Modern retail growing at 15pc a year

Modern retail, which replaces traditional grocery shops, has been growing at 15 percent a year since 2014 in Bangladesh riding on changing consumer behaviour, said a top official of Nielson, a leading global market researcher.

In 2018 the total turnover is estimated to be Tk 2,180 crore, up from Tk 1,342 crore in 2014.

“Modern trade will emerge stronger,” said Diptanshu Ray, market leader for Nielson's South Asia East region, at a retail congress organised by the Bangladesh Brand Forum (BBF) at the capital's Le Méridien hotel.

Ray presented a keynote on 'What's next in modern retail' at the event 'Bangladesh Retail Congress 2018', which was attended by 350 professionals.

Bangladesh's largest retail chain Shwapno presented the congress along with Lotto. The Daily Star is the strategic partner of the initiative to shape modern retail in the country.

Discussants pointed out the changing behaviours of consumers following the advent and growth of e-commerce, advancement of technology, rising health awareness and consciousness about quality products and services.

Population growth, increased urbanisation and rising income, particularly the growing middleclass population in the country, have been driving the growth of consumerism in Bangladesh, which is expected to be the 26th largest economy in the world by 2030.

“The promises are real,” Ray said, adding that higher incomes are leading to greater spending in the economy. Each year for the next decade, the annual income of about 20 lakh additional Bangladeshis will reach $5,000 or more.

Consumer's rising purchasing power is increasing the demand for fast-moving consumer goods (FMCG), generating $3.1 billion in FMCG sales.

“And, it is growing,” Ray said.

Even in this landscape, traditional trade, which accounts for 98 percent of total retail sales, will evolve and continue to dominate.

But modern retail, which expanded over the last two decades, will grow in the days to come.

“Modern trade is growing and gaining share in Asia.  Convenience is the fastest growing format across Asian markets,” he said, adding that changing priorities of shoppers would facilitate modern trade.

Some 51 percent of the shoppers like a wide range of product categories. Some 73 percent would not mind paying little more for higher quality, according to Ray.

Expansion of e-commerce will also contribute to the reshaping of retail. 

“Bangladesh is poised to be an e-commerce player on the world FMCG stage, in spite of its relatively nascent entry.”

The Nielson official also touched on shoppers' behaviour.

“Shoppers are highly price aware and sensitive to price changes,” Ray said, adding that shoppers are becoming more brand loyal and less store loyal for promotions.

Retail interface is changing, where established behaviours are being disrupted and new business models are emerging, said Prachi Tiwari, engagement director of Landor, in another keynote session.

“Shopping experience is becoming increasingly mobile first.  Mobile technologies will increasingly influence every stage of the customer's shopping journey.”

Approximately 71 percent of the consumers are now trawling websites to find the best price.

“Consumers demand instant gratification, want the right product, right price, and right away. They are also more savvy and well-informed about products in the market.”

Conscious consumerism is on the rise, according to Tiwari.

“We have to ensure that customers' experience is at the best level when they are in our stores,” said Mohammed Tareque Aziz, dean of College of Business Administration of the International University of Business Agriculture and Technology. 

Shopping is a source of recreation for many in Bangladesh owing to lack of options, said Rezaul Kabir, chief operating officer of clothing retailer Sailo.

And, customers keep in mind the service they receive from sales associates, he said.

Payment through digital channel is increasing but for that to flourish more very good mobile network support is needed, he added.

Many refrain from making payment through bank cards for fear of fraud, said Mohammad Ashraful Islam, chief operating officer of Aarong.

The retail scenario will change in the next 10 years, said Arafatur Rahman, head of marketing of Pran-RFL.

At the inaugural session of the event, Sohel Tanvir Khan, business director of ACI Logistics, and Shariful Islam, founder and managing director of BBF, spoke among others.