Renowned as the preferred sourcing hub for global brands and retailers, retail sector in Bangladesh has made substantial progress in the last few years, especially in fashion and lifestyle.
Suppliers to all prominent names in the realm of fashion the world over, many top of the line garment manufacturers/exporters have introduced their own brands lately – which are at par with global biggies in terms of quality – thereby adding a new dimension to the fashion retail sector of Bangladesh, which is undergoing a very interesting phase with both the homegrown and global names vying with each other to make their mark felt in the vibrant retail landscape.
One such local name that has emerged very strongly of late is the Evince Retail Limited. An ancillary/sister concern of Evince Group, one of the leading and most diversified independent manufacturing conglomerates in the apparel and textile sector in Bangladesh, Evince Retail Limited is credited with introducing two new brands in the country – Miniso Bangladesh and Noir.
In the backdrop of the same, Apparel Resources recently caught up with Shah Rayeed Chowdhury, the young and energetic Director of Evince Retail Limited, to know more about the existing retail scenario in Bangladesh, challenges and prospective growth areas, effect of coronavirus on the country’s retail landscape, Rayeed’s scheme of things going forward, and not to mention, all about Miniso Bangladesh and Noir. Here are the excerpts…
How do you perceive the overall retail scenario and its future in Bangladesh?
Shah Rayeed Chowdhury: Bangladesh is known for being one of the top RMG manufacturing countries in the world. This has led its new generation entrepreneurs to aspire to enter the fashion retail scene, as a lot of them either have a strong support of family-owned apparel manufacturing plants or through external sources related to the industry.
The retail market in Bangladesh began to expand drastically as a whole after the rise of smartphone users subsequently, as people now have easy access to information and trends. The ‘low cost of entry’ helps with the growth too. Not to mention the opportunity to use social media platforms for free to showcase the products and services and hold exhibitions that are typically not very expensive. Thus, there is an ever-growing market of people establishing brands without physical stores.
Although the industry is promising, there are certain issues that need to be addressed.
Unstructured growth and establishment of brands without a systematic plan of action, SOPs and a solid ideology prevent them from achieving efficiency in business. This is why a lot of brands are leaving as fast as they are entering the market.
Unregulated rent is another problem that we commonly face. Majority of sales (earnings) are spent on costs incurred from rent and service charges; as a result, there is very little left to be reinvested in the business. Also, since the industry is fairly new with regards to proper growth, there is a lack of people with the skill set required to execute certain tasks or fill up certain positions which is why a lot of training needs to be done.
Another major drawback that we face is the lack of tourism in Bangladesh. A big chunk of revenue for any fashion retail business comes from foreigners visiting the country, but unfortunately, since we are not being able to reach that untapped potential in the tourism sector, our brands are compelled to depend on local sales generated during peak seasons such as Eid-Ul-Fitr which constitute around 60 per cent of the entire sales for the whole year.
Despite these issues, we strive to move forward and find avenues to explore as there are tons of opportunities and demand to be met in the market. Besides, along with home grown brands, global brands like Miniso Bangladesh have begun to enter the Bangladeshi market now. They see the potential that our market holds, and I believe Bangladesh will be renowned as the next hub for the retail world in the near future.
A little information on the background of Miniso Bangladesh and Noir for better understanding of the brands and what each one offers…
Shah Rayed Chowdhury: Both Miniso Bangladesh and Noir belong to the Evince Group, which is one of the leading and most diversified independent manufacturing conglomerates in the apparel and textile industry of the country. Evince Group is the Master Franchisee of Miniso in Bangladesh with stores throughout most of the major locations in Dhaka and Chittagong while Noir is a Bangladesh-based clothing brand established in 2014, with four stores located in Dhaka.
Miniso, as one would know, is a Japanese designer brand, which began to develop in the Chinese market in September 2013. It quickly became popular and actively explored the international market and has opened 4000+ stores all over the world by the end of 2019 with business turnover reaching US $ 2.5 billion in 2018. Today, Miniso has reached cooperation agreements with nearly 100 countries and regions including the USA, Canada, Mexico, Russia, Singapore, France, UK and Bangladesh.
