Shwapno aims to clock $2b sales in seven years

Shwapno has posted operating profit in the last two years and witnessed a nearly six-fold increase in sales in the past one decade. And the fastest-growing retail chain in Bangladesh hopes to maintain its momentum in the coming years.

"We expect a turnover of about $2 billion in the next seven or eight years," said Sabbir Hasan Nasir, executive director of ACI Logistics, which owns Shwapno.

Currently, the brand has a network of more than 440 outlets, mostly in cities and towns. It is planning to widen its footprint by raising the number of stores to 4,000 in the next seven years.

Speaking to The Daily Star during an interview recently, Nasir discussed how the chain is growing to become a profitable company and reach the doorsteps of people.

When Shwapno started out in 2008, the acceptability of the brand was low, he said.

As it was going through a learning curve, the CEO of the company changed three times.

"My first responsibility was to make Shwapno acceptable to consumers," said the fourth CEO of the brand. He has been leading the company since 2012.

He said with continued efforts, Shwapno has become relevant to consumers. It has been the market leader in the retail chain sector since 2013.

"As a brand and organisation, Shwapno is phenomenally successful in making an operating profit."

The company has been receiving the Best Brand Awards, an international competition that recognises the concept and design of brands from around the globe, since 2015-16.

"Now, consumers have accepted us as the number one brand. Our first target was to ensure the growth of the same-store sales, increase the portfolio, and make it acceptable to middle-class consumers," Nasir said.

The company has been making operating profit for two years while its operational cash flow has been in the positive territory for five years.

"On the other hand, if we consider depreciation and amortisation, we have been making profits for the last two years. This means the business is operationally successful and sustainable," he said.

Over the years, sales grew. In 2013, turnover was Tk 320 crore. Since then, it has surged six-fold to Tk 1,832 crore.

The gross margin, which measures a company's gross profit compared to revenues, has doubled to more than 18 percent, on the back of scale benefits as well as through its direct sourcing from farmers.

"These indicators are telling that operational parameters are in good shape."

Nasir hopes the way the number of stores is increasing, the operating profit will keep rising and the same-store sales growth will grow.

"We have expanded our footprint without increasing debts. We have grown through our partners' investment."

Currently, the company is working on two fronts: raising the number of stores further and lifting the growth of same-store sales.

The company is also broadening its footprint by increasing loyalty, a key growth driver.

The CEO also talked about the challenges facing the retail chain industry.

Nasir pointed out some barriers, including the value-added tax and consumers' slow adoption of the idea of supermarkets, and finding suitable locations to open new outlets.

The disruption to the supply chain caused by the Russia-Ukraine war has emerged as another challenge for the sector, creating supply shortages for many products.

Another barrier is the restriction on imports slapped after a sharp decline of the country's foreign currency reserves.

Shwapno is running a lot of promotional campaigns to attract customers.

There are 4,000-5,000 products available on the shelves of the brand. The prices of a majority of them are not higher than those in the unorganised retail market if discounts and other offers are considered, Nasir said.

"I think we are cheaper in the fast-moving consumer goods sector even if you consider VAT."

He pointed out that the prices of fresh products such as rice, fish and meat are cheaper because they are sourced directly from producers.

Around 23 percent of the items up for grabs at Shwapno outlets come from direct sourcing.

Shwapno is also working to boost online sales with a view to catapulting it to a stronger position in the next four to five years.

"We are installing the omni channel infrastructure. From June 2024, we will see strong growth in the online market."

Introduced during the peak of the Covid-19 pandemic, home delivery has turned out as an important driver for the company and it currently accounts for 2-3 percent of the sales.

"Online sales will generate 10 percent of the total revenue in the next seven years," he said.

Shwapno is the first retailer in Southeast Asia to receive the global good agriculture practice (GAP) certification -- a recognition of its efforts aimed at ensuring product quality.

"We are the only retailer in the super-chain industry in Bangladesh to get a hazard analysis and critical control points certification. We have a strong lab where we test our products."

"We have a large quality assurance team. We are one of the best-quality retail chains in Bangladesh."