Bangladesh has seen steady growth as a producer market in recent years but now the South Asian nation is being touted as the world’s next great growth market for consumer products.
In its report, “Bangladesh: The Surging Consumer Market Nobody Saw Coming,” Boston Consulting Group (BCG) said the South Asian nation’s population of middle income and affluent consumers (MAC) is expected to triple to 34 million by 2025, and those buyers value foreign brands.
“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.”
Of its 160 million strong population, only 7 percent of Bangladeshis are classified as middle income or affluent—meaning they bring home $5,000 or more annually—compared to Vietnam’s 21 percent and 38 percent in Indonesia.
But BCG says the group is growing quickly owed to a decade of stable economic growth, an expanding working-age population and strong upward mobility. By 2025, Bangladesh’s middle income or affluent population could reach 34 million—triple today’s 11 million—and the wealth will extend beyond just the major cities of Dhaka and Chittagong.
This growth means a major opportunity for branded consumer products as BCG’s survey found evidence of “huge potential demand” for these goods, though shoppers are still wary of racking up debt.
Sixty percent of consumer surveyed for the report said they expect their incomes will rise in the next year and 69 percent said there are additional things they’d like to buy. When considering consumer durables, 80 percent of Bangladeshis said brand was a major factor influencing their buying decisions, followed by quality.
“While Bangladesh’s growing consumer class is eager to trade up to higher-end brands, goods, and services, they are also budget conscious,” Olivier Muehlstein, a BCG partner and another coauthor, said. “Companies must create a strong value-for-money proposition to win over Bangladeshi households.”
No two markets are the same, and in Bangladesh, consumers still purchase most of their household goods with cash at traditional mom-and-pop shops instead of convenience stores and supermarkets.
These buyers are also moving more toward mobile. Sixty-eight percent of MAC consumers own Internet-enabled smartphones and 14 percent of online purchases (almost the same as those done with credit and debit cards) are done through the online payment service Payza.
“Many more Bangladeshi consumers will be making the leap from cash transitions and mom-and-pop outlets directly to mobile payment and online shopping,” said Vivek Nauhbar, a BCG consultant and another coauthor. “Companies should start building robust e-commerce platforms designed for interacting with consumers through small digital screens to meet growing mobile-enabled demand.”
Winning in Bangladesh, according to BCG, will mean companies have to start gaining brand loyalty now by emphasizing high quality for money, easing consumer concerns about debt by offering credit at affordable interest rates, developing distribution networks that can sell products through small local shops and building mobile-centric e-commerce platforms.
“For most companies, winning in Bangladesh’s rapidly growing consumer market will require not only a ramped-up presence,” Munir said, “It will also require an entirely new approach based on deep insights into MAC consumers.”