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The Retail Industry in Hungary

2012, European Retail Research

In this report we present an overview of the retail sector in Hungary. Hungary's retail industry had already been lagging behind its Western counterparts, and the gap widened even further due to the socialist economic policies prevailing after World War n. After the transition, the nineties brought new opportunities for making up for all those years, mainly as a result of liberalized legislation. From. the beginning of the nineties, the in-store retail industry simultaneously witnessed small-size retail units becoming autonomous and the opening of department stores and business centers where supply appeared in a more .. concentrated" form. By the mid-nineties, this trend was further strengthened by the appearance of hypermarkets and shopping malls. The various forms of non-store retail had also started to develop after the transition and managed to win the trust of consumers-only to lose it again rather quickly. By now, as a consequence of these processes, the retail industry has been restructured, the range of products they offer has been expanded and also enriched by new entertaining I catering elements.

The Retail Industry in Hungary Agnes Hojineister-Toth, Judit Simon and Afros Kozak Abstract In this report we present an overview of the retail sector in Hungary. Hungary's retail industry had already been lagging behind its Western counterparts, and the gap widened even further due to the socialist economic policies prevailing after World War n. After the transition, the nineties brought new opportunities for making up for all those years, mainly as a result of liberalized legislation. From. the beginning of the nineties, the in-store retail industry simultaneously witnessed small-size retail units becoming autonomous and the opening of department stores and business centers where supply appeared in a more ..concentrated" form. By the mid-nineties, this trend was further strengthened by the appearance of hypermarkets and shopping malls. The various forms of non-store retail had also started to develop after the transition and managed to win the trust of consumers - only to lose it again rather quickly. By now, as a consequence of these processes, the retail industry has been restructured, the range of products they offer has been expanded and also enriched by new entertaining I catering elements. Keywords Hungary, retail market, department stores, supennarkets, discount stores, consumer behavior Prof. Dr. Agnes Hofmeister-Toth (corresponding author) Corvinus University of Budapest Institute of Mar~ and Media, Department of Market Research and Consumer Behavior (Email: [email protected]) Prof. Dr. Judit Simon Corvinus University of Budapest Institute of Mar~ Research and Consumer Behavior and Media, Department of Market Dr. Alros Kozak Managing director ofGfk Hllllgary Received: June 16, 2011 Revised: July 1, 2011 Accepted: August 2, 2011 EUROPEAN RETAIL RESEARCH Vol. 25, Issue II, 2011, pp. 113-140 T. Rudolph et al. (eds.), European Retail Research, DOI 10.1007/978-3-8349-7144-9_, © Gabler Verlag | Springer Fachmedien Wiesbaden GmbH 2012 114 European Retail Research Vol. 25, Issue II, pp. 113-140 Introdnction Since the economic and political changes of 1990, there have been significant developments in the Hungarian economy. In our article we focus on the changes of the last decade, especially on those of the past years and more specifically on those in the retail sector. In the first section we provide a short overview of the economic and social development based on data aftbe last few years, together with a forecast for 2011. Following this brief introduction, we focus on the retail sector. A brief retrospect is given on the retail sector's development before and after the transition, but the main emphasis is placed on its development from 2008 to 2011, the period ofthc economic crisis. The article focuses on the following: • the overall decline of the turnover of retailing and the decrease of the number of stores • the structural change of the turnover and store numbers by store types and retail chains • the rapid changes in purchasing behavior • the changes in attitude towards new products • the changes in brand choice and preference • the rapid change in the penetration of online shopping. After analyzing the consequences of the crisis, we try to investigate the probable trends of recovery. 1 The Economic and Social Backgronnd of Hungary In 2010, the Hungarian economy grew by 1.2 percent, slower than the EU average (1.8 percent) and particularly slower than Gennany (3.5 percent) or Poland and Slovakia (3.8 percent). HungllI)"s 2010 growth was fueled exclusively by exports. During the second half of 2010, however, GDP expansion caught up with the EU average (2.2%) as the tertiary sector had also begun to grow, with domestic demand slowly rising after the drop in the first two quarters. In 2010, both employment and employment rate stabilized at their 2009 levels as a result of increased public sector employment. In spite of this, unemployment rate rose from 10.1 in 2009 to 11.2 percent in 2010. Real wages grew at an annual rate of 1.9 percent, with real incomes remaining stagnant altogether. Prices increased by 4.9 percent during 2010 with household energy, excise goods and fuels over-performing the average.