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Food retail growth expected to continue

Retail

Last year revenues from food sales in Hungary grew by 2.6%, according to economic research institute GKI, and credit insurance company Euler Hermes expects a similar, 2.5% growth this year. However, there are also risks involved.

According to the study carried out by Euler Hermes, there has been no change in the market shares of various food store chains, with multinationals continuing to dominate, a press release sent to the Budapest Business Journal says. 

Based on the latest available figures for a full financial year, those of 2016, Tesco is the largest food retailer, with revenues of more than EUR 2 billion, followed by local Coop with EUR 1.87 bln, and CBA with EUR 1.6 bln. German discount chains Lidl, Aldi and Penny Market were all able to grow in 2016.

As for profitability, Tesco, Spar and Lidl managed to increase their EBITDA, says the press release.

A growing challenge for the retail market is managing the labor shortage and retaining existing employees. This means growing costs and lower profitability, the report notes.

Euler Hermes predicts restructuring ahead at all market chains in Hungary, which may translate into fewer stores or reduced opening times. At the same time, it adds, other chains may try to boost growth by opening new stores, requiring financial resources. Currently food retail bears a low risk, but there are many factors which can change this rapidly, Euler Hermes stresses.

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