Rise of ru­ral con­sumers in de­vel­op­ing coun­tries: har­vest­ing 3 bil­lion as­pi­ra­tions

The Smart Manager - - Trust Deficit? - By vi­jay ma­ha­jan

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

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