This article is published in collaboration with BCG Perspecitives.

You feel the energy soon after disembarking at Hazrat Shahjalal International Airport in Dhaka. All of Dhaka, the capital of Bangladesh, seems to throb with bustling masses of people. Bridges, expressway overpasses, and major new neighborhoods are continually under construction. Evidence of the country’s rising disposable income is on display at crowded shopping malls such as Jamuna Future Park, the largest in South Asia, and new billboards, which seem to cover every available space, advertise products as varied as packaged foods and smartphones.

To much of the outside world, Bangladesh remains synonymous with poverty. It is time to take a new look at this land of 160 million: this rapidly developing economy is one of the world’s next great growth markets for discretionary consumption.

Although the number of middle-class and affluent consumers in Bangladesh remains small compared with those of other big emerging markets in Asia, Bangladesh is one of the fastest-growing markets worldwide. We project that, each year for the next decade, the annual income of around 2 million additional Bangladeshis will reach $5,000 or more. That means that they will be earning enough to afford goods that offer convenience and luxury, such as air conditioners, imported shampoos, and cosmetics. And although half of Bangladeshis still live at the so-called bottom of the pyramid, economists estimate that another 30 million to 40 million will make the leap from poverty to the entry rungs of the middle class by 2025.

To help companies gain a deeper understanding of the middle and affluent class (MAC) in this increasingly important—but often neglected—market, The Boston Consulting Group’s Center for Customer Insight surveyed around 2,000 households across the country. We asked consumers about their sense of financial well-being, their purchasing habits, and their consumption priorities for some 70 product categories. To help companies anticipate when consumption is likely to take off in these categories, we also analyzed changes in Bangladeshi household consumption of specific goods and services relative to rising incomes.

The following are among our key findings:

  • Bangladesh’s consumer class is swelling and dispersing. Although only some 7 percent of the country’s current population can be classified as middle income or affluent, compared with 38 percent in Indonesia, MAC Bangladeshis will account for around 17 percent of the population by 2025. Consumer wealth is also dispersing regionally: projections indicate that within the next decade, 63 cities will have MAC populations of at least 100,000, compared with 36 now.
  • Consumers intend to spend but are wary of debt. Sixty percent of consumers report that they expect their incomes to rise over the next 12 months, and 69 percent say that there are more things they want to buy. But they are restrained by concerns—due perhaps to social taboos or to a lack of familiarity with debt instruments—that they will run up debt that they won’t be able repay. Alleviating this concern could unlock great growth opportunities.
  • Consumers are highly loyal to brands, but they are also budget and quality conscious. Most Bangladeshi consumers—more than 80 percent in the case of durables—cite brand as a top factor that influences their buying decisions. These consumers work within a budget, and price is often cited as a second priority over quality. Far fewer Bangladeshis than consumers in Southeast Asian emerging markets say that price discounts sway their decisions.
  • Consumers increasingly use the mobile Internet. Forty-one percent of Bangladeshi consumers surveyed—and 68 percent of MAC consumers—own Internet-enabled smartphones. Currently, most transactions are in cash, but the popularity of smartphones suggests that more consumers will be making the leap to mobile payment, creating an opportunity for reaching households through wireless mobile services. Eighty-one percent of consumers said that they trust what they read online, and 66 percent search for product information online.

Although these findings suggest that tremendous growth opportunities will unfold over the coming decade, companies must approach this market with a sophisticated understanding of the Bangladeshi consumer. They should also address the constraints that prevent consumers from acting on their strong desire to purchase brands and should introduce products that meet household budgets. Companies can expand their reach through different retail channels and in more locations.

For the next few years, companies should focus on ramping up their operations to meet growing demand from MAC households in Dhaka, Chittagong, and a handful of other cities. But at the same time, they should begin laying the groundwork for a broader expansion as the MAC population continues to grow and as buying power spreads swiftly throughout the country. The strong brand consciousness of Bangladeshi consumers suggests that the companies that can now establish themselves as trustworthy, build market share, and develop a reputation for delivering good quality will be those that reap the biggest rewards in what promises to be one of world’s next big growth markets.

Publication does not imply endorsement of views by the World Economic Forum.

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Author:  Zarif Munir, Olivier Muehlstein, and Vivek Nauhbar are writers at BCG Perspectives. 

Image: Workers sew prayer caps. REUTERS/Andrew Biraj.