Brac-Aarong: Financing and Promoting the Creative Industries

In 1972, Fazle Hasan Abed founded the Bangladesh Rural Advancement Committee (BRAC)
and a holistic development model that has revolutionized income-generating opportunities for
rural communities in developing countries. Through its handicraft and fashion section, Aarong,
BRAC has developed a sustainable national brand that provides a livelihood in the creative
industries for tens of thousands of people across Bangladesh.

Initially established as a small-scale relief and rehabilitation project to assist refugees returning
from India after Bangladesh’s war of liberation, BRAC is now one of the world’s largest
development organizations. With a founding donation of £189,000 (about US$ 315,000) from
Oxfam, Mr Abed established four health clinics, built fishing boats and offered housing
assistance to promote employment in more than 200 villages in northern Bangladesh. Since then,
BRAC has disbursed more than US$ 7 billion to more than 7 million borrowers in Asia and
Africa.

With more than 120,000 employees and an annual turnover of US$ 535 million, BRAC’s
commercial success is obvious. But for BRAC, the real measure of achievement is the positive
impact it has on the lives of the 110 million people it reaches through its development work
every day.

Aarong – BRAC’s flagship social enterprise

BRAC established Aarong, its handicraft-marketing branch, in 1978. The initiative was
dedicated to creating economic opportunity for disad-vantaged artisans and rural women through
the revival and promotion of their traditional handicrafts. Today Aarong has become the
foundation
for independent cooperative groups and family-based artisans to market their craft, both within
Bangladesh and internationally. The project currently has nine retail outlets and supports more
than 65,000 artisans in 2,000 villages across Bangladesh. An additional 25,000 independent
cooperative groups and traditional family-based artisans also sell their crafts through Aarong.
Potters, brass workers, jewellers, jute workers, basket weavers, handloom and silk weavers,
wood carvers, leather workers and other artisans from all over the country come to Aarong for
marketing and support services.

Every woman who works in Aarong-owned production facilities is also a beneficiary of BRAC’s
multifaceted development programmes with access to microcredit to develop income-generation
activities in addition to their regular wages.

As further evidence of BRAC’s successful business model, Aarong has seen an average annual
business growth of 40 per cent in the past four years (see Figure 1). While many local export-
orientated businesses have suffered as a result of the current world economic climate, Aarong’s
market, which is 95 per cent domestic, has grown by an estimated 12 per cent this year. Built on
the strength of its strong domestic market, the Aarong label has become Bangladesh’s leading
fashion brand. The sheer scale of BRAC’s reach and reputation within Bangladesh has been part
of the reason the Aarong project has been so successful. The brand has a strong national identity
and customers are proud to shop there. They also trust BRAC’s sustainable business practices
that have evolved through a model of trial first before scaling up.

Aarong has also successfully found a niche in the retail fashion space. Prior to the establishment
of Aarong’s retail outlets, shopping for quality textile products was either through the backstreets
of local markets or in up-market boutiques inside hotels. It is the closest shopping experience to
a department store in Bangladesh, offering a range of products ranging from clothing, shoes,
jewellery and accessories to furniture and homewares. So, although the brand’s marketing
includes billboard advertising and fashion shows within the country, it is really the elements of
convenience, range and quality of product, combined with a strong national identity, that have
effectively become its marketing tools.

The value of Aarong to the creative industries in Bangladesh is not only economic. The success
of the retail brand has inspired consumer interest in indigenous Bangladeshi design through
blending the traditional with the contemporary in a manner that has won instant consumer
appeal. Aarong’s product designs focus on the diverse types and textures of crafts and patterns
that have been passed along from generation to generation among weavers and artisans in craft
hubs around the country. Aarong also plays a role in protecting and promoting traditional
Bangladeshi products and designs through its extensive design library where remnants of the
country’s rich craft heritage, such as Nakshikantha art and Jamdani patterns, have been widely
researched and archived.

