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2.3 Distribution and import channels

The import and distribution channels in Hungary are relatively simple, due mainly to its small geographic size and landlocked location. Usually, large-sized distributors also act as importers. While medium-sized distributors/importers buy their products from East and West Europe, a number of large-sized companies go directly to Asia to source a wide range of consumer goods and industrial inputs. Their customers include local wholesalers and those from other East European countries, as well as some large-sized retailers of consumer goods, and medium- and large-sized manufacturers of industrial items.

Notably, many importers and distributors in Hungary have been building up their distribution network in Central and Eastern Europe (CEE). While they feel the heat of intensified competition in the domestic market in view of the rising participation of West European players, most are striving to build up their regional networks beyond Hungary in order to reap the benefits of economies of scale. This development is facilitated by Hungary’s liberal trading environment and relatively low taxation.

Moreover, regional distribution is facilitated by the country’s EU accession, which allows Hungarian distributors to distribute their products to other markets in the EU without tariffs or other customs restrictions. Coupled with the harmonisation of product and other technical standards with those of the EU, these have aided Hungarian distributors in developing their regional networks in the region.

On the retail front, although the Hungarian retail sector is relatively small, it is regarded as one of the most advanced in CEE, attracting a number of foreign operators such as Tesco, Auchan, Metro and IKEA to invest. There were 156,812 retail shops[1] in Hungary as at end-June 2009, down from 160,493 as at end-June 2008. Notably, more than 50% of the retails shops were operated by sole proprietors, while the rest were controlled by either small or large chain store groups. In recent years, the rise in chain stores has been facilitated by the participation of foreign players, which usually prefer the chain store format. Amid the increasing popularity of chain stores, local players have also striven to enlarge their networks.

Product-wise, shops selling food, beverages and tobacco have the largest number of outlets, amounting to more than 43,000. Hypermarkets and supermarkets are within this category. Meanwhile, retail shops specialising in textiles and clothing items have proliferated, a reflection of the fact that apart from food and basic necessity items, textiles and clothing are the major items that consumers shop for. Other major categories of specialised retail shops include vehicles and parts, as well as shops specialising in consumer goods like books and stationery, furniture, lighting and household items, footwear and leather goods, etc.

Chart: Number of retail shops in Hungary

In terms of sales by retail format, it can be noted that hypermarkets, supermarkets and discount stores account for a significant share of the market, accounting for about one-third of total retail sales, due mainly to rising foreign participation. Meanwhile, specialised stores such as clothing and footwear, health and beauty and home and gardening are also gaining popularity among Hungarian consumers.

Chart: Retail sales in Hungary, 2009

In fact, large retailers usually appear in a chain store format, and major chain stores often set up by foreign retailers. Apart from Tesco (the UK), Auchan (France), Coop (Switzerland) and Spar (Austria), other examples include IKEA and H&M (Sweden), Mango and Zara (Spain), Mexx (the Netherlands). They mainly engage in hypermarkets, supermarkets, DIY/furniture businesses and/or certain specially chain store businesses (especially clothing).

Some Hungarian retailers have also successfully set up their retail networks in Hungary, despite intense competition from foreign operators. The CBA, which is one of the largest buying co-operative/alliances, is one of the best examples. In fact, in view of the intense competition from giant retailers, many small- and medium-sized retailers in Hungary have set up various kinds of buying co-operatives to source collectively from suppliers in order to reduce costs.

Top 10 retailers by sales (2009) in Hungary

 

Retailer

Brands

Website

1.

Tesco

Tesco, S-Market, Tesco Express

www.tesco.hu

2.

CBA

CBA, Cél 

www.cba.hu

3.

Coop

Coop

www.coop.hu

4.

Spar

Spar, Interspar, Kaiser's

www.spar.hu

5.

Auchan

Auchan

www.auchan.hu

6.

Real

Real Elelmiszer, Real Pont

www.realrt.hu

7.

Schwarz

Lidl

www.lidl.hu

8.

Rewe

Penny Market

www.penny.hu

9.

Cora

Cora

www.cora.hu

10.

Media-Saturn 

Media Markt, Saturn

www.media-saturn.com

Source: Euromonitor

Also noteworthy is the fast emergence of national importers/distributors in Hungary. As mentioned, many importers and distributors in Hungary have been building up their distribution network in the CEE beyond Hungary in order to reap the benefits of economies of scale. These are good business partners to whom new-to-the-market Hong Kong companies can make contact when making their debut in the Hungarian market.

Selected examples of national importers/distributors and retailers in Hungary

Consumer electronics, Lighting

Avex

www.hauserelectronic.hu

Sowah Hungary

www.sowah.hu

Bravotech

www.euronics.hu

Electro World

www.electroworld.hu

Rabalux

www.rabalux.hu

Somogyi Elektronic

www.somogyi.hu

Fashion (i.e. clothing and footwear)

Budmil

www.budmil.eu

Mayo Chix

www.mayochix.hu

Jeans Club

www.jeansclub.hu

Retro International

www.retrojeans.com

Xuxa

www.xuxa.hu

Horvath Cipo

www.horvathcipo.hu

Aranypok

www.aranypok.hu

Jewellery and timepieces

Orex

www.orex.hu

B. L. Oraszalon

www.oraszalon.hu

Caprice International

www.caprice.co.hu

Time Center

www.timecenter.hu

Toys and games

Regio 

www.regiotoy.hu

Edi-Plus

www.jateksziget.com

Gulliver 

www.gullivertoys.hu

Bonsai Int'l Budapest

www.bonsaibp.hu

QX-Impex

www.qx-impex.hu

Baby products

Brendon

www.brendon.hu

Gifts and premiums

Anda Present

www.andapresent.hu

Fortrend

www.fortrend.hu

Golding

www.golding.hu

Home furnishings and kitchen products

Retz Butor

www.butor-konyha-dekor.hu

VE-Falko

www.vasedeny-falko.hu

Interestingly, unlike many other East European countries, street sales and open markets are not significant in Hungary. This is because Hungarians prefer to shop in shopping centres, which accommodate different kinds of specialty chain stores, independent shops and/or supermarkets/hypermarkets. Currently, leading shopping centres include the West End City Centre and Mammut Shopping Centre, which are located in Budapest. Other than shopping centres, consumers are used to buying in shopping districts with clusters of small independent shops. These shopping centres and major shopping districts are usually concentrated in the centres of major cities, such as Miskolc, Pecs and Gyor, in addition to the capital.

Selected major shopping centres in Budapest

Name

Website

Arkad Center

http://www.arkadbudapest.hu

Auchan

http://www.auchan.hu

Campona

http://campona.hu

Duna Plaza

http://www.dunaplaza.hu

Lurdy Haz

http://lurdyhaz.hu

Mammut (I and II)

http://www.mamut.hu

MOM Park

http://www.mompark.hu

Pólus Center

http://www.polus.hu

Savoya Park

http://savoyapark.hu

West End City Center

http://westendcitycenter.hu


[1] Including motor trade shops and filling stations

Content provided by Hong Kong Trade Development Council
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