VAT removal fuels supermarket growth

The recent removal of the 5 per cent VAT on packaged goods in supermarkets has significantly shifted Bangladesh's retail landscape. This has enabled major chains like Agora, Meena Bazar, and Shwapno to expand rapidly and attract middle-class consumers who previously shopped at traditional grocery shops. With cleaner shopping spaces, more varied product offerings, and reward programmes, supermarkets are now more appealing due to the new tax law, which has leveled the playing field. Supermarkets can also use the benefits of bulk buying to offer competitive prices, drawing customers away from small merchants.

With supermarkets gaining traction, Fast-Moving Consumer Goods (FMCG) companies must adapt their placement and promotion strategies to sustain market dominance. Strengthening ties with supermarket chains will help brands secure exclusive in-store promotions and strategic aisle displays. Brands can work together to develop alluring discounts, package deals, and seasonal promotions that promote repeat business thanks to the growing popularity of loyalty programmes. FMCG firms can also aggressively negotiate premium shelf positions in the organised setting of supermarkets, giving visibility top priority by strategically placing it next to checkout stations and at eye level. This strategy greatly increases the possibility for sales and improves product visibility. As modern retail continues to grow, brands proactively aligning with this shift will be best positioned for long-term success in Bangladesh's evolving retail market.

Supermarkets make up only 2.5 per cent of Bangladesh's retail market, but they are expected to grow quickly. For instance, as supermarkets like Walmart and Kroger grew and offered greater variety and cheaper pricing, independent grocery stores in the United States started to decline in the 1950s and 1960s. By the 2000s, conventional grocers were all but extinct due to the dominance of big-box stores and online sellers like Amazon.

Long-term success will be ensured for FMCG firms that proactively adjust to this retail transition, as chains seek statewide expansions and consumer preferences change.

In order to keep their products competitive, visible, and accessible in this era of rising supermarkets, FMCG companies should now reconsider their route-to-market strategy.

Tanvir Mahmud

Student, North South University

tanvirmahmud5567@gmail.com