Soaring inflation dampens Eid sales

The holiday marking the end of Ramadan used to be a boon for Bangladesh's small shops and businesses, often generating profits equivalent to those of the entire year. However, this year, many fear they won't even cover their monthly rent due to poor sales, worsened by inflation soaring to 9.5% or higher over the past 12 months.

During visits to Dhaka markets such as New Market, Mouchak, Bashundhara, and outlets in Gulshan, Banani, and Mirpur areas, The Business Standard reporters noticed a rise in sales for branded shops compared to last year. Conversely, sales have decreased for shops selling low-value items, indicating financial strain among individuals with limited resources, leading to reduced discretionary spending.

"There are no sales, no buyers till 12pm," said Md Sagor who manages the Khazana Saree store in Mouchak Market. "We did not see it before; rather, we had seen buyers waiting before opening the shutters of our shops," a disappointed Sagor told TBS.

Sagor acknowledges the challenges faced by lower- and middle-class individuals in meeting their basic needs, including food. Consequently, they are opting to purchase less and choosing relatively cheaper options. "We noticed that customers are hesitant to purchase sarees priced over Tk3,000, and bargaining has become more prevalent," he noted.

A TBS reporter interviewed 20 businesses at Mouchak Market within two hours, and their consensus was unanimous: this year's sales have significantly decreased, with some reporting declines as steep as 50%.

Anwar Hossain, a salesman at Alif Saree Bitan in Mouchak market, has been in this market for 10 years. He expressed deep concern over the unusually poor sales during the Eid festival, a situation he had never encountered before. 

"I am worried about the Eid bonus because our shop owner said that if sales continue to be so poor, he might not be able to provide us with bonuses," Anwar lamented.

Mohammad Alam, a salesman at Nadim Saree in Gaousia Market, said their sales have decreased by 50% during this time compared to last year.

"On holidays, there's a crowd of buyers, but on other days, it's like a regular time with very few buyers. There used to be so many buyers during the previous years that we couldn't even find time to talk to you," Alam told the TBS reporter.

Not only clothes or sarees, but leather products and even groceries are also experiencing declining sales.

Maksuda Khatun, owner of Shabab Leather, said this time she has experienced extremely poor sales. "Despite hoping for a better Ramadan season like previous years, sales have been disappointing. Even after the pandemic, last Ramadan saw some decent sales, and we managed to make profits."

She added, "Everything seems normal this Ramadan, but people don't have money. It feels like only 5% of the population has money, and they're the ones making purchases."

Shabab Leather, located in Hazaribagh, mainly produces bags, wallets, long wallets, belts, jackets, key rings, files, and other corporate items.

Yasir Hossain, who sells T-shirts in the Panthapath area, said, "Customers are bargaining a lot, and we're making less profit on our sales. This time, our sales have decreased by 50%."

Kabir Sheikh, who operates a grocery shop on Dilu Road in New Eskaton, Dhaka, stated that his daily sales during last year's Ramadan were approximately Tk1 lakh. However, this year, his sales have plummeted to hardly Tk30,000 per day.

"People are purchasing less because the prices of every item have surged significantly," Kabir remarked.

Abdul Quddus, a salesman at the J&Z showroom in Mouchak Market, which sells shirts, pants, and T-shirts for adults, said, "Our sales have decreased by 30%."

He mentioned that adults in the middle class are buying fewer clothes due to budget constraints. Quddus explained, "How will they buy when their budget is low? After paying house rent and setting aside a portion of the salary for food, there isn't much money left."

Additionally, many people travel to the village to visit their families, incurring additional expenses. He added that it can be observed that they are purchasing clothes for their children without buying anything for themselves.

Zahid Hussain, former lead economist of the World Bank's Dhaka Office, told TBS that while inflation has surged over the past two years, the wages of the low-income group have not seen a corresponding increase. Consequently, the purchasing power of the low-income group has diminished, while the affluent are relatively unaffected by inflation.

Ghulam Rahman, president of the Consumers Association of Bangladesh, told TBS, "The increasing income disparity in the country has been evident in Eid shopping this time. Those who are relatively poor or in the lower middle class are barely surviving. It is very difficult for them to spend extra for Eid. Still, everyone tries to buy something for their sons and daughters, including new clothes, for Eid. They cannot afford these costs, he added.

He explained, "It is observed that they are prioritizing purchases for children. For example, if a person has Tk100, they will use it to buy for their child first."

On the other hand, those whose income is increasing can afford these expenses, leading to higher sales of higher-priced products, he continued.

Branded shops witnessing better sales

SM Khaled, managing director of Sara Lifestyle, a local fashion retail brand of Snowtex Group, says their sales have increased by 37% during Ramadan compared to last year.

He also mentioned that they have increased their product prices due to the high cost of raw materials, but they remain cheaper than other stores yet.

He said, for example, that they sell a shirt for Tk800, while the same category of product sells for Tk1,000 in other stores.

"We always strive to offer products at a more comfortable price than other stores," Khaled added.

He said they are planning to reduce their prices this year by doubling their production.

Shaheen Ahmed, owner of the fashion house Anjans, said the sales were not as expected; they were almost similar to last year's sales.

"Due to high inflation and dollar exchange rates, the prices of all raw materials have increased by 15% compared to last year. Despite the challenges, we have tried to keep the prices the same as last year," he added.

Md Rezaul Karim, chief operations officer at Sailor, a lifestyle brand of Epyllion Holdings Limited, said, "We enjoyed good business during Ramadan, as customers' presence overwhelmed every one of our stores."

"We had targeted a 20% increase in sales compared to last Ramadan's figures, but our achievement exceeded our expectations."

He said their production costs had increased by about 20%. Despite this, they increased product prices by about 10%, and the remaining amount was adjusted through increased efficiency, minimising operational costs, and reducing their profit margin.

Mehedi Hasan, manager of Bata at the Bashundhara City store, said, "We had good sales during Ramadan. Compared with last year, the sales were 5% higher."

Eid economy

Eid-ul-Fitr, the largest festival in the country, witnesses a significant influx of money as people indulge in spending sprees, whether it's on clothing, footwear, travel, or zakat. This surge in spending provides a boost to the economy.

As per a survey conducted by the Bangladesh Shop Owners Association, around Tk170,000 crore circulates during Ramadan and Eid-ul-Fitr. Out of this, Tk37,400 crore is for clothing purchases, while the highest portion, over Tk70,000 crore, is spent on zakat, and an additional Tk27,000 crore is allocated for extra food expenses.