Demand for consumer products erodes
The demand for consumer products has declined in recent months due to a fall in consumers' disposable income, manufacturers said.
Their sales have gone down more in rural areas than among the urban people, they added.
“I've noticed a significant drop in demand this year," said Nasiruddin Biswas, managing director of Nasir Group of Industries that has a wide range of products, including melamine, sneakers, glass and cigarettes.
"Our sales have fallen significantly since the beginning of 2012-13 (July-June),†he said.
He said melamine sales have gone down by 30 percent and sneakers by 40 percent.
They now sell 5,000 pairs of sneakers a day from 8,000 pairs in 2011-12, he added.
Nasir Group sold 5,000 tonnes of float glass a month in 2011, but the volume has come down to 3,200 tonnes now.
“Now I'm spending most of my time with the marketing department to boost sales, but it's not working,†he said.
Biswas linked the slump in demand to a fall in farmers' income.
“Farmers do not get fair prices for their cash-generating crops such as paddy, jute and tobacco,†he said.
Consumer products are the manufactured goods that are purchased primarily for personal, family and household purposes.
These products include major household appliances, processed food and beverages, sugar, edible oil, apparels, sneakers and shoes, furniture, toys and jewellery.
According to manufacturers, sales of the consumer products have gone down, on average, by 20 percent this year compared to those a year ago.
Locally produced cigarettes and beverages were hit hard as their sales fell by as high as 30 percent.
Rural people are the main consumers of these products. Consumer products industry accounts for around one-third of Bangladesh's manufacturing sector. The wholesale and retail sector accounts for more than 14 percent of gross domestic product. These two sectors combinedly employ around 40 percent of the total workforce.
Of the consumer goods manufacturers in Bangladesh, Akij, Abul Khair, Meghna, Nasir, ACI and Transcom are the leading ones. Like Nasir, many of these groups have been witnessing a significant drop in their sales.
According to the manufacturers, rural people consume the majority of their products as nearly 80 percent people live in villages. These people rely mainly on farming of paddy and jute for their livelihood. But they did not get fair prices for their crops this year. A kilogram of fine quality rice is being sold at Tk 40-Tk 42 at the retail level, although the price is Rs 42 (more than Tk 62) in neighbouring India.
“We are witnessing a slump in consumer demand,†said Sk Bashir Uddin, managing director of Akij Group.
Bashir said they used to see seasonal slumps every year but that faded away in a couple of months after harvests. “This year, it seems unusual. The farmers are not getting fair prices for their crops, which has impacted their consumption,†he said.
The stagnation in the construction sector and the slowdown in development activities have also impacted the consumers' demand, according to the manufacturers.
“A downturn in the construction sector has also affected the economy,†said Bashir.
Mostafa Kamal, managing director of Meghna Group of Industries that produces many consumer items including flour, edible oil and sugar, said Europe and the US provide subsidy to their farmers, but the farmers in Bangladesh do not get fair prices.
He said a slow pace in development activities has also impacted the rural people's buying power. Cement production and its sales have gone down recently, he added. Many of the businessmen have been failing to pay their bank instalments on time.
“I've never failed to pay bank loans, but this time I'm feeling the pinch and many banks do not want to give me fresh loans,†said Biswas of Nasir Group.
Besides the local reasons, global economic downturn has also had spillover impacts on the Bangladesh economy.