In recent times, Bangladesh has grappled with a steep surge in food and commodity prices, sending shockwaves through households and the national economy. This price hike can be attributed to a complex web of factors, including global market dynamics and inefficiencies within our own distribution model.
While international commodity prices have fluctuated, local prices have experienced less mobility, signifying a discrepancy between production and consumption points. Various global events have contributed to this phenomenon, including geopolitical tensions such as the Russia-Ukraine conflict, as well as disruptions in the supply chain due to the lingering impacts of the COVID-19 pandemic.
These factors have collectively influenced market dynamics, resulting in challenges in aligning local prices with the fluctuations observed in the international commodity market.
This underscores the need for a revamped distribution system – a role in which the retail ecosystem can play a transformative part.
The retail sector in Bangladesh, particularly the retailer and small shop ecosystem, holds immense societal and economic significance. According to reports, a staggering 98% of consumption in Bangladesh occurs through small retailers, marking the highest consumption in South Asia through this channel. Beyond being transaction points, they embody trust and familiarity, providing credit options and accommodating preferences.
Additionally, they contribute significantly to local employment, intertwining with the community and driving economic growth. Supporting and enhancing the operations of these small retailers is not just an economic imperative; it’s a recognition of their vital role in shaping both livelihoods and communities.
With an estimated market size of $200 billion, the retail sector is a substantial contributor to our growing economy. In fact, Bangladesh boasts one of the fastest-growing economies globally, heavily driven by consumption, with over 70% of GDP attributed to this sector, and 47% specifically tied to retail.
However, what stands out is that more than 95% of the retail market remains disorganized. This substantial disorganization creates inefficiencies, hampering the distribution chain and presenting a significant opportunity for tech-enabled players to effect notable disruptions.
Addressing these inefficiencies and streamlining the value chain could result in a remarkable increase, projecting a market worth of approximately $280 billion by 2025.
The grocery sector accounts for more than 75% of the retail market in Bangladesh, reflecting a significant consumer demand for food and ingredients. As people aspire to higher living standards with rising incomes and tech enabled retail services are gradually gaining ground with surges in on-demand grocery delivery, growing demands for tech-enabled home services, and a rise in online retail platforms, this demand is expected to escalate, propelling growth across various retail categories.
Our nation’s strategic focus on Vision 2021 to attain middle-income status has spurred economic growth, with expectations of reaching a trillion-dollar economy by 2041.
However, the retail ecosystem in Bangladesh faces critical challenges, notably in sourcing, logistics, and financing. Small retailers struggle with sourcing quality products at reasonable prices, efficient logistics to reach customers, and adequate financing to sustain and expand their businesses.
To bridge these gaps, reforms in policies, infrastructure, and innovations are essential. Easier financing and investment environments for startups and a concerted push for formalized SME loans through financial organizations are crucial steps. Such measures would empower retailers to overcome financial obstacles and thrive in the competitive market.
In this evolving landscape, new players like ShopUp are bringing innovative solutions to the market. Their platform Mokam’s MWS revolutionizes sourcing models, ensuring a steady supply of quality products for retailers. REDX provides smart logistics solutions, optimizing the delivery process and ensuring timely product delivery.
Moreover, ShopUp is in the process of introducing their financial division, known as “Onkur,” to cater to the evident need for capital. “Onkur” is being designed to facilitate convenient access to working capital through tailor-made financial solutions, ensuring retailers have the essential financial backing to drive their expansion and meet customer requirements. This venture is led by prominent leaders from the banking sector, demonstrating their expertise and commitment to this initiative.
As Bangladesh strives for economic prosperity and embraces its position as one of the world’s fastest-growing economies, nurturing and empowering our retail ecosystem will be paramount. Through concerted efforts, collaboration, and a tech-enabled approach, we can transform the retail landscape, driving economic growth and prosperity for all. The time is ripe to unlock the immense potential within our small shops and retailers, paving the way for a thriving future.