Bangladesh Emerging as One of the World’s Next Great Growth Markets for Consumer Products

DHAKA, BANGLADESH–(Marketwired – Oct 22, 2015) – Bangladesh is emerging as one of the world’s next great growth opportunities for companies with a keen understanding of the nation’s rising consumer class. Every year, 2 million Bangladeshis join the ranks of middle-class and affluent consumers, and they are highly optimistic about the future, value foreign brands, and are jumping onto the digital bandwagon. These are among the findings in a new report by The Boston Consulting Group (BCG).

The report, titled Bangladesh: The Surging Consumer Market Nobody Saw Coming, is being released today. The findings, by BCG’s Center for Customer Insight (CCI), are based on CCI research that included a survey of more than 2,000 Bangladeshi consumers and analysis of their consumption patterns.

“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.”

The report focuses on Bangladesh’s middle and affluent class (MAC), which the firm defines as individuals whose annual household income is $5,000 or more. That means that these consumers earn enough to afford goods that offer convenience and luxury, such as air conditioners, imported shampoos, and cosmetics.

Although only 7 percent of Bangladesh’s population of 160 million is currently classified as middle-income or affluent — compared with 21 percent in Vietnam and 38 percent in Indonesia — their ranks are growing rapidly due to a decade of stable economic growth, a growing working-age population, and strong upward mobility. Bangladesh’s MAC population is projected to triple by 2025, to about 34 million. Consumer wealth is also dispersing beyond the major cities of Dhaka and Chittagong: within the next decade, 63 cities are projected to have MAC populations of at least 100,000, compared with 36 now.

The BCG survey of Bangladesh consumers found evidence of huge potential demand for branded consumer products — but also revealed that a willingness to spend is tempered by a wariness of taking on debt. Sixty percent of consumers surveyed said that they expect their incomes to rise over the next 12 months, and 69 percent said that there are more things they want to buy. What’s more, most Bangladeshis — 80 percent in the case of consumer durables — cited brand as a top factor influencing their buying decisions. The majority of respondents also placed a high priority on quality.

This enthusiasm is tempered by financial concerns, however. Around half of Bangladeshi consumers reported that they are concerned about their ability to repay debts, and around two-thirds said that they believe that uncertainty about Bangladesh’s economy could affect their financial health. As a result, the majority of those surveyed also cited price as a top priority.

“These findings indicate that while Bangladesh’s growing consumer class is eager to trade up to higher-end brands, goods, and services, they are also budget conscious,” said Olivier Muehlstein, a BCG partner and another coauthor. “Companies must create a strong value-for-money proposition to win over Bangladeshi households.”

The BCG research also uncovered several distinct attitudes and cultural traits in Bangladesh that companies must take into account if they are to succeed in this market. Bangladeshis focus more attention on the immediate needs of their large households than do consumers in many other large Asian emerging markets, for example. Households still purchase most of their goods with cash and at traditional mom-and-pop retail outlets, rather than at more modern channels, such as convenience stores and supermarkets.

Yet Bangladeshis are also rapidly adopting advanced mobile Internet technologies. Forty-one percent of consumers surveyed — and 68 percent of MAC consumers — own Internet-enabled smartphones. Around 14 percent of online purchases — almost as many as those done with credit cards and debit cards — are conducted through Payza, an online payment service. Eighty-one percent of consumers said that they trust what they read online, and 66 percent search for product information online.

(Article source: https://finance.yahoo.com/news/