Overview
Geo-strategically positioned between India and China, Bangladesh consists of the world’s 8th largest population, where consumer spending is around USD 130 billion+ growing at 6% annually. Bangladesh has been the focal point in this part of South Asia providing expansion opportunities for several sectors over the last decade. The rising Middle and Affluent Class (MAC) consumers have been playing a pivotal role in this extraordinary growth story of the consumer industry. According to a recent study by
BCG (2015) (LightCastle was the local partner), the Middle and Affluent class (monthly household income of around $400 or greater, known as MAC) is expected to quadruple in size to 34 million within 2025.
Factors that are affecting consumption patterns are demographic dividend – a younger population depicts there is strong demand for goods like fast food, coffee and other beverages and consumer durable item; increasing urban population and the nuclear families – 19% of total population living in urban areas in 1990s has increased to 30%+ in 2016; Rising literacy rate, growing middle class and white collar culture, and globalization – thanks to the advent of information technology/social media. Due to growing economic prosperity across the board, MAC population residing in smaller cities increasingly have spare capital to invest in consumer durables.
This MAC population tend to have higher demand for different items including consumer durables. Urban areas have seen a rise in the number of nuclear family structure and many working couples, which has influenced demand for refrigerators and other home appliances. Alongside, growing electrification rate has spearhead demand in the rural markets. Although many local brands are entering the electronics market, majority of consumers still prefer international brands over local ones, due to perceived quality parameters. However, consumers in the low income households, in general, are more price sensitive, and are willing to purchase local brands at affordable pricing, in lieu of longer warranty period and reliable after-sales services.
With rising income, demand for consumer durables will be increasing and the current industry growth of 15% is projected to increase further. Alongside, with ease of making hire purchase and new electricity connections across the country, demand for consumer durables are expected to increase in the near future.
Market Projection
Current Categories
The market for Consumer Electronics consists of a number of segments, each of which has a significant share in the total market size. In order to get a comprehensive understanding of the market, the consumer durables market has been classified into 4 major categories.
- Television
- Refrigerators
- Air Conditioner
- Home Appliances (includes Washing Machines, Microwaves and Kitchen Appliances)
Market Size
The continually growing market is currently stands at USD 1.38 Billion as of 2017.
- Television: USD 414.22 Million
- Refrigerators: USD 549.11 Million
- Air Conditioner: USD 164.57 Million
- Home Appliances: USD 251.41 Million
Trends
Growing MAC coupled with declining cost of durables and purchase friendly terms is driving demand.
- The Rise of Nuclear Families and Working Women: Due to the increase in number of working women and nuclear families in today’s urban culture, the demand for automation in household chores has increased and as a result, there is a sharp increase in the demand for consumer electronics.
- Growing Demand in Peri Urban and Rural Markets: With the increase in household income and large scale electrification, demand for consumer electronics has increased in the peri urban and rural areas that cover 70% of the country’s households.
- Credit Facility: The consumer electronics products that were once considered as ‘high-end luxury products’ are now considered as regular household necessities. This has become possible since the companies provide the consumers with offers like EMI (Equal Monthly Installment) and banks provide credit card schemes with 0% interest loans.
Growth Forecast
All of the product categories are experiencing rapid growth and continue to exhibit greater market size in the coming years. The market standing for refrigerators and televisions look the most promising in terms of growth.
| Year | TV | Refrigerator | Air Conditioner | Home Appliances |
|---|
| 2018 | 414 | 549 | 165 | 251 |
| 2019 | 478 | 614 | 215 | 288 |
| 2020 | 543 | 680 | 271 | 328 |
| 2021 | 636 | 779 | 360 | 379 |
| 2022 | 699 | 878 | 392 | 425 |
Source: LCP Primary Research
Industry Drivers
- Increasing Number of Women in the Workforce: Country’s current women labor force participation is 36 percent, which is higher than the South Asian average in this regard. The increasing number of working women will give rise to demand for more products that make day-to-day lives easier.
- Competitive Market and Accessible Financing Opportunities: The competitive force of the market will lead the companies to offer different financing opportunities (e.g. EMI) to attract more consumers and the involvement of financing institutions with credit card schemes will likely to gives rise to more market demand.
- Increasing Number of Organized Retail: In order to meet the increasing demand, the number of organized retail stores throughout the country (both in urban area and its outskirts) is expected to rise. This has the possibility to generate more demand and attract new customers.
- Innovation and Greater Number of Consumption Options: Technology dispersion is usually faster in the developing countries and due to that, the market is full of new products with new features and different advantages. This ‘in-product innovation’ is coming into picture because of consumer’s necessity and has the potential to give rise to new demand as well.
Competitive Landscape
Major Brands in the Market
Consumer Electronics is a competitive market with a wide ranging products from both international and local players. Due to the brand image and credibility, the international brands have strong top of mind association. However, the local players are dominating the market in terms of sales volume, mainly due to competitive pricing.
| Product Category | Local Brand | International Brand |
| Television | Rangs, Walton, Vision, Singer, MyOne. | Sony, Samsung, Panasonic, Toshiba, Phillips, LG, Sanyo. |
| Refrigerator | Walton, MyOne, Minister. | Samsung, Whirlpool, Kelvinator, LG, Hitachi, Hier. |
| Air Conditioner | Butterfly, Walton, | General, LG, Daikin, Gree, Carrier, Whirlpool. |
| Home Appliances | Walton, Electra, Singer, Eco+. | Miyako, Sebec, Panasonic, Sharp, Steamfast. |
Market Share Intra Category (Television)
Walton, the local brand is in the leading position in the Television market with a market share of 27 percent. However, most of the market share is covered by different local, international and Chinese brands which makes the television market somewhat saturated.
| Company | Share |
|---|
| Walton | 27 |
| Singer | 7 |
| Minister | 4 |
| LG | 3 |
| Sony Rangs | 3 |
| Vision | 2 |
| Nova | 2 |
| Transcom | 2 |
| Others | 50 |
Source: LightCastle Primary Research
Market Share Intra Category (Refrigerator)
In the market for Refrigerators, famous local brand Walton is in the leading position with 54% market sharing, taking over more than half of the market share. The second position is also held by a local brand, Singer.
| Company | Share |
|---|
| Walton | 54 |
| Singer | 14 |
| LG | 4 |
| Jamuna | 4 |
| Minister/MyOne | 4 |
| Others | 20 |
Source: LightCastle Primary Research
Market Share Intra Category (Air Conditioner)
The Air Conditioner market used to be dominated by foreign brands like LG, General and Gree. In recent years, local brands like Walton have started manufacturing/assembling air conditioners at affordable pricing, with majority of price sensitive customers choosing inexpensive ACs Walton even has launched an Air Condition model with Ionizer technology in the local market back in last July (2017). A device named ionizer attached to an air conditioner filters dusts, smoke, bacteria and odor from room air making it pure and healthy.
| Company | Share |
|---|
| General | 35 |
| Gree | 20 |
| Singer | 14 |
| Others | 31 |
Source: LightCastle Primary Research
Summing Up and Future Opportunities
Due to rising labor costs in China, more and more production is being outsourced to cheaper destinations. Bangladesh with its affordable wage structure of workers, growing expertise in the IT sector and light engineering, can be a future hotspot for manufacturing of consumer electronics.
Consumer electronics industry shows a brighter picture of the future. With number of nuclear families on the rise, and other macro and micro economic factors changing for the better, it is a safe bet to say the industry will boom. While the local companies have yet to catch up with the international big players, the day is not far when the locals will compete in the same demographic consumer market as the international players.
