Two months after the political upheaval on August 5, the consumer goods sector in Bangladesh is yet to recover. Despite some signs of improvement, the wholesale and retail markets across the country, including the capital, remain sluggish.
Labour unrest, disruptions in the supply chain, and security concerns continue to weigh heavily on the market. Traders report that sales have plummeted by about a third.
Immediately after the political shift, businesses were targeted by miscreants, leading to widespread vandalism and arson. Many citizens have lost jobs, and workers fear further layoffs, forcing them to cut expenses. This, in turn, has dampened demand for consumer goods.
Adding to the woes, flooding and security issues have disrupted the transportation network, further limiting product distribution. Companies are struggling to move goods across the country, causing a buildup of inventory in factory warehouses. As a result, several manufacturers have scaled back production, with imports also on the decline.
Sales down, production slowed
"We’re still not running at full pace," said Biswajit Saha, a director of City Group, a major player in the consumer goods industry. "With consumers tightening their belts, retailers are purchasing fewer goods from companies, and no one wants to take risks in this uncertain environment."
Abul Bashar Chowdhury, chairman of Chattogram-based BSM Group, echoed this sentiment. "Sales of consumer goods have dropped by 40%. The goods arriving now were ordered months ago, but they are stuck in warehouses, unsold. Many traders are holding back on opening letters of credit (LCs) for new imports, and this slowdown will have lasting effects."
The change in government, after former Prime Minister Sheikh Hasina’s fall on August 5 and the establishment of an interim government led by Dr Muhammad Yunus on August 8, sparked unrest. Many large businesses are still struggling to adapt. As the political situation began to stabilize, severe floods dealt another blow to the fragile recovery.
Supply chain disruptions and economic instability
City Group's Biswajit Saha noted that while the country's overall situation is improving, the consumer goods business remains far from stable. "There’s still a lack of demand and sales are down. On top of that, traders are concerned about law and order, with many still facing political retribution in certain areas."
Before the student-led political movement that caused Sheikh Hasina’s ousting, the country was already facing a gas crisis. While production in factories has resumed, the supply of imported raw materials is not yet back to normal, leading to a shortage of essential inputs. Additionally, businesses are contending with a dollar shortage, gas and electricity crises, and instability in the banking sector, all of which are further hampering recovery.
Industry stalled, traders struggle
Taslim Shahriar, senior assistant general manager of Meghna Group of Industries, pointed out that the recession in sectors like tourism, hotels, and restaurants is having a ripple effect on the consumer goods market. "People are still not going out, and foreign visitors are few. The slowdown in these sectors is hurting us, and it’s difficult for business to recover until everything else stabilises."
S Alam Group, another key player in the consumer goods market, has seen significant disruptions due to the political changes. "Their products are no longer available in the market, causing a major supply chain issue," said Moulvibazar Wholesale Edible Oil Traders Association Vice President Ali Bhutto. "The supply of oil has decreased, and so have sales."
Financial strains and flood impact
Bashir Ahmed, president of the Bangladesh Wholesale Traders Association, highlighted the financial strain traders’ face. "Banks are limiting withdrawals to Tk 5 lakh, which has slowed down transactions. No one is purchasing large quantities of products, and the wholesale business is operating at less than 20% capacity. The floods have only worsened the situation."
With no clear end in sight, the consumer goods industry in Bangladesh faces an uphill battle, as businesses and consumers alike struggle to navigate an uncertain and challenging landscape.