Since its initiation, Miniso has collaborated with world famous brands including Marvel, Disney, Sesame Street, Coca Cola, Hello Kitty, Pink Panther, Cartoon Network and so on, releasing playful crossover products that are extremely popular with young consumers. In a continued commitment to original design, the brand has established the Miniso Original Design Academy (MOD) and teamed up with some of the best designers from Finland, Denmark, Norway, Spain and South Korea to create high-quality products that skilfully blend creativity and practicality – winning it a series of international design awards such as IF, Red Dot, and the A’ Design Awards.
Further, Miniso Bangladesh has introduced a unique franchisee model where we offer safe investment for people who share the same mission and passion for Miniso (a global, thriving brand) as part of which franchisees only require to invest in the store and Miniso Bangladesh manages entire operations from HR to marketing to product analysis, etc. This model has allowed Miniso Bangladesh to grow exponentially in a short time.
Now coming to Noir, it primarily aims to introduce global trends to the country at limited quantities with a view to allowing consumers withhold exclusivity of designs. The customer is at the heart of the business model in Noir, which includes design, production, distribution and sales.
At Noir, the focus is always to uphold tradition and culture and work the designs around that. This enables people to express their own personal style while staying true to their roots.
What are the USPs of Noir and Miniso Bangladesh that would distinguish the two from a host of others, which are already operating in Bangladesh today?
Shah Rayeed Chowdhury: Our key distinguishing factor from others would have to be our team. It would be fitting to mention how Miniso Bangladesh is one of the fastest growing retail brands in the world with an ideology that unites us all – making lives better, something towards which we are all working day in and day out. Miniso Bangladesh will always uphold its ‘product first’ key corporate strategy, and follows the very latest trends among Generation Z consumers, a quality-conscious group who the brand remains dedicated to. We listen to customers’ needs when developing products, creating ‘back to basics’ goods with simplistic designs that mimic nature.
By updating products on a weekly basis and sourcing from world class suppliers while offering the best value, Miniso Bangladesh can rapidly set trends, particularly in the fields of homeware, digital accessories, health and beauty, toys and textile goods. Moreover, even though there a few copy brands that are coming up, they are unable to engage in IP cooperation agreements with world-famous brands like Marvel, Disney and Cartoon Network, to name a few.
For Noir, even though we are fast adopters of global trends, we aim to provide fashion clothing and accessories to consumers at the highest level of quality. Noir products are manufactured in the same factories that cater for European brands like Next, Celio and so on and our denim and textile factories produce fabrics for ZARA Inditex. Moreover, both brands have an extensive backend ERP system that helps to maintain all operations.
However, at the end of the day, it all comes down to the team. We are proud to have a vibrant work culture with a strong, young and dedicated team of hard-working professionals who have the same dream of setting an example of what it means to be the best brand in Bangladesh. In order to achieve just that, we all need to recognize that a profound shift to shared growth and prosperity based on ideals of improving lives is a movement that is building.
Going beyond the capital city, how is the retail scenario in other Tier 2 and Tier 3 cities of Bangladesh?
Shah Rayeed Chowdhury: Our retail industry has grown beyond Dhaka, as demand continues to rise parallel to awareness of products. As Bangladesh ranks number 19 in the list of countries by smartphone penetration in 2019, people now are more aware of information. They have become more conscious of global and local trends, usage and features. In addition, retailers are able to take advantage of the ever-increasing number of smart phone users by promoting their offerings via social media at rates which still remain the lowest means of advertisement. This has enabled retailers to tap into markets other than Dhaka – namely Chittagong and Sylhet. However, markets like Cumilla, Narayanganj, Barisal, Khulna and Bogura also have immense potential. Having said that, it does depend on the type of brand, service or product. For instance, Miniso Bangladesh’s plan is to open store across Bangladesh, as it has products for all target groups, a wide range of prices, suitable for varying market demands and income levels.
