Lidl takes the lead in Hungary’s retail market

The structure of the market changed significantly last year as discount store chains gained ground partly by opening new stores and partly by attracting customers from other chains and small stores.

Lidl opened 51 new stores between 2010 and 2020, Aldi 74 and Penny Market 40. Their sales revenue last year was 3.7, 6.7 and 2.3 times the 2010 value, respectively.

This made Lidl Hungary’s largest retail chain in 2020.

The increased market share of discount chains can be explained by the fact that their business model is able to react swiftly to new customer needs and demands, GKI said.

Spar also managed to grow last year through opening new stores and diversifying its existing ones. It opened 189 new units in the past 10 years and nearly doubled its sales.

Meanwhile, Tesco and Auchan, which mostly operate hypermarkets, fell behind slightly in terms of growth. Tesco has closed several stores since 2013 and its revenue only increased by 11% in 10 years. Auchan, a much smaller player, increased the number of its stores through the acquisition of Cora and by opening smaller supermarkets. Its sales rose 88% in 10 years,

The clear losers in the market restructuring of the past decade are Coop, Reál and CBA, chains running smaller stores.

The number of stores decreased significantly in all three chains, while sales stagnated or grew by just 2 to 3%. Nevertheless, sales per store increased in the past 10 years, although so did average floor space.

The above restructuring of the market was driven by changing customer purchasing power and the closing of other stores. In small communities where local stores compete with Reál, Coop and CBA, purchasing power increased by 76% in nominal terms between 2012 and 2019, compared to 85% in Budapest and 78% in cities. This, and the fact that a lot of small local stores closed in the period, was a major boost to large retail chains.

As procurement prices and labour costs are rising faster than purchasing power in small communities, an increasing number of small retailers are driven out of business. In 2020, 750 food stores closed, and most of these were not part of any retail chain.

Cover photo: Getty Images