Luxury electronics sales hit by rampant inflation

Demand for mid- and high-end consumer electronics in Bangladesh has fallen sharply as most people switch to cheaper alternatives or avoid purchases altogether amid persistent inflation.

In addition, according to market insiders, product prices have risen sharply as repeated devaluations of the local currency have led to higher prices for imports of necessary components and spare parts.

Given the decline in consumer purchasing power, consumers are being particularly frugal now as economic uncertainty has gripped the country since the August 5 political changes.

Thus, most of them are switching to cheaper local brands of consumer electronics.

Product prices have risen sharply as repeated taka devaluations have made imports of essential components and spare parts more expensive, insiders said.

Although the Bangladesh Bank has announced several interest rate hikes to ease brutal inflationary pressures, the consumer price index (CPI) has been hovering around 10 percent since March 2023.

In September this year, the consumer price index stood at 9.92 percent, up from 10.49 percent a month earlier, according to data from the Bangladesh Bureau of Statistics.

“TV sales in the lower price segment have grown by 3-4 percent as consumers shift to local brands,” said Ritesh Ranjan, business head, Transcom Digital.

On the other hand, sales of high-end TVs were down about 30 percent year-on-year in the four months from July as prices rose 22 to 28 percent in line with the rising value of US dollars.

Likewise, overall sales of consumer electronics fell 28 percent year-on-year between July and October as prices rose sharply, he added.

Ranjan said the import duty on components and spare parts required for local assembly of TVs, refrigerators and other products of foreign brands has increased by an average of 15 percent solely due to depreciation of the local currency.

“The impact of this price increase falls on consumers,” he said. “Apart from high-end TVs and air conditioners, the demand for washing machines and microwave ovens has also fallen due to the same reason.”

Ranjan also said that there are no high-quality refrigerators available in the market under Rs 1 lakh. Units that used to cost Tk 80,000 now cost Tk 120,000.

He also said market sentiment has been worsening over the past two months, with air conditioner sales down more than 50 percent year on year.

In this situation, Transcom is offering discounts of up to 20 percent on air conditioners, 17 percent on refrigerators and 13 percent on TVs.

According to Ranjan, they can even take advantage of the convenient repayment option in up to 36 equal monthly installments.

Ghalib Bin Mohammad, chief marketing officer (CMO), Walton Hi-Tech Industries, said that both consumers and manufacturers are experiencing difficulties due to the overall unfavorable economic situation.

However, he said his company was able to overcome subsequent challenges through proper planning and management.

“From the very beginning, we have focused on quality assurance across all product categories,” he added.

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

“Thus, since consumers get quality products at competitive prices, they prefer domestic brands over foreign ones,” he added.

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

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

Fair Electronics locally manufactures and markets products from Samsung Electronics, a leading South Korean multinational consumer electronics company.

Meshbahuddin said the industry’s suffering began in early 2023 and continues as raw material prices have risen significantly due to higher US dollars.

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

“Essentially, people don’t know what situation might arise in the future. For this reason, they are not interested in purchasing expensive products right now.”

Mr Nurul Afser, deputy managing director of Electro Mart, said their sales revenue has dropped significantly since July, making it difficult to cover operating expenses.

“It’s very difficult to predict what might happen next in the market,” he added.