Mandated Sunday closures hurting small- and medium-sized companies in Hungary

May 1, 2015

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The Sunday closure law targeting multinational retailers in Hungary is definitely having an impact, just not the one intended by the government. While larger retailers have made adjustments to their businesses to accommodate the dramatic changes, it appears that Hungary’s part-time employees, students and small Hungarian-owned shop owners and their employees, and retailers catering to tourists are the ones most adversely affected.

The Sunday closure law has been in place for less than two months and online retailers are already reporting a 10-15 percent growth in business, which is at least good for Hungary’s logistics businesses, said Anita Csörgő of CBRE during a roundtable discussion at a real estate conference.

Csörgő says retail business parks, where Sunday business had generated in excess of 20 percent of revenues, have been hit the most.

Retailers in downtown Budapest had hoped to be able to remain open.  But now that it has become clear the Sunday closure law is binding on them too, there might be a unified effort to oppose the law, Csörgő said.

Downtown retailers relied heavily on Sunday business because tourists, who in many cases make up 50 to 90 percent of their customers, usually visit the city for around three days. One of those days happens to fall on Sunday, said Csörgő.

These retailers have been trying in vain to compensate for Sunday’s lost business by staying open longer during the week, but tourists don’t go shopping at 4.30 am or 10 pm, she said.

Csörgő believes Hungarian-owned small- and medium-sized retail businesses will suffer the most because of the Sunday closures.

President of the Hungarian Association of Retail Centers Gyula Gyalay-Korpos says longer opening times during the week do not solve the loss of Sunday business.

The Árkád mall in Budapest has seen a 17 percent growth in business on Fridays and 25-26 percent growth on Saturdays. He says extending business hours during the rest of the week isn’t increasing sales. What is more, increased activity on Friday and Saturday presents other problems for retailers, including lack of parking for customers and longer lines at cash registers.

Gyalay-Korpos predicts the Sunday store closures will also cause headaches in Hungary’s Lake Balaton region, a prime tourism location. He says there isn’t enough infrastructure for small family-owned retailers to cater to many tens (if not hundreds) of thousands of tourists.

Large multinational retailers are being quiet about how they are dealing with the reduced employment hours, says Gyalay-Korpos. However, he says it is clear that these businesses are letting go of employees close to retirement, student employees and part-time employees, and that they are trying to retrain existing employees to work as cashiers. He says accurate figures regarding how many people were laid off won’t be available until the end of the year.

Referenced in this article:

Nem fogja elhinni, kik szívnak a vasárnapi zárva tartással a leginkább, napi.hu; 30 April 2015.