High-end electronics sales hurt by runaway inflation

The demand for consumer electronics in the mid to high-end categories has declined drastically in Bangladesh as most people are shifting to cheaper alternatives or avoiding purchases altogether amid persistent inflation.

Besides, product prices have risen sharply as the repeated devaluation of the local currency made it more expensive to import the required components and spare parts, according to market insiders.

Considering their eroding purchasing power, consumers are being particularly frugal for now as economic uncertainty has been gripping the nation ever since the political changeover on August 5.

As such, most of them are shifting to lower priced local brands for consumer electronics.

Product prices have risen sharply as the repeated devaluation of the taka made it more expensive to import the required components and spare parts, insiders said

Although Bangladesh Bank has announced several hikes in interest rates to blunt the brutal inflationary pressure, the Consumer Price Index (CPI) has been hovering around 10 percent since March 2023.

In September this year, the CPI stood at 9.92 percent, down from 10.49 percent the month prior, showed Bangladesh Bureau of Statistics data.

"Television (TV) sales in the lower price segment have increased by 3-4 percent as the consumers are shifting to local brands," said Ritesh Ranjan, head of business at Transcom Digital.

On the other hand, sales of high-end TVs declined by about 30 percent year-on-year in the four months since July as prices have surged by 22 to 28 percent in line with the growing cost of US dollars.

Likewise, overall sales of consumer electronics decreased by 28 percent year-on-year in the July-October period as prices ballooned, he added.

Ranjan informed that the import duty for components and spare parts required to locally assemble TVs, fridges and other products of foreign brands has increased by 15 percent on average solely due to the depreciation of the local currency.

"The impact of this price hike is falling on consumers," he said. "Other than high-end TVs and air conditioners (ACs), the demand for washing machines and microwaves has also fallen for the same reason."

Ranjan further said there are no high-end refrigerators available on the market for less than Tk 1 lakh. Units that previously cost Tk 80,000 are now priced at Tk 120,000.

He also said the market sentiment has been deteriorating over the past two months, with AC sales having fallen by more than 50 percent year-on-year.

Amid this situation, Transcom is offering discounts of up to 20 percent on ACs, 17 percent on refrigerators and 13 percent on TVs.

They can even enjoy an easy repayment facility of up to 36 equal monthly instalments, Ranjan said.

Galib Bin Mohammad, chief marketing officer (CMO) of Walton Hi-Tech Industries, said consumers and producers alike are struggling due to the overall adverse economic situation.

However, he said his company has been able to overcome the subsequent challenges so far through proper planning and management.

"From the beginning, we have focused on ensuring quality across all product categories," he added.

According to Mohammad, Walton offers both mid-range and high-end products at very competitive prices.

"So, as consumers are getting quality products at competitive prices, they are preferring domestic brands to foreign ones," he added.

Md Meshbahuddin, chief marketing officer of Fair Electronics, said sales of consumer electronics usually increase in the second half of each year.

However, this year has been different as the market is quite dull at present, he added.

Fair Electronics locally manufactures and retails products of Samsung Electronics, a leading South Korean multinational home appliance and electronics company.

Meshbahuddin said the industry's sufferings began in early 2023 and are continuing as input prices have risen significantly due to the price hike of US dollars.

Also, consumers are not in a buying mood due to the uncertain political situation and volatility in the banking sector.

"Basically, people do not know what situation may arise in the future. For this reason, they are not interested in purchasing costly products right now."

Md Nurul Afser, deputy managing director of Electro Mart, said their sales revenue declined significantly since July, making it challenging to meet operational costs.

"It is really tough to predict what may happen next in the market," he added.