Major changes to come to Hungarian Tesco? Will the retail chain leave the country?
Tesco’s parent company is doing well under the current circumstances, but the Hungarian supermarket chain is underperforming among its regional subsidiaries. The Tesco CEO hopes that the surcharges on the chains are temporary.
Mfor writes that it has been a long-standing ambition of the Hungarian government to hunt down one of the big supermarket multinationals. Viktor Orbán has hinted at this in the past, and last autumn, Márton Nagy, Minister of Economic Development said:
Hungarian ownership in the banking sector could still be increased, the insurance sector has not yet consolidated, and the food retail sector is a long way from achieving its targets.
Tesco has emerged as a possible target among the various retail chains in recent years. However, the British chain has consistently said it has long-term plans for the Hungarian market. The possibility of the Hungarian Tesco chain leaving the country may have arisen in part because the British chain has already closed its shops in Poland. It is also because the Hungarian subsidiary is not performing well compared to its regional peers.
Weak regional performance
24.hu reported that Czechia and Slovakia, the other two Central European countries where Tesco is present, are performing well. Hungary is a much tougher nut to crack than the other two countries for a number of reasons. The Hungarian government introduced a special retail tax in 2022 and some restrictions in 2023. These are quite bad for the retail sector in Hungary. According to the CEO of Tesco, the price freeze and the mandatory discounts are the roots of the problem. Hungary has the highest inflation in the EU, which also makes business difficult for the chain here.
What does the future hold for Tesco in Hungary?
There have been rumours in 2020 about major changes in Tesco’s business in Hungary. However, as for the possible downsizing or restructuring of Tesco’s operations in Hungary, the CEO gave a clear negative answer. He also added that they aim to manage business in Central Europe together in the three countries mentioned above. The CEO is hoping that the measures that have been taken in Hungary are essentially temporary or provisional. Therefore, we do not have to worry about Tesco leaving Hungary yet.
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Blame Orban, of course, but the truth is that Tesco is competing in a saturated market without having anything special to offer consumers. Its products are neither better nor cheaper than Lidl’s, Spar’s, Aldi’s or even independent bodegas’. If one does shop in a Tesco store, it’s only because that store is significantly closer and quicker to get to than any others.
Concur – Steiner Michael.
Having the highest VAT in Hungary in the World doesn’t help either!!!
27.5% VAT in Hungary! What a joke!