Bangladesh is poised to be one of the world’s next great growth markets for discretionary consumption, according to a report released in Dhaka by Boston Consulting Group.
The report, titled “Bangladesh: The Surging Consumer Market Nobody Saw Coming,” summarized some key facts about the nation of 160 million people, whose median age is 24: noting that middle-income and affluent consumers are expected to triple to 34 million by 2025. The report said the middle-income population is growing by an average of 10.5 percent annually.
“Bangladesh is one of the greatest untapped growth markets in Asia, yet it has been off the radar of most major consumer-product companies,” said Zarif Munir, a BCG partner and coauthor of the report. “Companies that move now to get into position have an opportunity to build a lasting competitive advantage.”
In a separate report, the World Bank laid out a road map for growth in Bangladesh over the coming years. It noted that exports from the garment industry made up a large part of the growth – at $25.5 billion in 2014-15, the sector represented more than 80 percent of the country’s total exports of $31.2 billion.
While Bangladesh is the second-largest apparel producer in the world, it has only 5 percent of the $450 billion global apparel market, as against China’s 40 percent.
The study noted that Bangladesh could create 5.4 million new jobs in the apparel industry, and 13.5 million jobs if it managed to capture an additional 20 percent of China’s apparel business.
The BCG study highlighted the importance of noting the distinct attitudes and cultural traits in Bangladesh that companies must take into account if they are to succeed in the market. Each year, two million Bangladeshis join the ranks of middle-class and affluent consumers, and they are highly optimistic about the future, value foreign brands, and are jumping onto the digital bandwagon, the study said.
Bangladeshis focus more attention on the immediate needs of their large households than consumers in many other large Asian emerging markets. Shopping trends include both a propensity toward using cash, as well as shopping from mom-and-pop retail outlets rather than at more modern channels, such as convenience stores and supermarkets, it said.
Brand consciousness is already strong in Bangladesh — with a huge potential demand for branded consumer products. Most Bangladeshis — 80 percent of the BCG survey — cited “brand” as a top factor influencing their buying decisions in the case of consumer durables. The majority of respondents also placed a high priority on quality.
However, more than half of the consumers were concerned about taking on debt, and preferred to pay cash. Around two-thirds said they believe that uncertainty about Bangladesh’s economy could affect their financial health.
As a result, the majority of those surveyed also cited price as a top priority.
“These findings indicate that while Bangladesh’s growing consumer class is eager to trade up to higher-end brands, goods, and services, they are also budget-conscious,” said Olivier Muehlstein, a BCG partner and another coauthor. “Companies must create a strong value-for-money proposition to win over Bangladeshi households.”
Consumer wealth is dispersing regionally, as well. The BCG report noted that over the next decade, there will be 63 cities whose middle-income and affluent consumer population is at least 100,000, compared with 36 cities now.
“We predict growth will occur more rapidly in eastern cities like Lakshmipur, Gazipur and Brahmanbaria and then in western cities like Jessore, Tangail and Jhenaidah,” the report said.