A recent study of Hungarian consumers' food buying preferences carried out by the GfK market research group shows that small shops serving the local community are still the most popular outlet of choice - although hypermarkets such as those run by the western chains are becoming increasingly popular.
GfK interviewed 1,000 people for its survey - mostly women, who still do the majority of the grocery shopping in Hungary.
The survey, carried out late last year, showed that small shops are the most popular store format for 34 per cent of Hungarians, compared to 29 per cent who prefer hypermarkets and 21 per cent who opt for discount stores.
But these figures are all the more revealing when comparative data for the previous years is included. Small shops have seen their share of sales decline steadily over the last few years, with 39 per cent of those questioned saying they preferred to shop in this kind of store in 2000.
At the same time, hypermarkets have become much more popular, rising from just 14 per cent in 2000, although GfK said that this growth rate was slowing - in 2001, hypermarkets were favoured by 14 per cent of those questioned, but this surged to 26 per cent in 2002 before the more modest increase to 29 per cent in 2003.
Supermarkets, however, are the big losers, with their share falling from 17 per cent in 2000 to 11 per cent in 2003. Discounters' share of sales has remained almost constant - 20 per cent in 2000, rising slightly to 21 per cent in 2003 - reflecting more than anything the slow development of the discount store sector in Hungary.But there is undoubtedly a market for discount operators in Hungary. The GfK survey shows that price is the most important element when it comes to deciding where to shop for most Hungarians, suggesting a bright future for low-cost retailers.
After price, product freshness and quality is the most important factor - explaining the continued importance of the convenience store format - while the range of products on offer is the third most-important factor, and one which clearly favours hypermarkets.
Polite service, check out speeds and cleanliness are the next most important factors, while clear price labels and accessibility of the shop are of lesser importance.
The least important factor for Hungarian customers is the possibility of paying with a bank card - a reflection of the fact that Hungary is still very much a cash-based society rather than any lack of provision on the part of the store operators. Car parking is also not considered a priority either, reflecting the continued importance of the local convenience store in Hungarian shopping habits.
Small stores were found to be the most popular outlet in smaller towns - where larger store formats are undoubtedly less common - and among households with a net monthly income of less than HF40,000 (€152).
As for hypermarkets, they were found to be most popular with people under 40, and with a net income of more than HF120,000 (€456) a month. Because of the high concentration of hypermarkets in major residential areas, it is not surprising that consumers in Budapest and the surround Pest county were the most likely to spend the most in these larger stores.
Discount stores were most popular with the over 60s, and again were dominated by Budapest residents. But the survey also revealed that the relatively low number of discount stores in Hungary also had an impact on the figures - many of those shoppers who opted for one of the other store formats said they would choose to shop instead in a discount store if there was one in their local neighbourhood.
Budapest residents are also the main supermarket users, as are college and university graduates, the survey showed.
Shoppers also appear to use the different store formats for different kinds of products. Washing and cleaning products, as well as basic food products such as flour and sugar, are the most popular items bought in hypermarkets, while tea and coffee, again along with washing and cleaning products, were the top choices among supermarket shoppers.
Customers most often buy milk and dairy products, fresh bread and bakery products in small shops, reflecting the perishable nature of these products and the subsequent need to regularly stock up. The products bought most often in discount stores are basic food products, as well as tea and coffee.
GfK's survey showed that the importance of specialist shops continues to decrease, although products such as fresh meat, fruit and vegetables are still widely bought through the specialist channel.
Huge opportunities in discounting
This was the fifth survey of Hungarian shopping habits carried out by GfK, but the next few years will make for particularly interesting reading as the influx of products, and companies, from the rest of the EU is expected to have a major impact on the market, offering Hungarian consumers a wider choice, although not necessarily at lower prices.
And with incomes expected to rise steadily following EU membership, the migration of shoppers towards hypermarkets is likely to quicken pace, especially as groups such as Tesco look to build in their base in Budapest and other major cities and move into more rural areas.
But many of the western companies operating hypermarkets in Hungary have a wide range of store formats in other countries, and the continued importance of local stores and discounters could prompt them to adopt this multi-format strategy there as well.
GfK's survey also showed that Hungarian consumers are not particularly tempted by promotions and offers, suggesting that every day low prices are the best way of attracting custom - another factor supporting the rapid expansion of the discount sector.
Western groups which have no presence in Hungary at the moment could see these other formats as a way of cornering a share of the market. Carrefour, for example, is rapidly expanding its Dia discount format in a number of markets where it operates to complement (or indeed bolster) its hypermarket business, and it is not inconceivable that this strategy could be used by Carrefour in the Hungarian market.
German group Schwartz has in fact already confirmed its interest in the discount sector, with plans for 100 or so Lidl discount stores there in the medium term, the first of which will open this year.