effects on traditional retail outlets.According to one source, the total number of bakkals(traditional corner stores) in Istanbul decreased from16,527 in 1987 to 11,800 in 1992 (Yardimci, 1997).It is quite difficult to document the displacementimpacts of large retailers because retailing has alwaysbeen known for its high turnover, characterized byease of entry and a high rate of attrition. The processhas certainly already created quite a number of losersamong the ranks of small retailers.5

On the other hand, there are those even among theunderprivileged who are trying to benefit from thecity’s new role. “Manufacturing and selling more bluejeans and leather jackets than carpets and kilims, theGrand Bazaar and the surrounding hans have becomethe Oxford Street of eastern Europe and central Asia”(Mansel, 1996: 432). This has brought the unregis-tered economy new opportunities. Consequently, theunregistered economy has grown, as unregulated salesof consumer goods to smugglers from Russia, easternEurope and central Asia alone have become anactivity creating 200,000 jobs (Financial Times,1994). The explanation of this new development isthat the collapse of the Soviet Union has really putIstanbul, once again as in its Ottoman past, at thecrossroads of trade routes.

Conclusion

This paper has been an effort to understand thechanges in Istanbul’s commercial landscape over timeby attending to the changing commercial function ofIstanbul within the world economy and to the chang-ing internal commercial relations. We have lookedinto the ever-changing morphology of commercialactivity (wholesale trade and especially retailing) anddiscussed, over a time period of a few centuries, (1)the reallocation of resources and power within thesphere of urban commerce, (2) the emergence of new

5One subject which is left unexplored here, due to space limi-tations, is how small businesses are trying to react to the threatscoming from large domestic and European retailers. Their struggle,through from lobbying efforts to establishing voluntary buyingassociations, deserves more attention. In Istanbul, one of the latestdevelopments was the establishment of Birmar in 1997 whichbrought 54 small retailers together in the form of a voluntaryorganization.


consumption landscapes, and (3) the recomposition ofurban form in relation to commerce.

At the core of the paper, there has been the spatialexpression and manifestation of the two transform-ations that Istanbul experienced: first as the Ottomancapital in the nineteenth century; second, as the capi-talist capital of the Turkish Republic since the 1980s.We have shown that in both transformations, thechanges in the ways in which the state and marketsare interrelated in the city, and the changing degree ofintegration with the outside world (especially Europe)give clues concerning the changing power relationswithin commerce and their manifestations in space.

In the case of urban commerce, in spatial terms,the first transformation was well represented by theshifting of the hub from the Grand Bazaar to Pera’sGrande Rue in the nineteenth century, and the emerg-ence on the commercial scene of the European storessuch as Bon Marche´, Au Camelia, and Bazar Allem-and. This has happened when the state and marketsstarted to become separate and equally powerfulidentities competing with each other, whereas in theclassical period markets had been almost completelysubordinated to the state. This was also the time per-iod when the empire gradually submitted to the econ-omic dominance of Western powers. In 1838, a treatyopened the empire to foreign capital; at the same time,the minority groups (the Armenians, the Greeks, andto a lesser extent Jews) had obtained a commandinglead in the trade and finance of the empire.

The most recent transformation of the 1990s is alsohappening when the relationship between the stateand markets is changing. An important aspect of the1990s is that in this period the private entrepreneurialsector has begun to look ready to take the leadingrole from the state in the development process. Effortstowards a cautious and gradual retreat of the statefrom the economic activities have been intensified andthe private entrepreneurial sector has diversified itsactivities beyond manufacturing. This was also thetime period when a new model of development withan outward-oriented strategy emerged which aimed todevelop the export potential of the country by reco-gnizing and coming to terms with global competitiveconditions. Consequently, a greater integration withinternational markets has been established. The recentchanges in the economic and spatial organization ofurban commerce should be understood in this context.In spatial terms, the transformation was representedby the new spatial imprint of urban commerce in thecity with its free-standing stores, multiple establish-ments scattered throughout the urban system, andlarge purpose-built shopping center developments.6

The way the city is stumbling towards a Westerndistribution system today exhibits some similarities toits own experience when Istanbul underwent a trans-

6For a more detailed analysis of the spatial imprint for the countryas a whole, see Tokatli and Boyaci (1998).

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formation into a more modern and Western city from1838 to 1908. The transfer of Western capital andtechnology to both manufacturing and retailing endsis now obvious, and the rapid transmission of theWestern consumption culture is clear. Many decadesafter the disappearance of Bon Marche´, Au Camelia,and Bazar Allemand, the emergence on the commer-cial scene of mostly European stores became a veryvisible development once again. This time around theresidents of Istanbul had to learn how to pronouncethe names such as Carrefour, Marks and Spencer, andBauhaus. Once again Istanbul is experiencing a trans-formation which serves some segments of the popu-lation more than others, thus increasing socialdivisions and inequality. Once again, this is not with-out its backlash: here the reactions of small businessesto the new transformation with or without Islamistattitudes should be mentioned.

The long-term result of the nineteenth centurytransformation turned out to be almost the oppositeof the intended: in the twentieth century Istanbulbecame a national city with stronger links to the dom-estic economy of a national republic as opposed to amore and more cosmopolitan city of a world empirewith strong ties to the West. What the long-termresults will be this time is an open question.

Acknowledgement

Robert Beauregard read an earlier draft of this articleand made very helpful suggestions. We are gratefulto him.

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