Ethnicwear still holds a position of eminence in Bangladesh. Is the consumer choice still the same or undergoing changes?
Shah Rayeed Chowdhury: The Bangladeshi culture is deep-rooted, partly due to the way we were raised in close knit communities and the way we were taught to respect our heritage. Bangladeshis are proud of their tradition and when it comes to fashion, a form of self-expression, they love to own their culture and reflect their beliefs via what they are wearing. I cannot speak on behalf of everyone, but surely that is the case for Noir. Ethnicwear continues to be Noir’s driving force with regards to high volume categories. As changing something as powerful as culture is what we should not even attempt to do, so we rather decided to help explore it.
Coronavirus has had an adverse impact on Bangladesh’s retail sector. What are the challenges that you faced with context to the same, and if you had been able to successfully negotiate the same?
Shah Rayeed Chowdhury: This reminded me of the following quote by Andy Grove, “Bad companies are destroyed by crisis; good companies survive them; great companies are improved by them.” Coronavirus has certainly brought about change in every aspect of our lives and also challenges we have never faced before but our team was not sitting idle throughout the lockdown and duration of time in which our stores were closed. Almost immediately, we had made use of online means of staying connected and shifted to a routine ‘work from home’ schedule. Regular coordination meetings were held amongst both brands, sometimes even together to facilitate synergy, something we strongly believe in as a team. In addition, we had used this ample of time to focus on developing strategies, policies and SOPs for each department, conducted several online trainings, re-educated the team on our mission. These teams were given assignments, they took courses to develop skills and so on. Our goal was to utilise this time for self-improvement of the team so that when it was time to get back in the battlefield, we were better than ever.
Adaptability is a core characteristic of any team aiming to not only survive during bad times but succeed as well. If we must focus on the challenges, the obvious would be (a) Rent and (b) Bank interest. The biggest portion of our costs these two overheads which are difficult to negotiate.
How do you foresee the long-term impact of COVID-19 on Bangladesh’s retail sector, especially fashion and lifestyle domains?
Shah Rayeed Chowdhury: Before I answer this question, I just want to highlight the reality that this is not the first time in human history that a pandemic has occurred. Imagine, if we had lived for a thousand years; this would have been the 6th or 7th pandemic we would have endured. Just like now, people would have learned how to tackle an incoming hurricane knowing some businesses will inevitably get hurt. We no longer react the same way when we hear the news of a hurricane. This is not the first time the business world has gone through forces that has shaken it. Take the example of the internet. It put a lot of companies out of business, the ones who could not adapt to the new change. However, the internet has helped to create businesses in return as well. Another example is streaming. Streaming services wiped out all video store businesses. The ones that run out of business are the ones who cannot adapt. We have to learn to adapt to changing times and to new ways of running business. Of course, the COVID-19 pandemic was way more sudden and shocking than the internet, but the point I am trying to make is that it’s now new in business. What we are going through now, we have to view it not as the end but as a part of the journey.
On that note, there is no going back to normal or pre-COVID-19 era. In the same manner, the world had changed after let’s say World War 2; there was no going back to what the world was like before that. In the long run, we do not know what will happen, but one thing is for certain that we will learn to adapt. For instance, by now we are all aware that for both fashion and consumer goods, the safe and moving category will now be the essentials (basic everyday items). In the case of fashion retail, these are things like basic shirts for work under Taka 1200-1500 (night fit and fabric) and other essentials like basic kurtas and kurtis which are worn by people on a daily basis.
At the end of the day, people are not going out as much, people are saving rather than spending; thus, they are not going to spend on items which are cost wise premium or outfits meant for outings. This is the back to basics era! For consumer goods, we are providing things such are anti-pandemic items like masks, gloves, sanitisers, hand wash and everyday essentials like stay-at-home fitness gears, selfcare items, cutleries and homeware at affordable price ranges. One thing is certain, pandemic or no pandemic, moving forward the only consistent category will continue to be low cost essentials.
