Retail’s productivity is the key to curbing inflation

By: Trademagazin editor Date: 2025. 10. 16. 11:12

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From 2015 until the Covid-19 pandemic the national economy produced spectacular growth, driven mainly by the inflow of foreign capital and the extensive expansion of the labour market. Between 2004 and 2023 the Hungarian GDP grew by an average of 2.3% per year.

This article is available for reading in Trade magazin 2025/10.

Guest writer:
Dr. Tamás Kozák
secretary general
OKSZ

Despite steady growth and the increase in employment level, consolidation continued in the retail sector. This process resulted in thousands of store closures each year, while the average store size shifted toward larger floor space, which also led to greater efficiency. Growing productivity and efficiency are key factors shaping consumer price trends. In Hungary labour productivity surged by 39% between 2004 and 2023, but in the same period it rose by 55% in the Visegrád countries and 71% in the Baltic States. It is also a problem that for instance in 2019 the productivity of foreign-owned companies was 2.6 times that of Hungarian-owned firms.

In this environment Hungarian retail trade performed remarkably well: from 2010 to 2023 the improvement in labour productivity in retail (50%) was outstanding compared to the data for the Hungarian economy as a whole (15%), and it was six times higher than the similar indicator for the manufacturing industry (8%). In the spring of 2025 there were 400 villages in Hungary where there were no grocery stores. This indicates that it isn’t possible to provide even basic supply functions in all 3,155 settlements.

From this point of view the government’s current margin freeze regulation also has a very negative effect, as it pushes down prices in large hypermarkets, supermarkets and discount stores, by this taking away customers from smaller stores.

Retail’s lost potential, %

Source: Equilibrium Institute

Research by GKI Economic Research reveals that 18% of small shop or chain owners planned to close one or more of their shops this April. The total number of stores in the three domestic chains fell from 9,374 in 2016 to 6,918 in 2022. However, the average floor space of the remaining stores is constantly increasing: while the national average was 122m² back in 2013, this figure grew to 163m² by 2023.

The change in gross revenue per store between 2016 and 2022

Source: Sikos T. – Szendi, 2024

“The Next Years of Retail” is a study prepared in collaboration by the Danubia Forum and the National Trade Association (OKSZ), which reviews the processes and expected trends that have a significant influence on the life of the sector. The majority of the analyses deal with the problems of the food segment and their possible solutions, and the authors of the study believe thoughtful cooperation between governments and economic actors can find the answers to the challenges.

Our recommendations

Measures to improve the productivity of retail trade should pursue a dual objective: they should support the efficiency improvement efforts of large retail chains and enable small-town and village retailers to compete successfully. In order to achieve the first objective the system of restrictive legislation linked to turnover should be reviewed. The maximum sectoral tax rate of 4.5% is a discriminatory burden that only applies to companies with a turnover exceeding HUF 100bn. The shopping mall ban should be abolished and regulations need to be simplified. In order to strengthen local retail trade new businesses should be supported by sharing up-to-date market knowledge, developing the commercial functions of local community spaces and we need to encourage – even with tax breaks – joining franchise systems.

The OKSZ-series is to be continued in Trade magazin’s next issue