When global unrest hurts retail, Bangladeshi retail shows resilience

A new study titled "Distant Geopolitical Unrest and Retail Sales" by Rafid Ur Rahman, Martin Heinberg, Constantine S Katsikeas and Sourindra Banerjee, accepted for publication in the prestigious Journal of Retailing, reveals a striking and somewhat counterintuitive reality with powerful implications for Bangladeshi brands and retailers: global political unrest creates unintended consequences in retail markets, and those consequences do not affect all brands equally.

Conventional wisdom suggests that when wars, sanctions, and geopolitical tensions erupt, all brands suffer alike. The logic appears straightforward. Uncertainty depresses consumer confidence, disrupts supply chains, raises costs, and weakens retail performance across the board. In such turbulent periods, even the largest and most powerful brands are assumed to provide safety and stability.

However, this new research shows that this widely held belief is only partially true. While global unrest does reduce overall retail sales, it reshapes competitive dynamics in ways that defy traditional assumptions.

The headline finding is clear: global unrest reduces retail sales, but the extent of the impact depends on which brands are on the shelf. The findings show that large, globally dominant brands managing complex supply chains across many markets simultaneously tended to rationalise and streamline their product variety during this period, thereby affecting sales in some markets. While store brands had the flexibility to expand their variety. The reduced product variety of globally dominant brands contributed to some sales losses, whereas the expansion in product variety of store brands resulted in a sales boost. Both responses were rational, given their very different operating contexts.

The research analysed nearly 3 million retail transactions across more than 800 brands in Bangladesh during the period surrounding the Russia-Ukraine war. While the data came from Bangladesh, the lessons are directly relevant for other markets across South Asia.

Another corollary finding from the study is also insightful. The study argues that brands are not merely bystanders during global crises; they choose how to respond, and those choices matter. Some issue statements which signal their stance, but this study shows that communications alone, without corresponding action on the ground, tend to have a limited impact on shelf presence and consumer behaviour. By contrast, some brands take concrete steps, such as re-evaluating market exposure or shifting operations. While adjusting presence in certain markets due to geopolitical unrest can be challenging for brands, they can manage this by protecting their product range in other countries. These more decisive actions also tend to pay off for both brands and retailers in other markets. Retailers view such brands as more credible and committed, making them more inclined to support them during uncertain times.

In sum, the study highlights a simple but powerful point: in times of global unrest, consumers don't punish store brands for offering more options; in fact, they respond positively by buying more from brands that are available, adaptable, and responsive. Furthermore, during uncertain times, real action, not just rhetoric, helps brands stay visible, relevant, and competitive in front of consumers.

Sourindra Banerjee is a professor at Leeds University Business School