English2021. szept. 28.János Devecsai

In the food industry, it is a problem in Hungary that production technologies are extremely outdated in many places. Therefore, in certain segments it is hard to find suitable Hungarian suppliers - Gabriella Heiszler, managing director of SPAR Magyarország Kereskedelmi Kft. told növekedés.hu.

Let's start with the “plaza stop” law. How does it hold back the development of SPAR? 

Several new residential areas have been created in county seats and in Budapest recently, but although many people have settled in these new neighbourhoods, we are not allowed to build new food stores in their neighbourhood because of the “plaza stop”. Although the word “plaza” makes people think of huge buildings, the law, in fact, applies to any commercial building with a gross floor area of more than 400 square metres.

Because of this regulation, we cannot rethink our existing stores, either.

For example, in many places it would be good to be able to move certain stores a few hundred metres away, because parking facilities are essential for a successful operation today. And yet, we can’t do it because of the plaza stop law.

We very much hope that the regulations related to this will change.

There are problems with supply chains in several places across Europe. The UK is hit the hardest, where customers are facing empty shelves in supermarkets in several places. Can a similar shortage of goods occur in Hungary too? 

We are not threatened by this. It may happen that a certain shop just runs out of a given product for a while, but it is unlikely that this problem will affect complete product groups.

The food retail industry grew significantly at the beginning of the pandemic. How has the turnover of SPAR changed now that the pandemic subsided? 

Last year, our growth reached 8.7 percent. This year, however, we are unlikely to achieve that kind of growth dynamics. 

In any case, the importance of different types of shops increased during the pandemic. 

When the number of new infections was high, consumers were specifically looking for large shops, i.e. hypermarkets, including INTERSPARs, as they tried to buy as many goods as possible in one place. Now, however, smaller stores are doing better.

How has Covid changed customer habits? 

People have become much more price sensitive; even those who have not been negatively affected financially in the last year and a half. There are some whose savings have even increased, for example because they had to call off expensive trips abroad, and yet they buy fewer premium products in grocery stores now than before the pandemic. 

Probably, there are also psychological reasons for this. Now the greatest demand is for products that are good value for money.

How easy or difficult is it to find new workforce now? 

The situation in Budapest is similar to that before the pandemic, i.e. it is very difficult to hire new workers. The situation is clearly better in Western Hungary, but as always, the easiest to find new workforce is in Eastern Hungary.

Wages in the retail sector have risen spectacularly in recent years. What are your future plans in this regard? 

Now we hear a lot about the possibility of raising the minimum wage to 200 thousand forints. We believe that raising the minimum wage is a good idea. It is clear that the wage gap between Western and Central and Eastern Europe should disappear over time. 

Hungarian salaries need to catch up with Western Europe.

At SPAR, the lowest gross basic salary for store workers is 240 thousand forints during the probationary period, and 260 thousand after that. Last year, we spent 7 billion forints on wage increases.

What is the proportion of Hungarian suppliers at SPAR? 

The share of domestic suppliers in the food segment is more than 90 percent. There are large conglomerates and also small producers among them. Of course, it is also true that some of them are importers or manufacture from imported materials.

A few years ago, it was a problem in the retail industry that some Hungarian suppliers could not guarantee high quality in the long run. Do you have such problems now with Hungarian suppliers? How easy is it to find reliable domestic partners? 

We have a total of about 1600 suppliers and our experience with them is very good. It happens, sometimes, that a smaller partner is not able to provide good quality consistently, but this is not typical. 

In the food industry, what is really a problem in Hungary is that production technologies are extremely outdated in many places. Therefore, in certain segments it is difficult to find good Hungarian suppliers. 

Many plants are still working with equipment purchased in the 70s or 80s.

This is why there is no really good Hungarian fruit yogurt, for example. 

What is the share of online purchases in your overall turnover now? 

The need for online shopping has grown significantly because of the pandemic, but online purchases still account for less than 1 percent of our revenue. 

Why is this share so low? 

There are two reasons for this. Firstly, it is important for customers to get the right shopping experience. They want to see the fresh products on offer and, for example, pick the bread rolls or tomatoes that they like best for themselves. 

Secondly, food stores are important places for socialization. When shopping, not only mothers with young children or old age pensioners, but also office workers working from home, for example, are hungry for human words and want to see other people.

Because of this, offline stores are likely to never go out of style. 

Although the online segment is getting stronger, I don't think online purchases will reach a double-digit share within our total turnover in the next 10 years. 

On the other hand, it is clear that online shopping can make our daily lives easier in many ways. Heavy-weight products such as beer or washing powder, for example, are particularly popular in online stores. 

The agriculture minister said this year that foreign retailers are taking a lot of profit out of the country. How much profit do you take out and how do you see this problem in general? 

SPAR has invested 470-480 billion forints in Hungary in the last 30 years. I think it is perfectly normal in a market economy for an investor to expect some return on their money.

Last year, for example, we paid 10 billion forints in dividend to the parent company while investing three times as much money in various investments projects in Hungary. 

Like almost every large company, we play our part in social responsibility, and also create an atmosphere in which our employees and suppliers love to work with us. I don’t think there is anything wrong with giving over a part of the profit to the owner, who invests huge amounts of money in the country. 

Internationally, more and more retail outlets are offering hospitality services as well. Is this trend going to prevail? 

Yes, this is a visible trend. On the one hand, some of the restaurants are also becoming sales outlets, because they start selling particular ingredients in addition to selling their dishes. On the other hand, shops are also moving towards hospitality, for example, offering daily menus or a cup of coffee, which customers can have on the spot.