Total business space in retail market increased by 288,000 sq. m in first three quarters to 17.6 million sq. m, including around 11,000 sq. m rise in Q3 in Hungary.
Number of retail shops declined by around 780 in Q3 2006. Decline in mom-and-pop stores was around 1,357 in the period, contributing to the concentration in the market, showing an increasing concentration in the market. Total business space in retail market increased by 288,000 sq. m in first three quarters to 17.6 million sq. m, including around 11,000 sq. m rise in Q3.
Average space for each store increased to 106 sq. m from 104 sq. m. Retail concentration continued their increase in Budapest & Central Hungary.
"Increase in concentration shows a significant role of big retailers successfully running national chains in the country. These chains have benefited from logistic techniques & sophisticated inventory & are the big reason of displacing small retailers in the country," said an analyst at RNCOS.
However, the decrease in small retail stores has improved the productivity, the analyst noted. Small owners have a tendency to hide their sales in order to avoid taxation, while big retailers generate their sales report regularly to impress investors.
Greengrocers declined by 117 & apparel shops decreased by 102 stores & non-food shops declined by 328. Petrol stations, car parts, cosmetic shops, and non-food stores- all witnessed increase. Company-operated shops & single-owner stores also saw declines.
Probably, the period between 1997-2000 was the start of concentration in Hungary's retail market. The period is marked with arrival of multinational firms, hypermarkets and buyer groups gathering small retailers into their stores.
Post millennium period brought further changes as concentration began to rise. Difference between this period & above mentioned period is small shop numbers started to decline. These changes can be characterized by a combination of increasing concentration, new formats, better strategies & rising popularity of large retail stores.
However, there is still a significant amount of small retail stores in the country. This is because some small retailers are operating as convenience stores, adapting to the needs of local consumers. Moreover, there are still a large number of 'forced entrepreneurs' who don't have alternate employment opportunities. Assortment & price competition are better in bazaars, consisting various small retailers and immobility of majority of Hungarian population, mainly rural population has made large retail store access difficult for the majority.
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