Trouble in store

Photo: Nóra Halász

Fidesz finally accepted (after its previous rejections) the proposal of its small coalition partner, KDNP, and from March 15 shops will be closed on Sundays. Now the Ministry of National Economy has extended the rule even to online trading. SPAR and market leader Tesco are not pleased.

Not only was the ban passed by Parliament with a clear majority (119 votes in favour, 40 against and 25 abstentions), it was also supported by Minister of National Economy Mihály Varga, who clearly rejected the proposal at first. Besides enforcing Sunday closure, the law limits general opening hours in retail stores to 6am-10pm, which will be painful for the non-stop shops. On Christmas Eve and New Year’s Eve retail stores may only be open from 6am-12noon.  If the rule is violated, the Office of Consumer Protection may close the store for 5-15 business days, which may be extended to a year in case of a repeated offence.
There are exceptions: the Advent season and one freely electable Sunday in a year, also shops less than 200 square metres where the owner and his or her family members are working. Shops selling baked or dairy products may stay open from 5am-12noon on Sundays and holidays, shops selling newspapers or flowers may open from 6am-12noon. The law does not regulate shops at airports, train and bus stations, petrol stations, in healthcare, judicial and military institutions, and national tobacco shops. In addition, the government will allow exceptions in individual communities according to their specific circumstances.
The opposition is furious: the Hungarian Socialist Party (MSZP) announced introducing an amendment to compensate “the loss of the employees caused by the government”. Dialogue for Hungary (PM) said KDNP, “the little side-car of Fidesz”, would like to “prove their existence” with this proposal that is risking the economy. Both parties criticised the quick introduction of the law, without consultation.
The Democratic Coalition (DK) submitted a referendum initiative to annul the law. The party will not accept the government “intervening” in the lives of private individuals and risking the jobs of more than 30,000 people, party board member Laszlo Varju said. The question that DK submitted to the National Election Committee is: “Do you agree with keeping shops open on Sundays?”
Portfolio.hu said no expert opinion had been sought before taking a decision that affects several hundred thousand people and is hardly justifiable from an economic point of view. The Ministry of National Economy had not responded by press time to The Budapest Times’ questions as to whether there was actually an expert opinion that made Minister Varga change his mind and vote for the law, and how the ministry sees the risks to jobs.
Shorlty after news portal Index reported last week that those chains may profit which have an online ordering option and deliver the products, for example Tesco, the ministry announced that according to the law, online commerce also must stop on Sundays and holidays and between 10pm and 6am. According to György Vámos, general secretary of the Trade Alliance OKSZ, the ministry misunderstands the law: it only controls the opening times in retail stores and does not concern online orders delivered on Sunday, because web shops do not have opening times and the delivery of products is not part of the retailing business, rather a logistic activity.
The Austrian SPAR chain announced in reaction that its stores will concentrate more on building a franchise system – thanks to this move each store will have its own revenue, which would help lowering the recently increased food supervision fee imposed on them – and that it will drastically limit its planned investments in Hungary due to the current taxing policy.
SPAR said that regarding the Sunday closing it is negotiating with the

station chain about the opening of further SPAR Express stores. A spokesman said that due to “budget saving measures” the opening of online commerce, which was planned for this year, would be delayed for an unspecified time.
The turnover on Sundays represented 8% of total business. SPAR would be hiring fewer employees because of the raised food supervision fee and depending on business results some stores might also be closed down. It would substantially scale back planned investments for 2015, as a result of which some 600 new jobs would not be created.
Market leader Tesco will be also weakened by the different burdens and this will have its consequences. The president of Tesco Hungary, Nigel Jones, confirmed the closure of 13 stores beginning on February 4 and dismissal of about 560 employees because he is forced to do so by the new regulations – a total of 16 in the case of Tesco.
In response Mihály Varga has scolded Tesco for blaming government measures for its own business problems. Tesco is having problems not just in Hungary, but across Europe. The company’s trouble is specific to itself, he said. When a company wants to blame somebody other than its own business for its troubles, it’s “awkward”, Varga said. The minister noted that retail sales in Hungary had climbed 5-10% in 2014. There are more than 2,000 vacancies in retail trade, he said citing employment service figures. Business associations in the field see a chance for hires and do not expect any major layoffs, Varga added.

Auchan plans no closures in Hungary

Auchan Magyarország operates 19 shopping malls and 16 petrol stations in Hungary and has no plans to close them, the company said on Friday. There are no changes in Auchan’s plans for Hungary to remain in the country in the long term, director-general Dominique Ducoux said. The drop in revenue resulting from the Sunday ban on large retailers to come in force in mid-March is expected to even out or at least partially be recovered during the rest of the week. The company is still interpreting the new regulations and will make every effort to maintain all current jobs, he said. Auchan employs nearly 7,000 people in Hungary, including 360 disabled people. It has about 1,500 suppliers, including 1,350 Hungarian ones.