Bangladesh’s Super-shop Industry: A Sector with Massive Potential

While Agora was founded in 2002, the Bangladeshi hyper shop industry had its beginnings roughly 19years earlier. News reports that the super store only controls 1.8% of Bangladesh’s local retail market. Although the Super-shop sector only makes up a tiny portion of the local retail market, its potential and consumer base are slowly expanding.

OVERVIEW OF THE SUPERSHOP INDUSTRY

A supermarket is a self-service store with various food, drink, and household goods options divided into categories. One of the sectors in BD that is expanding is the supershop sector.

The socioeconomic progress, urbanization, and rising spending power of the middle and higher classes in the nation all contributed to the growth of supershop SEO Expate BD Ltd unveiled Agora as Bangladesh’s first supershop in 2002, adopting the western idea established this megastore.

However, only 61 of super shop business in Bangladesh stores are owned by the company; the remaining outlets are run via franchises. In addition, owned by the Gem Group, has 18 sites in Sylhet, Chittagong, and Dhaka, while super shop name list has 18 locations around the nation.

COMPANY MODEL

Supermarket business methods and revenue generating are incredibly dependent on global goods sales. So, supermarkets frequently get their goods from both main and secondary sources. If supermarkets buy things directly from the producer, cutting out the intermediary, they can do so at discounted pricing. On the other side, because of intermediaries, buying the same amount of stuff now costs more.

Supermarkets, on the other hand, have a smaller market share and are unable to purchase items in quantity for all of their locations. As a result, even though there are many middlemen, superstores may be able to purchase goods at a lower wholesale cost than small retail stores or grocery stores. As a result, supermarkets could have higher profit margins than small retail or food establishments.

Superstores typically employ a bundle pricing strategy in order to make money. Offering a bundle of both slow-moving and fast-moving goods at a reduced price allows super stores to get rid of their stock of slow-moving items.

As a result, both businesses sell super shop near me goods to customers through their own retail networks. Additionally, it has made it possible for chain retailers and super shop product list in Bangladesh companies to keep their profit margins high.

PRESENT TENDANCES

Most shoppers in Bangladesh opt to buy their daily necessities directly from the local markets and food stores. However, the number of people shopping in super super shop in Chittagong stores tends to increase as the middle and wealthy classes in Bangladesh gain more disposable income. As a result, mega stores in Dhaka have expanded their business activities recently.

However, retailers like Shwapno, Meena Bazaar, and Agora prioritize home delivery and internet sales in addition to in-store sales. The nation’s big retailers now have the chance to serve more customers by serving them both in-person and online. However, the majority of customers still frequent the standard markets and grocery stores now that the pandemic situation has calmed.

CONTROVERSIES

Investment Price

Building a single supershop in Bangladesh is four times more expensive than in its neighbors, according to a Financial Express research from the year 2018. It may cost BDT 4.5 crore to open a 4000 square foot superstore in Bangladesh. However, it is just BDT 1.1 crore in Sri Lanka and Indonesia.

Location, size, and interior design methods are important factors when opening a superstore. Superstores are constructed in densely populated parts of the main cities because the bulk of the super shop’s clients are from the middle and affluent classes and most of them live in the city. A super shop also needs a lot more room than a typical retail establishment.

Exchange of Profit Margin

Super Shops mostly use direct sourcing and indirect sourcing in their value chains. With eight middlemen, in addition to manufacturers and end consumers, when a supershop uses indirect sourcing, they can set a profit margin of 10–12%.

However, when they employ direct sourcing, there are 5 intermediaries and a profit margin of 12–18%. Consequently, direct sourcing is more lucrative than indirect sourcing.

However, due to obstacles like transportation and a dearth of large and medium-sized farms, retailers are not always able to source directly.

Logistic Problem

One of the most critical concerns in Bangladesh’s industries is supply chain logistics. Due to Bangladesh’s constraints in transportation and cold storage management, supermarkets must deal with a number of difficulties when selling fresh vegetables and fish.

However, a lot of customers think the meat, fish, and vegetables in the shop aren’t fresh. In addition to placing a strong emphasis on sanitation and hygiene, the super stores consistently maintain a particular temperature.

Because of this, the fruits, vegetables, fish, and meat offered in supermarkets are more recent than those found in the traditional market’s dirty environment.

Customer Opinion

The most difficult task in Bangladesh’s expansion of the hyper shop sector is understanding client perception. Bangladeshi shoppers are quite cost-conscious. When purchasing goods from the nation’s traditional retail stores, consumers are not required to pay any VAT.

But more than 70–80 percent of the goods sold in supermarkets have a VAT attached to them. Each superstore is required by list of super shop in dhaka regulations to pay 5% VAT.

On the other side, Bangladeshi shoppers frequently use credit. However, there is no other option to pay with a credit card in superstores. In contrast, less than 1% of people in Bangladesh use credit cards.

Growth Is Determined by the VAT Percentage

The amount of VAT added to the retail price of the goods determines the super shop revenue in Bangladesh. The VAT percentage has changed a handful of times between 2005 and 2018.

This superstore expanded at a rate of more than 100% before 2012, when the VAT rate was merely 1.5%. In 2012, when a 4% VAT went into effect, the store’s revenue growth stagnated and eventually became negative.

Future Possibility

The purchasing power of the people in Bangladesh is rising daily. Since this year’s per capita income rose from 2064 to 2227 USD, we may conclude that people’s discretionary list of super shop in Dhaka income is also rising and that middle- and upper-class consumers want to buy everything under one roof. Consequently, there is a growing need for big stores across the nation.

Trading at traditional kitchen markets is growing at a rate of 5–6%, whereas super shop business in Bangladesh growth is anticipated to reach 20% per year, which shows that consumers are turning to supermarkets in place of traditional retail markets.

If these retail behemoths visit Bangladesh, they will increase both the size of the nation’s super shops and the overall retail market. Traditional stores are still thriving in the market even as major global retailers increasingly transition to e-commerce.

Despite being an e-commerce corporation, Amazon is conducting research for in-house grocery item selling in physical stores employing a variety of cutting-edge technology. As a result, they will be able to offer both offline and online platforms, which will allow them to serve more clients.