Alza’s growth in Hungary and the shift back to traditional retail

By: Trademagazin Date: 2024. 09. 30. 12:12

Alza’s Hungarian country manager, Ákos Forrás, discussed in an interview with Pénzcentrum how the end of the COVID-19 pandemic led to a significant shift back towards traditional brick-and-mortar shopping in Hungary, more so than in neighboring countries. While online retail surged during the pandemic, Hungarian consumers quickly returned to physical stores, creating a unique trend compared to other markets.

Alza’s Strategy and Overtaking eMAG

Forrás revealed that Alza is on track to surpass eMAG in market share by the end of 2024. Unlike eMAG’s marketplace model, Alza focuses on selling products from its own inventory, allowing for faster, more reliable delivery. This approach has given Alza a competitive edge in the Hungarian market, where quick, efficient service is highly valued by consumers.

Success of Czech Companies in Hungary

Forrás highlighted the success of Czech companies like Alza in Hungary, attributing it to the Czech market’s online dominance and advanced service levels. In Hungary, however, traditional offline shopping still holds a strong position, and local retailers have not been forced to significantly upgrade their online services.

Challenges for Hungarian Retailers in the Online Space

Hungarian retailers, who primarily focus on physical stores, face challenges in growing their online presence. For example, while Extreme Digital once led the online retail space, its merger with eMAG led to the discontinuation of the brand, leaving a gap in the market. Despite some attempts by other companies to fill this void, Forrás stated that there is no profitable marketplace model in Hungary currently.

The Competitive Landscape in Hungary

Forrás noted that the Hungarian market is already highly competitive, with several international players like eMAG and Allegro operating alongside Alza. He believes that online retail will only continue to grow if the overall retail market expands and the balance between online and offline sales shifts more in favor of e-commerce.

Consumer Preferences and Alza’s Position in Hungary

Despite competition from global giants like Temu, Forrás emphasized that Alza’s strong local presence, with Hungarian-language support and local operations, makes it a trusted brand in the eyes of Hungarian consumers. Alza also works with more local suppliers, positioning itself well in the marketplace.

Temu’s Impact and the Online Marketplace Challenge

Forrás acknowledged Temu’s rapid rise through an aggressive marketing campaign but argued that Alza’s focus on high-quality, trusted electronics will allow it to maintain a competitive advantage, particularly in higher-value product categories where consumers seek reliability.

Logistics and Future Competition

Alza’s collaboration with multiple logistics providers, including the Hungarian Postal Service, has given it flexibility in delivery. Forrás predicts that the future growth of the online market in Hungary will depend on the expansion of the overall retail market and a shift in consumer behavior towards more online shopping.