Rise of rural consumers in developing countries: harvesting 3 billion aspirations
The ride from Gulshan to Anondo Bazar covered just 15 miles, but it felt like I’d entered another world.
As the car pulled out from my hotel in one of the most affluent districts in Dhaka, the capital of Bangladesh, I looked out at foreign embassies and expensive hotels. We merged from bustling city streets onto a highway. No more than an hour later, though, we were carefully picking our way up a dirt track, sidestepping mud puddles from the morning’s rain on our way to a farming village of 250 people.
Everything around me belied the fact that I had traveled only a little farther than I do during my daily commute to my office at the University of Texas in Austin, the state capital. I walked through an empty fish market, its seafood sold out early that morning, as it regularly does. I saw a customer walk out of a small restaurant with a live chicken under his arm. The local Unilever distributor was making his rounds in a vehicle adapted for rural roads: a three-wheeled bicycle with an improvised cargo container painted an eye-popping green. What little glamour there was, came from a billboard above a shop featuring Bollywood actress Aishwarya Rai in an advertisement for Lux soap.
Yet even in this small farming village, and in a developing economy that posted a per-capita GDP of just $829 a year when I visited in 2013, local consumers could buy many of the same brands available in Gulshan, Dhaka, or most anywhere else in the world. Shopkeepers hung singleuse packets of Unilever’s Close-Up toothpaste and Sunsilk shampoo from bamboo poles. I spotted packages of Nestle’s Cerelac baby food, PepsiCo’s 7-Up, and Horlicks, the malted-milk drink mix from GlaxoSmithKline.
For the village men who work on surrounding farms and the young women who work in a nearby garment factory, average household incomes hovered around $100 a month. Yet in small packages that sell for a few cents each, they could purchase premium shampoo, toothpaste, and soft drink brands. I asked a local restaurant owner what beauty products she preferred. Nivea, Fair & Lovely, and Colgate, she told me.
As I glanced up at the television perched atop a nearby shelf, her upscale preferences made perfect
sense. She was showing a popular Bengali channel, Star Jalsha, broadcast from India and owned by Fox. Between the billboard with a Bollywood actress and the satellite broadcast beaming ads into her store, she and her patrons had a direct connection to the world and brands beyond, even if they rarely left the village. And as I realized this, the myriad other forces that have fueled the rising opportunities in rural markets started to reveal themselves throughout the village.
I flashed back to the mosque I noticed as I first walked up the muddy dirt track into the village. It was built by one of the town’s wealthiest residents, an undeniable show of status he opened up to everyone in the community. Yet I learned later that his affluence came from remittances sent back by his migrant laborer sons, who worked at modest service-sector jobs in the Gulf countries, and it struck me how large an impact those inflows have on rural communities.
I noticed a bKash sign in one small shop and realized the remarkable influence that technology and entrepreneurship can have on rural parts of the developing world. With the wide availability of mobile phones in developing countries, entrepreneurs could develop technology networks that allowed rural consumers to hold affordable and convenient financial services in the palm of their hand—even if they’d never see a bank branch in their lives. As part of the bKash network, the shopkeeper in this small village could help customers send and receive money. Less than 15 percent of Bangladeshis are connected to the formal banking system whereas over 68 percent have mobile phones. The introduction of bKash not only capitalized on the tremendous rural opportunity in Bangladesh, it helped expand the market.
I started to better understand the effect natural and cultural seasons had on rural consumers, finding changes in spending patterns even down to the village level. In one instance, a large consumer company provided a graph that showed the impact Ramadan, Eid al-Adha, and the three main harvest seasons—Boro, Aus, and Aman—had on its sales in Anondo Bazar. The Islamic holidays really charged sales, while the coming of the harvest and payments to farmers also could nudge spending higher (see Figure 1.1). ■
I noticed a bKash sign in one small shop and realized the remarkable influence that technology and entrepreneurship can have on rural parts of the developing world.
Sage Response 2016, ₹795, 212 pgs, Hardcover Vijay Mahajan