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Publication date: 10 February 2020

Veronika Fenyves, Kinga Emese Zsido, Ioan Bircea and Tibor Tarnoczi

Changes in food retailing (globalization, concentration) have negative impacts on smaller, “traditional” food retail businesses. Their market share decreasing year by…

Abstract

Purpose

Changes in food retailing (globalization, concentration) have negative impacts on smaller, “traditional” food retail businesses. Their market share decreasing year by year. The purpose of this study is to examine and compare the financial performances of these businesses under the given circumstances and current economic environment in a Hungarian and a Romanian county.

Design/methodology/approach

The study is based on two complete databases, including all companies that behoove retail food activity (considering the NACE cod) in the counties of Hajdu-Bihar (Hungary) and Cluj (Romania). The database analyzed contains the financial statements for five consecutive years for 212 and 690 businesses. Databases were examined by the most typical financial indicators using the multivariate and univariate analysis of variance and the k-medoid cluster analysis methods.

Findings

The results of the analysis have shown that there are differences in the number of retail food companies in the case of two counties, both in number and in financial performance. Companies in Hajdú-Bihar county perform better in terms of financial ratios than those in Cluj county. The groups created by k-medoids cluster analysis are relatively well distinguished in the case of Hajdú-Bihar county, while the picture is much more mixed in the case of Kolozs county. However, it is also important to note that the companies analyzed should generally perform better to survive.

Research limitations/implications

Among the limitations of the study, it is important to note that the findings are relevant only to the two counties examined. Another limiting factor is that quite several companies had to be excluded from the analysis due to missing data or outliers.

Practical implications

The study presents for the corporate decision-makers the current performance of the companies of the sector examined in the two counties. The results of the study highlight the business areas of concern in management. The findings show that they need to change this performance to strengthen their market position. We believe that it is not enough to complain about the expansion of the supermarket chains, but they should take appropriate actions to improve their situation. Based on the results of the study, it can be concluded that there is a need to improve the financial efficiency of retail food companies in both counties to survive in the long run. This improvement is essential because retailers can play an important role in smaller settlements and narrower residential environments.

Originality/value

Comparative analysis of retail food companies in similar counties in these two neighboring countries has not been conducted using complex financial analysis. The study revealed the common and/or individual characteristics of these companies.

Details

British Food Journal, vol. 122 no. 11
Type: Research Article
ISSN: 0007-070X

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