Spring Retail Boom: Developments, Inflation, and Economic Forecasts

June 3, 2024
4 minute read

March Sees Strong Retail Recovery Amid Inflation Easing and Rising Real Incomes

According to Hungarian CSO data, retail sales showed a strong recovery in March, rising 2.0% month-over-month and 4.2% year-over-year . Year-to-date retail sales volume (January-March 2024) increased by 2.2% year-over-year. The before mentioned increase in retail sales is likely due to the ease in inflation rate combined with the increase in real income. The Health& Beauty saw the largest increase at 9.7%, followed by fuel at 3.9%, food at 3.1%. The sharpest decline was in books and newspapers, down 8.4%, while textiles and clothing fell by 4.4% compared to the same period last year. Sales volume increased by 5.7% in both specialized and non-specialized food retailing. Specifically, non-specialized food and beverage shops, which comprise 77% of food retailing, saw a 5.7% rise in sales volume, while specialized food, beverage, and tobacco stores experienced a 4.8% increase. The share of mail order and internet delivery, which represents 7.4% of all retail transactions has increased by 4.2%, showing slight decrease in the growth of online transactions compared to post-covid years when the sector was booming, however still showing a strong presence.

Regarding the future of retail sales, we expect domestic spending to continue driving economic growth in 2024, with retail sales likely to show positive growth, aided by last year's weak base. However, given the rising retail sales combined with the sustained increase in real wages since late last year, inflation is expected to rise again.

Source: CSO Hungary

Retail Market Activity and Development

Looking at the activity on the retail market, delivery of smaller projects, such as retail parks, has remained consistent in recent years. Additionally, the renovation of the Corvin Palace on Blaha L. square indicates that activity persists in the Hungarian retail market. Looking ahead, the pipeline includes the development of Zenit Corso, a uniquely designed building featuring an open interior. This development will house various shops opening directly onto the street, merging the concepts of a shopping center and a shopping street.

There are new entrants on the market, namely Primark has opened its first store in Hungary, located in Arena Mall, covering an area of 3,100 square meters. Additionally, Time Out Market is set to join the roster, aiming to unite the city's culinary specialties under the roof of the before mentioned Corvin Palace.The focus is not solely on the capital, as evidenced by the opening of a retail park near Lake Balaton in Várpalota. This development features tenants such as Kik, Jysk, and Sinsay, offering brands that were previously available only in neighbouring county seats.

Another interesting, mixed-use project is Centrale, a significant mixed-use building comprising office spaces, a hotel area, several food courts, and approximately 50 retail units located in Central Pest atop a bustling metro station close to the Papp László and Puskás Ferenc arenas.

Challenges and Opportunities in Mall Developments

Examining the current pipeline for mall developments in Budapest reveals minimal activity, with no ongoing projects. Government restrictions implemented in 2012 continue to pose challenges for developers navigating the retail market. However, the modernization of older malls should not be overlooked, as the renewal of these structures should be managed with the same importance as in the case of residential buildings. Moreover, the retail market as a whole is experiencing significant transformations during last 3-5 years. Traditional shopping malls – except the Top 5 Shopping Centres in Budapest – are no longer the primary focus for most consumers. Shoppers today spend less time browsing and instead prefer quick, purposeful visits with clear purchasing intentions. Shopping habits have also significantly changed, due to the effects caused by the Covid period, and looks like these habits are here to stay. Consequently, retail parks have become the preferred retail schemes.

Decline in Retail Units

On the other hand, stores are closing and disappearing at a rapid pace. By the end of last year, the Central Statistics Office reported the existence of 106,300 retail units, this number is a decrease of 16.3% compared to four years ago. Examining this decline over a six-month period reveals a 3.6% reduction, representing 3,955 retail units, which equates to the daily closure of 21 units over the half-year span. It is important to note however that we are mainly talking about smaller units and not large market players

No items found.

Related posts

Stay Informed with Our Newsletter

Get the latest updates and insights delivered straight to your inbox.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
By subscribing, you agree to our Privacy Policy.

Stay Informed with Our Latest News 
and Analysis

At our company, we understand the importance of staying up-to-date with the latest news and analysis in the commercial real estate market. Our team of experts continuously monitors market trends and provides valuable insights to help you make informed decisions. Whether you're a seasoned investor or new to the industry, our latest news and analysis will keep you informed and ahead of the competition.