Growing inventories, more financing in foreign exchange

As István Tari, regional director of Erste Bank has told us, in spite of signs of recession in the FMCG sector, retail chains are expanding in the hope of future business. – As it takes 2-3 years for a store to turn profitable, this is the time to open them when medium term prospects can already be seen. – he explained. The strategies followed by different chains are quite diverse. One of the discount store chains relies on a relatively stable foreign supplier base, with Hungarian suppliers playing only a minor part. A hyper market chain follows a similar strategy, relying on an increasing proportion of imported private label products. – Both chains are examples of trying to become independent of Hungarian suppliers, who cannot provide credit for periods exceeding 60 days. Global suppliers with a sound financial background are hard to compete with. – adds the regional director. When the movement of goods is slowed down owing to problems with financing, inventories grow and require even more financing, which can lead to insolvency.