Small supermarkets struggle to sustain | The Daily Star
12:00 AM, June 22, 2008 / LAST MODIFIED: 12:00 AM, June 22, 2008

Small supermarkets struggle to sustain

Eight stores shut businesses in one year

A file photo shows customers shopping at the Gulshan outlet of chain supermarket Nandan. Small supermarkets seem to be the losers in Bangladesh's emerging retail landscape. Photo: Amran Hossain

Small supermarkets look to be the losers in Bangladesh's emerging retail landscape, squeezed by the buying power of larger competitors and the lower overheads of traditional markets and small shops.
In the past year at least eight supermarkets in and around Dhaka -- A to Z in Adabar, Ocean Shopping Mall in Mirpur, Sadia in Shamoli, Fortune City, Trust and 3S in Uttara area, Pacific Store in Shantinagar and another in Narayanganj have shut their doors for good.
“I have incurred a Tk 1.16 crore loss in the last seven years due to a continual rise in overhead costs at the same time as I was experiencing a fall in sales,” said Zakir Hossain, the owner of Ocean Shopping Mall at Mirpur.
Ocean, a single store with around 6,000 feet of space, was a classic small supermarket, compared with the larger groups that now normally use premises of around 15,000 to 20,000 feet and have several stores.
On the other hand it required significance investment to provide a full range of products and a 'modern' shopping environment.
Supermarkets, self-service stores that offer a wide variety of food and household merchandise, only started to appear in Bangladesh around a decade ago. However growth has been rapid, and there are now around 90 supermarkets, mostly in Dhaka and Chittagong.
According to the Bangladesh Supermarket Owners Association (BSOA), the annual turnover of the supermarket business in the country stands at around Tk 6,000 crore.
Hossain, also the general secretary of BSOA, said he was not alone in facing such pressures and times were increasingly tough for small supermarkets.
Shamsul Alam, general manager of Family Needs in Shantinagar, one of the oldest small supermarkets in the country, said overheads such as rent, utility bills, salaries and maintenance, had increased sharply but it was hard to pass these on to customers.
He also claimed that suppliers gave little room for retailers to make profits. For example he said that in India suppliers of toiletry products gave room for retailers to make 30 percent profits while in Bangladesh the best margin a retailer could expect was 12 percent.
Alam's tone was in sharp contrast to that of Niaz Rahim, owner of Agora, the largest supermarket group in the country. Rahim said large volumes, the quality of products and the buying power of the bigger groups gave them an edge.
“We are doing well. As a big store we are able to source directly from manufacturers for a good profit margin,” said Rahim, himself BSOA president.
Dhaka-based Agora with its four outlets, Meena Bazar with two branches, PQS with three stores and Nandan with three outlets are the major players in the market. Agora and Nandan have opened one outlet each this year and Agora is to open another in Chittagong later this year.
Zakir Hossain said another problem faced by the smaller stores was access to bank loans. “I approached several banks for Tk 1 crore loan, but all of them sought mortgages,” Hossain said, adding that some banks had asked for a Tk 2 crore mortgage against Tk 1 crore loan.

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