Pakistan’s retail industry is still developing with most of this segment fragmented and underdeveloped. There are more than 2.5 million shops in Pakistan, most of which offer only basic products. Consequently, clothing, food, beverages, and tobacco account for as much as 75 percent of retail sales.
Large supermarkets or chain stores for general consumer items are not widely available in Pakistan, though a few multinational chains have started operations. The European cash and carry retailer Metro, in joint collaboration with Pakistan’s Habib Group, has opened several self-service wholesale outlets in Karachi, Lahore, Islamabad, Multan, and Faisalabad. Carrefour Hypermarkets (Pakistan) with outlets in Karachi, Lahore, Faisalabad, Gujranwala, and Rawalpindi is the latest player in the hyper-market segment, along with the UK’s Greenvalley. The concept of chain stores for fashion apparel has also lately begun to emerge in the larger cities, where several such chains, stocking predominantly locally-manufactured merchandise, are currently operating. In addition, hundreds of government-owned Utility Stores sell food and household items and serve as a mechanism for restraining inflationary prices by following the government line on pricing. The military-owned Canteen Stores Department (CSD), a discount retail network, has also expanded to major cities.
The general perception among Pakistani consumers is that the prices in the larger and more upscale stores are higher due to increased overhead and capital investment costs.
Many consumer retail stores stock general merchandise for everyday use. Also, many stores sell a single commodity, for example, tires, cooking utensils, clothing brands, textiles, or jewelry. Such stores are generally located in bazaar areas and tend to be located near other shops carrying similar goods.
Foreign companies considering marketing their products in Pakistan may choose to use the services of local distributors or may develop their distribution chain. Distributors in urban areas generally deal on an exclusive basis.
As a matter of policy, most companies do not provide credit to distributors, and they in turn generally sell on a cash basis to small retailers, but do supply short-term credit to large retailers that offer a heavy turnover.
Pakistan’s wholesale market is fairly well developed, with more than 4,000 big wholesalers. Karachi is the major distribution center for wholesale goods. Approximately one-fifth of the wholesalers in Karachi sell on a consignment basis. Less than one-third of wholesalers allow discounts to their customers, but the granting of 30- to 90-day credit is common. Because of limited financial resources, retailers generally sell on a cash-only basis. Consumer credit in Pakistan remains an insignificant portion of the total commercial credit. Foreign companies selling industrial or capital goods often sell directly to the end-user or, if the market is fairly large, they appoint one major distributor who then sells either to sub-distributors or directly to end-users.
Trade Promotion and Advertising
Over a dozen major advertising agencies operate in Pakistan, including foreign-based affiliates. Advertising agency commissions are usually 15 percent of the cost of the advertisement. By U.S. standards, these agencies are fairly small concerns, with average annual billing of less than $20 million each.
Television and newspapers are the most widely used mode of advertising. Others include radio, billboards, periodicals, and trade journals, direct response advertising, slides and commercial film shorts in movie theaters, short messages (SMS) through cellular phones, as well as internet-based social media.
Pakistan has over 700 daily newspapers and weekly, biweekly, and monthly magazines. The daily Jang, published in Urdu, is the largest newspaper with a claimed national circulation of almost 900,000. The combined circulation for the roughly 11 English-language newspapers is approximately 300,000. The principal English-language daily newspapers are Dawn (published in Karachi, Lahore, and Islamabad), The News (Islamabad, Lahore, and Karachi), The Nation (Lahore and Islamabad), Daily Times, Express Tribune, and The Business Recorder (Karachi). Although the English-language press reaches only a small fraction of the population, it is influential in political, business, academic, and professional circles.
The Friday Times, published from Lahore, several special interest magazines such as Spider (Internet), Computerworld (Computer and IT) and Mobile Communications and Flare are steadily gaining prominence. Almost all newspapers in Pakistan are now available on the Internet.
Television is broadcast on state-owned Pakistan Television and several other local channels, using the PAL system. English language programs, including news, are available on several satellite channels.
Cable and Satellite Television: Cable television has been available in Pakistan for more than ten years and channels continue to become more professional and organized. Broadcast media is regulated by the Pakistan Electronic Media Regulatory Authority (PEMRA), which has issued 140 licenses for the establishment and operation of Satellite TV Channels, 257 licenses for FM Radio Stations, 4062 for Cable TV Service, and 61 in other categories It is estimated that cable television reaches approximately 30 percent of households in Pakistan. Regulatory details about broadcast media are available on the PEMRA website.
Satellite television broadcasts have made rapid inroads in Pakistan and it is estimated that more than 500,000 medium to high frequency dish antennas are presently installed in the country, although, with the advent of cable TV, the popularity of direct satellite television is gradually diminishing. More than 100 channels are received via satellite. The most popular transponder received in Pakistan is “Asiasat”.
Radio Pakistan reaches audiences within the country and abroad in 36 languages (19 regional and 17 foreign) from 24 medium and short-wave stations and more than 25 FM stations. The FM license granted by the government does not permit them to broadcast exclusive news and current affairs programs.
Pakistan currently allows trade-advertising material other than commercial catalogs to enter duty-free, but levies a 15 percent sales tax on those items. Samples may be admitted duty-free only if they are representative parts of a complete shipment or are unsuitable for sale. The duties applicable to commercial shipments apply to samples having a commercial value.
Trade Shows: The textile and apparel, leather, and gemstones industries hold regular trade shows. Recently, the telecommunications, safety and security, higher education, information technology, and oil and gas industries have become active in this area. Trade and seminar missions can also provide valuable first-hand insights into the Pakistani market, as well as serve to introduce U.S. equipment and technology. Trade missions can educate the government and other end-users about product availability, technical characteristics, quality, and price, and can establish contacts with key organizations to promote product awareness. Presently, the trade show business in Pakistan is suffering tremendously from the security situation.
U.S. firms should also consider participation in regional events (focusing on either South Asia or the Middle East) in order to reach potential Pakistani purchasers, agents, and distributors.
Sales Service/Customer Support
In Pakistan, the end-user generally requires comprehensive and reliable after-sales support on all durable and non-consumer items, accompanied by good documentation and instructions for product installation, operation, and repair. Many purchasers choose a complete turnkey package, which often includes employee training.
Foreign sellers generally require local agents/distributors to maintain a certain minimum inventory of spare parts. Most agents provide a warranty and “free maintenance” for one year, putting the cost of maintenance into their overall price.
It is a common practice for end-users to demand a guarantee that the supplier will respond to questions or rectify faults in the equipment within a specified period. The time period may vary from a few hours to several days, depending on the nature of the product and possible faults in the equipment.
Local Professional Services
The U.S. Commercial Service offices located in Islamabad, Karachi and Lahore maintain contact with reputable companies that offer various services and may be of assistance to U.S. businesses in completing a specific task in this market. Contact information for these service providers may be obtained directly from the individual offices. Pakistan has a fairly sophisticated services industry offering professional lawyers, accountants, business and management consultants, IT experts, and advertising professionals.
Various professional services are listed on the following website, which is Pakistan’s online – Jamal’s yellow pages.https://www.jamals.com/.