Bangladesh poised for a consumer market boom
Although the number of middle-class and affluent consumers in Bangladesh remains small compared with those of other big emerging markets in Asia, Bangladesh is one of the fastest-growing markets worldwide, according to a report by the Boston Consulting Group (BCG).
The report has projected that each year for the next decade, the annual income of around 2 million additional Bangladeshis will reach $5,000 or more. That means that they will be earning enough to afford goods that offer convenience and luxury, such as air conditioners, imported shampoos, and cosmetics. And although half of Bangladeshis still live at the so-called bottom of the pyramid, economists estimate that another 30 million to 40 million will make the leap from poverty to the entry rungs of the middle class by 2025.
To help companies gain a deeper understanding of the middle and affluent class (MAC) in this increasingly important - but often neglected - market, the BCG's Center for Customer Insight surveyed around 2,000 households across the country. Consumers were asked about their sense of financial well-being, their purchasing habits, and their consumption priorities for some 70 product categories. To help companies anticipate when consumption is likely to take off in these categories, the survey also analyzed changes in Bangladeshi household consumption of specific goods and services relative to rising incomes.
The survey found that Bangladesh's consumer class is swelling and dispersing. Although only some 7 per cent of the country's current population can be classified as middle income or affluent, compared with 38 percent in Indonesia, MAC Bangladeshis will account for around 17 per cent of the population by 2025. Consumer wealth is also dispersing regionally: projections indicate that within the next decade, 63 cities will have MAC populations of at least 100,000, compared with 36 now.
Consumers intend to spend but are wary of debt. Sixty per cent of consumers report that they expect their incomes to rise over the next 12 months, and 69 per cent say that there are more things they want to buy. But they are restrained by concerns - due perhaps to social taboos or to a lack of familiarity with debt instruments - that they will run up debt that they won't be able repay. Alleviating this concern could unlock great growth opportunities.
According to the survey, consumers are highly loyal to brands, but they are also budget and quality conscious and increasingly use the mobile Internet. Forty-one per cent of Bangladeshi consumers surveyed - and 68 percent of MAC consumers - own Internet-enabled smartphones. Currently, most transactions are in cash, but the popularity of smartphones suggests that more consumers will be making the leap to mobile payment, creating an opportunity for reaching households through wireless mobile services.