HUNGARY WITHOUT SHOPPING SUNDAYS

Legislation forcing all retail shops to close on Sundays entered into force in Hungary on March 15, 2015; most shops are forced to close on Sundays and at night.

BY ANDRÁS MAKÓ AND JUDIT BALATONI KISS

Pharmacies, petrol stations, shops at international bus stations and international airports, as well as markets, fairs, tourist service providers, catering and hotel facilities, and shops at World Heritage Areas may remain open according to the new rules.
This legislation also allows shops with a sales area of less than 200 sq m to remain open if family members or private entrepreneurs work on these days. Shops selling newspapers and florist shops may be open between 6 AM noon, shops trading bakery and milk products between 5 AM and noon. All other retailers may only be open on Sundays during advent and may obtain a permit for one selected Sunday per annum, chosen at its discretion.

The goal of the legislation is to protect family life and employee rights, end compulsory Sunday work, and support small independently operated shops.

SEVERE NEGATIVE IMPACT ON RETAILERS

The economic and social effect of this law has been examined by several consulting and research companies. Data from November 2014 (source: GFK Hungary) confirm that 11% of the turnover from trade with daily consumer products falls on Sundays (873,000 households shop on Sundays); the proportion is higher (14%) at hypermarkets and discounters (13%), while it is lower (10%) at supermarkets and small shops (7%). Tesco, Auchan, and Spar currently operate hypermarkets in Hungary.

The surveys conducted by the Hungarian Council of Shopping Centers (MBSZ) confirm that the legislation will have a severe negative impact on retailers and employment numbers. MBSZ estimates that approx. 15,000-20,000 people will lose their jobs and further 15,000 to 20,000 employees will face other detrimental effects from the legislation. The effect will not be sudden, but long-term. For example, companies will be reluctant to conclude contracts with mothers who need to be at home with their children during the week and student workers and workers entering into retirement age will be dismissed. According to the MBSZ statistics, the retail sector already lost approximately 10,000 employees between 2010 and 2013 and this tendency will now worsen.

NEGOTIATIONS IN PROGRESS

In our opinion, Sunday turnover will not be transferred to preferred family retailers able to be open on Sundays as these do not provide a suitable alternative to shopping centers, which provide a wide range of shopping and entertainment opportunities. Part of the Sunday turnover will be transferred to Saturdays and we forecast a small, temporary fall-back in turnover. We also expect a longer term loss in turnover in cities close to borders and in Budapest, as the ratio of foreign customers coming for one-day shopping in these places is very high.

After 15 March, 2015 the majority of the shopping centers will be opened on Sundays. All centres where a cinema is operated will open. Here coffee shops, restaurants and shops with sales areas of less than 200 sq m may also be open, provided that the owner or its family members are willing to work. The executive decree containing the detailed interpretation of the new law is yet to be issued; the further interpretative rules would be necessary for the preparation of the regulations regarding the new law.

 

ABOUT THE COUNCIL AND THE AUTHORS

The Hungarian Council of Shopping Centers (MBSZ) was founded in 1998 and considers its most important task to provide credible and up-to-date information to members and partners. The Council has 22 members representing all significant mall operators in Hungary. Its secretary,

JuditBalatoni_HCSC

JUDIT BALATONI KISS, IMAGE: HCSC

Judit Balatoni Kiss, has fulfilled her position since 2002. Some innovative tools have been introduced as a result of her activity, such as yearly study tours and the formation of specialized sub-groups for marketing and operation leaders. She managed to achieve outstanding results in cooperation with the Hungarian academic life.

AndrasMako_HCSC

ANDRA´S MAKO´, IMAGE: HCSC

András Makó is a Member of the Board of the Council; he was its President between 2004 and 2009. He has gained extensive experience in the field of full-scale real estate development and asset management. He currently operates his own advisory firm and is a lecturer at the Central European University.

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