About Aarong

Today, few urban consumers will argue that Aarong is the local Mecca for deshi handicraft.
Aarong’s product designs has brought consumer attention back to the products and styles that are
indigenous to Bangladesh, its designers blending the traditional with the contemporary in a
manner that has won instant consumer appeal, starting a revolution in trends that has now been
taken up by countless other boutiques and stores. Aarong’s product designs focus on the diverse
types and textures of crafts and patterns that have been passed along from generation to
generation among weavers and artisans in craft hubs around the country.

Aarong also plays the role of protector and promoter of traditional Bangladeshi products and
designs. It houses an extensive design library where remnants of our rich craft heritage, such as
Nakshikantha art and Jamdani patterns, have been widely researched and archived for present as
well as future use.

SWOT Analysis of Aarong

SWOT analysis is a powerful technique for understanding organizations Strength & Weakness
and looking for the Opportunities & Threats it may face. Used in a business context it helps
organization carve a sustainable niche in a market. This analysis is mainly based on an imaginary
situation.

SWOT analysis of Aarong

Strength

Aarong is a very reputed organization. They are now capturing 68% of total handicraft market
share in Bangladesh. It’s a local brand and now exporting their products outside of the country.
Aarong has good reputation for fine quality products. It has a strong management team who are
continuously giving their great effort to make it a successful one. Another important fact is that,
Aarong has almost “Zero” production damage rate which reduces their cost. They are innovative
and always bring some new product in the market which meets customer requirement and
expectations. The organization is a respected employer that values its workforce.

Weakness

Aarong has a reputation for new product development and creativity. However, they remain
vulnerable to the possibility that their producer may not be able to produce product timely due to
their inability. The collection channel of the organization is not that much structured so that they
can get the products from the producer on time and it may create problem for them in future. If
any producer is not able to make the product on time due to some personnel problem then the
company will also not be able to deliver their product on time. This is a big problem and it
happens most of the time on delivery. Aarong charges higher price relatively than their other
competitors as a result sometimes customers lose their interest to by product from them. Its sales
force or sales girls within the outlet are not properly trained up. Sometimes they make customers
disappointed by their attitude and customer doesn’t feel good to buy from there. Sometimes they
suffer for financial problem, although it’s a rare situation.

Opportunities

Aarong is very good at capturing the advantage of opportunities. It can go for new distribution
channel like it can make some joint venture with some other small Boutique and sales its
products in more places. Through that it can capture more market share in the handicraft industry
in Bangladesh. Aarong can expand its business globally. New market for handicraft such as
Europe and America are beginning to emerge. People are now trendier about local events &
functions like Pahela Falgun, Pahela Baisakh, Victory day, Independence Day etc and they buy
new and special products for these events. Aarong can make new products to sell in those special
occasions. According to the season change, people are also changing their preference in buying
products and considering this scenario Aarong can produce products on the basis of seasonal
variations.

Threats

Aarong doesn’t have any big competitors right now. But they have some small competitors like
KayKraft, Anjans, Deshal, Jattra, Khubsurti, Rina Latif, OZ, Rang and some other Boutiques
established at Banani 11, who are taking their 32% customer and increasing in a slow rate.
Aarong always face price wars with their competitors. Its competitors have some superior
products like OG’s Panjabi shape, Khubsurti’s design of Salwar kamiz Rang’s Shari’s color,
which is decreasing Aarongs market share as well as sales. But now they are repositioning their
Brand to compete with them.

Competitors Analysis of Aarong

Competitor analysis in marketing is an assessment of the strengths and weaknesses of current
and potential competitors. This analysis provides both an offensive and defensive strategic
context through which to identify opportunities and threats. Competitor profiling coalesces all of
the relevant sources of competitor analysis into one framework in the support of efficient and
effective strategy formulation, implementation, monitoring and adjustment.

Aarong has its own version of the competitive analysis and its function is clear: to line up
your product with other products and show where yours falls short and where yours is superior.
Each industry brings a different spin to this old favorite and user experience design has its own
set of criteria by which to judge competitors.

Competitors Analysis of Aarong

From the above diagram it is seen that Aarong has competitive advantage over it’s
competitors on almost every factors. Only few companies have ability to chase some sort of
advantage like Aarong. Such as Rina Latif’s product features, qualities and innovativeness, Kay-
Kraft and Anjan’s supplier, Rang’s color and Khubsoorti’s cost.