Promoting a Better Future for All by Being Penny-wise

BBJ: You came to Hungary from Penny in the Czech Republic. How do the markets compare?

Mathias Mentrop: Of the international Penny networks, the Czech is the largest, and I have brought the experience I gained there in more than a decade to Hungary. We all have the same goal: to offer our customers a range of products that represent excellent value for money and to be a leading player in the regional market as a local discounter. Many differences arise from each country’s characteristics, meaning the system operates in varied ways. In the Hungarian market, as with the Czech, the distribution of domestic products is exceptionally important, thereby supporting local farms and producers. Hungary’s retail sector is changing dynamically, so responding appropriately to complex local and global issues poses a constant challenge. Nevertheless, I see a lot of potential in the Hungarian team and our business partners. My primary goal is to strengthen Penny’s market position, and I believe I can rely on the help of my colleagues in Hungary to do this.

BBJ: The Penny rebrand is now complete. What is next for the firm in Hungary?

MM: The complete renewal of Penny stores in Hungary was finished by the beginning of 2023; all 230 units in the country’s network have been renovated inside and out and are open to customers. We are constantly improving our selection and product categories. In our private label range, the packaging and recipes of several of our sub-brands have been renewed to ensure their quality meets the continuously changing customer needs. The new packaging of our own brand product family “Sissy,” and the renewal of the “Salty” product range have received professional recognition.

The repositioning of the Penny brand is still taking place, as can be detected in the company’s communication. The marketing team is striving to ensure that customers learn about our other values (in addition to the excellent range of products) and feel even closer to them.

BBJ: How many new stores do you plan for 2024? Are there any other infrastructure plans?

MM: This year, we have already opened two stores and will open more. In 2024, we intend to open at least five more stores, such as the unit already under construction in Pilisvörösvár. As the first Penny in that area, this will be a significant milestone in the company’s Hungarian history, which is already more than a quarter of a century-long, and in the lives of the local residents. Following the expansion of our logistics center in Karcag this year, we plan to refurbish our HQ in Alsónémedi in 2024.

BBJ: Inflation is coming down in Hungary, but it is still the highest in the EU. How is this affecting your business?

MM: While the value of the FMCG market grew more than 20% during last year, the sold quantity fell by nearly 10%, which the market had to respond to. This is a challenge for all stakeholders. Of course, we have not abandoned our employees, and at the beginning of this year, we gave them a significant salary raise, devoting a total of HUF 3.6 billion. Additionally, we are giving everyone a one-off payment in November, a further HUF 400 million investment. Our new, complex benefits package was designed considering the company’s results last year and the Hungarian labor market and economic situation. It was outstanding compared to the Hungarian market conditions.

BBJ: Can you find enough staff for your shops and warehouses nationwide?

MM: Staff turnover and labor shortages are part and parcel of our daily lives. These mainly affect our colleagues working in logistics and sales. On the one hand, we are dedicating more to the well-being of our employees, and on the other hand, we are continuously developing our recruitment processes and improving training programs through digitalization.

BBJ: What are Penny’s targets for the environment and sustainability?

MM: Thriftiness is a well-known aspect at Penny, not only as regards the low prices of the products offered to our customers. In the current economic climate, it is essential that our stores can manage and make good use of the energy available. The Rewe Group, which owns the Hungarian subsidiary of Penny, has a climate strategy plan to reduce absolute greenhouse gas emissions (CO2 equivalents) at the company level to 30% below 2019 levels by 2030. This applies to all countries in Europe where we operate. Our ambitious goal is to make the Rewe Group climate-neutral at the company level by 2040.

Last year, we began installing glass doors on the wall refrigerators in our stores, ahead of many competitors. By the end of this year, customers will find this solution in nearly all our units. This alone will save around 10% of the total energy consumption of our stores. We are also taking the lead in renewable energy sources, supplying electricity by alternative solutions. Customers will find EV charging stations in the car parks of nearly 70 stores, and the introduction of numerous new units is planned across the country in the near future. Using this technology, we have already spared the environment more than two million kilograms of carbon dioxide and around 12 tonnes of nitrogen oxide emissions since January 2019.

I would also like to mention shortening the supply chain, which we can achieve by involving as many local producers as possible. This aligns with our campaign to promote Hungarian products, accepting high-quality goods from local producers near our logistics center. By this means, we also save hundreds of thousands of kilometers in transporting goods each year.

BBJ: Penny has just won the “Commercial Excellence Award for Hungarian Products” again. What is the percentage share of Hungarian products, and what are the plans to grow this?

MM: We are proud that two-thirds of our total product range is sourced from domestic suppliers. Of these, more than 500 products bear one or other of the Hungarian product trademarks. Among these, I would highlight our private label “Sissy” (dairy) and “Kedvenc Hentese” (meat) product portfolios, which are 100% domestically sourced. Increasing the share of domestic producers has been our priority for years.

BBJ: Will Penny run a Christmas charity drive again this year as part of its CSR program?

MM: We are always glad to take initiatives that do good and help those most in need. Supporting people is close to our hearts, and we are delighted to be involved in several such initiatives this Christmas. On Dec. 3, we will be joining the eighth Santa Run as the named sponsor for the first time and will be collecting good quality toys with our professional partner, the Hungarian Red Cross, at the race venue. Staff at the Penny HQ will also participate in this, and the gifts collected at the two locations will be distributed to needy families. For more than 10 years, we have supported the International Children’s Safety Service “Christmas for All” program, making the holiday preparations of disadvantaged children and their families more special and memorable. Likewise, we traditionally collect non-perishable food donations from customers at collection points in most of our stores. Last year, with the help of almost 400 workers and about 1,000 volunteers from the Red Cross, we collected a total of 31 tonnes of donations, and we will strive to improve on that figure this year. Nothing makes us happier than seeing as many happy faces as possible and helping others forget the difficulties of everyday life, at least for a short while.

This article was first published in the Budapest Business Journal print issue of November 17, 2023.