Unique retail chain provides affordable and nutritious food to low-income workers in Bangladesh
Dhaka, Bangladesh, 24 June 2020 – Bangladesh-based Direct Fresh Ltd has made a renewed inclusive business commitment to Business Call to Action (BCtA) aiming to provide 1 million low-income factory workers with quality produce and essential goods at lower than market price through a unique base of the pyramid (BoP) retail chain by 2022 and hoping to reach an additional 3 million over the next five years. The company aims to also increase the yearly disposable income of 500,000 BoP manufacturing workers by five percent by reducing their food costs by 2022.
BCtA aims to accelerate progress towards the Sustainable Development Goals (SDGs) by challenging companies to develop inclusive business models that engage people with less than US$10 per day in purchasing power (in 2015 dollars) as consumers, producers, suppliers and distributors. It is supported by several international organizations and hosted by the United Nations Development Programme (UNDP).
Around 21.8 percent of the Bangladeshi population falls under the national poverty line. Of the urban poor, a good number of these individuals are those working in the manufacturing sector who live in urban clusters – with 4 million working in the ready-made garment industry earning less than $5 a day.
With a monthly average wage of less than $150, these workers represent a huge market interested in using an innovative food supply service that caters to their financial and nutritional needs. Direct Fresh plans to cater to the needs of these workers by establishing BoP retail chains, or "retail fulfilment centres" in urban production clusters, aiming to open 100 over the next two years.
These retail centres will sell produce and essential goods at lower than market price and on interest-free credit.
With a four-member household spending almost $35 on food, the market size for food and FMCG products is estimated to be $2 billion a year. Direct Fresh’s retail centres aim to reduce the yearly food expenditures of such families by five percent, thus increasing their yearly disposable income and their quality of life.
“A dedicated retail fulfilment centre targeting a 4 million strong BoP market is a unique concept that has not been done before. Our model allows low-income manufacturing employees to have access to quality products through affordable payment mechanisms that in turn creates easier shopping experiences, saves times and has a positive impact on employee productivity,” said Tanvir Sifat, Director of Strategy & Business Development at Direct Fresh.
The company currently caters to more than 40 local and international customers, delivering to over a hundred distribution points. Hence their experience in food procurement and supply for the last seven years, has allowed them to strongly establish backend sourcing channels for various products. They also procure dry commodity products in bulk from local farmer groups and aggregators and import products directly as well. This enables the company to achieve price arbitrage and in turn pass on the savings to buyers, while still making the venture a profitable one.
Low-income factory workers will be able to avail these affordable products through a ‘factory sign-up model’ where Direct Fresh partners with large factories and in turn assigns credit limits to the workers to purchase products. At the end of the month, the purchases are adjusted against the worker’s salaries with no interest charged against the workers’ credit.
“Direct Fresh’s retail centres allow low-income factory workers to purchase nutritious food and essential goods at affordable prices, thereby decreasing costs on basic needs, allowing urban BoP residents in Bangladesh to invest in other essential areas, such as education and health that can improve the quality of life of entire households,” said Luciana Aguiar, Head of Business Call to Action.
BCtA membership does not constitute a partnership with its funding and programme partners, UNDP or any UN agency.
About Direct Fresh: Direct Fresh Ltd (DF) is a seven-year-old company registered in Bangladesh that has emerged as a 360° food solution provider for the institutional and retail customers of Bangladesh. The company is currently catering to 40+ institutional customers delivering to over 100+ distribution points across the country. With around 170 employees, DF is currently generating yearly revenue of US $12 million. Direct Fresh imports, trades and produces food products, operates using its own processing, logistics and distribution channel and delivers/retails the product to the customers directly.
About Business Call to Action (BCtA): Launched at the United Nations in 2008, BCtA aims to accelerate progress towards the Sustainable Development Goals (SDGs) by challenging companies to develop inclusive business models that offer the potential for both commercial success and development impact. BCtA is supported by the Dutch Ministry of Foreign Affairs, Swedish International Development Cooperation Agency (Sida), Swiss Agency for Development and Cooperation (SDC), UK Department for International Development (DFID), and hosted by the United Nations Development Programme (UNDP). For more information, please visit www.businesscalltoaction.org.