How have been sales this festive season compared to other years, keeping in perspective the pandemic?
Shah Rayed Chowdhury: All Miniso Bangladesh and Noir stores remained closed from 25 March 2020 and reopened on 10 July 2020. The health and wellbeing of our customers, colleagues and community is and always will be to be our top priority which is why we had opted to keep our gates closed during the peak seasons and resumed operations after taking the time to carefully implement strict safety protocols to ensure a comfortable and safe shopping environment.
Sale is secondary; hence, our message was ‘shopping can wait, safety cannot.’ After reopening the stores, we have been overwhelmed with positive response from our customers, people who remain true to the brand; however, it would obviously be exaggerated if I was to tell you that sales figures are through the roof. They are most certainly not. We like every other company are aiming to ride out the wave and survive. As mentioned earlier, customers are saving not spending and people are attempting to hold on to their jobs. There might be other unforeseen factors that are in play, for instance, shopping is an exciting experience where families and friends head outdoors, get some errands done, spend time, socialize. Currently, people are not in that excited ‘hangout’ state of mind. They will not leave their homes unless it is absolutely necessary or spend on things that are not essentials. Eid and Boishakh shopping are not only about getting the right clothing for the day, it is about the whole experience of getting together, giving gifts, going out to eat – everyone benefits from Eid shopping not just the clothing stores; thus, the whole industry suffered and is still suffering.
Furthermore, business hours have been reduced and stores now close at 8 PM instead of 10 PM, whereas peak hours start after 5:30 PM – 6 PM, resulting in a significant loss in sales. Keeping all this in mind, it is evident that we are all in survival mode.
Due to social distancing norms and customers’ reluctance to go out in view of the pandemic, sales through online channels is said to have increased significantly in the last few months. Your views?
Shah Rayeed Chowdhury: Online selling platforms have been thriving ever since the imposition of lockdowns, creating people’s dependence on websites and Facebook shops. This sudden surge in demand for online purchases enabled people to gain confidence on online platforms and in turn presented with a lot of opportunities for businesses.
Truth be told, although online selling platforms are yet to reach desirable levels of efficiency and productivity, there was always a lack of comfort from the side of consumers in Bangladesh to make purchase via the web due to lack of trust. And as mentioned before, shopping is more of a social experience. Having said that, this was the perfect time for us to complete development work of our websites which is something we have been working on extensively.
With the ample amount of time that came about during lockdowns and store closures we are expecting to launch state of the art websites with all the latest updates for both Miniso Bangladesh and Noir by the end of the year. However, when it comes to online selling or the idea of the website, customers in Bangladesh rely mostly on Facebook. It might be because that’s where they spend majority of their time and it is easier to share information between friends and family, read comments and reviews, direct message the companies selling the products and so on. That is one of the reasons Facebook pages and groups are always actively selling goods and services. Therefore, initially Noir started selling products via Facebook and Instagram direct messaging starting from 22 August 2020, before the website is launched officially.
Going forward, what are in your scheme of things?
Shah Rayeed Chowdhury: If I was asked this question in the beginning of the year, the answer would have been completely different. But fortunately, our plans of expanding primarily into the realm of online selling have been pushed ahead as consumers have grown into the habit of making purchases online. What I mean by saying ‘grown into’ is that consumers are now comfortable with ordering products online, availing such services with utmost confidence which was rather lacking.
Now is the perfect time for anyone to invest in an exciting online customer experience. Having said that, apart from primarily focusing on our online selling platforms, we will be continuing to open stores across Bangladesh. Our goal is to always look for opportunity during a crisis and this time it is evident that a lot of spaces are now being emptied by existing tenants, especially in prime locations where previously it was impossible to find a suitable free space.
At the end of the day, no matter how much we grow comfortable with the online market, the experience of shopping in a brick-and-mortar store will continue to be unmatched.