The distribution network in Hungary

Evolution of the Sector: Until recently, small, independent, family-owned shops dominated Hungary's retail sector, especially in the less populated parts of the country. Thousands of these shops continue to serve rural populations, posing logistical challenges for distributors and suppliers. However, medium-sized, financially well-established heavy-discount chains are making inroads in Hungary's retail sector with retail units in smaller villages and other settlements. The most successful distribution companies in Hungary are wholly-owned subsidiaries of international chains, such as Auchan, Tesco, Lidl, Aldi, DM, etc. The increasing share of discounters reflects the high price sensitivity of Hungarian customers and provides evidence of strong price competition leading to lower profit margins of grocery retailers. However, according to Euromonitor, supermarket chains are rationalising their networks, focusing on locations and outlets with the highest growth potential and less competition, resulting in a decline of total outlets in recent years. This also resulted in changes in the ownership of outlets.

Unlike the countryside, Budapest's retail sector has many prestigious superstores, shopping centres, hypermarkets, and supermarkets as well as large retailers such as Rossmann, OBI, Praktiker and IKEA. A typical distribution channel in Hungary is for importer-wholesalers to service retailers and end-users directly.

There are more than 120 shopping malls, and nearly 170 hypermarkets in the country (US Trade administration and Statista). The largest malls in Budapest are Arkad, KOKI Terminal, Westend, Arena and Mammut. Supermarkets and grocery stores generated EUR 11.7 billion in 2022, a 1.4% increase compared to 2020 (IBISWorld).

E-commerce has been growing in the retail sector, with a further jump due to the COVID-19 epidemic. Cash is still more dominant in Hungary but the number of retail transactions with bank or debit cards (Visa, Amex and Mastercard) has grown significantly in recent years. Online retail sales increased 32% to HUF 1.203 trillion in 2021 (Budapest Business Journal).
Market share: Distribution networks for consumer goods are rapidly developing. Small and medium sized local businesses and especially small independent retailers are losing their marketshare to foreign competition.
According to the latest figures by the USDA, hypermarkets account for 24% of all turnover, discount stores for 21%, supermarkets for 17%, and the market share of retail chains is 13%.
The main international grocery retailers are (Trade Magazine):
•    Lidl with a turnover of HUF 922 billion in 2021
•    Spar (HUF 792 billion)
•    Tesco (HUF 765 billion)
•    Coop Hungary (HUF 674 billion)
•    CBA, Hungary main national retailer (HUF 569 billion)
•    Auchan (HUF 464 billion)
•    Réal (HUF 433 billion)
•    Penny (HUF 389 billion)
•    Aldi (HUF 384 billion)
Retail Sector Organisations: Hungarian Chamber of Commerce

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