Retail in Bangladesh is quickly growing and becoming more organized. With Bangladesh being one of the fastest-growing economies in the world and transitioning into a middle-income economy, the change is also bringing with it some major implications for the retail industry. Organized retail, greater value, and more immersive experience is slowly being sought after as the standard of living in the country increases. The urban population is ready for an immersive and dynamic shopping experience.
As the global retail industry is undergoing massive changes, the retail industry of Bangladesh faces the challenge of not only developing itself but also taking into account the massive shifts undertaken by the experienced players in retail worldwide. Today, consumers are more inclined to shop online and on social media, research online before making a purchase, and using alternate payment methods such as digital wallets and more. To that extent, a concerted effort by the retailers of the country can bring about the changes needed to propel retail to the global stage.
EVOLUTION OF RETAIL
The purpose of Retail is to make products available to the end customers. The first proper concept of retail propped up in ancient Greece with merchants selling goods at agoras. Retail has since then evolved and molded to meet customer needs and make the lives of people easier. In the 1700s, the colloquial “mom-and-pop” stores opened up, particularly in the United States, to provide a way for families to earn a good income. Eventually, these stores evolved to form general stores and by the 1950s, shopping malls came into prominence.
The introduction of cash registers, credit cards, general stores, and shopping malls were all revolutionary as they introduced greater convenience to the consumer experience. The end of the 20th century saw the rise of the internet and the birth of the next big evolution. Electronic Commerce began to take root as the internet started spreading and companies started opening websites and selling products online. B2B e-commerce initially comprised of the lion’s share of electronic but Amazon and eBay quickly changed the game raking in more consumers to the B2C environment of e-commerce.
In Bangladesh, the scenario of retail has remained different, being largely dominated by classic mom-and-pop stores “mudir dokan”. Even though the first superstore opened in 2001, organized retail, according to figures by Bangladesh Superstores Owner’s Association (BSOA), comprises only 1% of the market almost two decades later.
E-COMMERCE BRINGS A NEW FACET TO RETAIL
The 21st century has brought with its e-commerce and a looming fear that traditional retail may die out. The global market for e-commerce is expected to reach 6.5 trillion USD by 2022 whilst other predictions show that e-commerce will see massive growth in APAC regions in the coming years. Traditional retail still makes up for a large portion of total sales in comparison to e-commerce. However, it has witnessed a slight and steady decline in recent years during the same time that e-commerce witnessed rapid expansion. According to a recent study by Statista, more than a fifth of all retail sales in China occurred online in 2017.
In Bangladesh, e-commerce is yet to experience the massive growth and impact that the developed world, as well as neighboring countries like India, have been experiencing. Statista currently ranks Bangladesh in the 46th position in terms of e-commerce sales with a market value, according to a German research firm, of $1.6 billion. This number is expected to double in the next four years as Bangladesh builds upon and improves the digital and physical logistics infrastructure in the country.
While there are dedicated e-commerce websites for various purposes, online vendors and buyers have taken to social media to set up their own marketplaces. A great share of e-commerce sales takes place through these pages. Currently, the eCommerce Association of Bangladesh (E-CAB) estimates around 700 e-commerce sites and 8,000 e-commerce Facebook pages and groups. C2C sites like Bikroy and B2C sites like Daraz, Chaldal and more have all shown significant surges in growth and popularity in the country. B2B and B2E services also operate in various capacities in the country. A big obstacle to the growth of e-commerce in Bangladesh still remains as online payment and transaction infrastructure is yet to develop.
OMNICHANNEL AND RETAIL 4.0
Omnichannel is an important building block in the emergence of Retail 4.0. A report by Mckinsey highlights the evolution of retail in 5 phases, with the fifth phase ‘Retail 4.0’ being characterized by seamless integration and interweaving of digital and physical worlds to create a highly immersive marketplace. Omnichannel is a rethinking of the role of multi-channel used by retailers with the aim of providing greater value than the sum of its component channels.
With more and more people shopping online and using smartphones, tablets, desktops, and seamless payment options, many retailers are experimenting with a new experience for customers, including virtual stores. Cashless stores are also emerging where customers are able to pick up their necessities from a store without having to go through the cash till as technology allows for automatic receipts being created upon self-checkout and credited to customers’ accounts.
TRENDS SHAPING THE FUTURE OF RETAIL
The retail industry is facing the latest generation of consumers with an increasingly different palette of demands. The millennial and the digital natives are tech-savvy, perceptive of multi-channel communications, have a global mindset and the ability to filter out traditional, near-identical and unoriginal marketing efforts. They demand global quality, do not practice blind loyalty, and choose brands that best suit their personality and ideals. Thus, retailers are faced with a new challenge and a bouquet of new possibilities.
The growth of the economy and infrastructure, globalization, connectivity, a new generation of shoppers and more will shape the trends of Bangladesh for the future keeping it more in line with global trends. Mckinsey’s study of ‘Retail 4.0’, along with other studies, have uncovered trends to watch out for as Retail continues to evolve.
E-Grocery – The e-grocery segment offers greater profit margins for grocers as opposed to the traditionally low margins. By incorporating features such as virtual stores, low prices, effective delivery models that incorporate home delivery, click-and-collect, drive-through, and centralized lockers, e-grocers have the ability to rise in the future. In Bangladesh, one of the most popular e-commerce sites is an e-grocer, whilst supermarkets are also opening e-grocery segments.
Self-Checkouts and Digital Wallets – As more and more economies go cashless, retailers will be increasingly incorporating new features that use digital payment methods to compliment them. Self-checkout systems will be able to significantly reduce ques and bring about a greater degree of automation efficiency.
Real-time Pricing – E-commerce platforms have the ability to change their prices anytime they wish in order to capitalize on demand surges throughout the month, week, or even day. They offer flash sales and great discounts to customers as incentives for them to make online purchases. As electronic shelf labeling (ESL) technologies become widespread, brick-and-mortar retailers will be able to compete in real-time pricing with e-commerce sites easily.
Data-centrism and Personalization – Most customers like to have a tailored experience. Collecting customer data will enable companies to build customer profiles by observing patterns and to design customized offers for buyers. Analyzing data from customer feedback can help retailers gain valuable insight into customer requirements. This will drive effective, personalized shopping experiences & offerings.
Mobile Content – To increase the likelihood of purchases, retailers have to consider keeping mobile content in their promotional activities. Customers are getting advertisements on social media platforms including YouTube, Instagram and Facebook that are usually operated through smartphones. This is especially true in the Bangladeshi context where mobile connections significantly outnumber desktop broadband. Retailers are beginning to consider smartphone users while they design their promotional activities to more effectively appeal to the consumer.
Mixing Content & Commerce – Retailers and Media brands are combining their expertise to engage customers and boost sales. Typical retail staff is working with graphic designers and video editors. Content creators are going deeper into commerce. Retailers are recruiting content developers to more effectively engage with consumers.
SUSTAINABILITY OVER GOOD MARKETING
Today’s consumers are taking an eco-friendly stance. Consumer groups are trying to build a better world for future generations. They are avoiding using Plastics, accepting Recycled products and Green Products. Many corporate are aligned with the idea of creating a sustainable business and they are not using Plastic Bags, trying not to harm the environment in the production process. Sometimes corporates are promoting their sustainable attitude to their customers to have competitive benefits and to foster goodwill. Retailers are learning how to become sustainable. They know it will help boost their business in the long run.