In the 1980s, Zsolt Fazekas worked in Hungary’s first shopping centre in Balatonfüred. It was there that he and the head of the appliances and electronics department decided to start their own business. First, they rented the Balatonfüred retail premises of a Veszprém industrial cooperative. When their company, Vöröskő Kft., was registered in 1989, it was one of the first private enterprises in Hungary. This was in the very early days of business in Hungary: the court that registered their company did not have a computer and it took one and a half years for Vöröskő to get its own phone line. They faced the typical retail problems of the time. Finding customers was easy, but supply was insecure and a big challenge, because they depended completely on major state-owned wholesalers.
It soon became clear that they would have to join an international procurement association to get quality products for good prices. First, they become members of Electromarkt, a move which did not live up to their expectations however, so they left them after a few years. Euronics, which they joined in 2001, was attractive for several reasons: they could use the popular brand name, the joint procurement process ensured good prices for Vöröskő, but they could still retain their independence. They only had to obey one written and one unwritten rule: they could not serve competitors and they had to share their experience with other members.
Vöröskő’s sustainable development continued, unimpaired even by the 2008 financial crisis. They reacted quickly to the recession period, and as a result, suffered no losses even in the middle of the crisis.
In contrast to their competitors, Vöröskő did not place orders for six months ahead. This meant that they could react much more resiliently to market changes than their competitors. This was key in fighting the falling revenues. While the market shrank by 47%, their turnover fell by only 20%.
The company also started its webshop relatively early, in 2008. The greatest challenge was to set up an online shop that supported rather than competed with their offline retail business. Online buying has become especially popular among Hungarian shoppers in the recent years, and last year was the third in a row that saw webshop sales double. Online sales now generate 40% of their total turnover. Despite this however, Fazekas still believes that the future of their conventional stores is bright. Western European trends also show that offline shops are still very much needed in the digital world.
“The electronics trade is my medium”, Fazekas says. He has 30 years’ experience in his field, a serious feat given the fierce competition on this market. Indeed, this sector is such a challenging one that sometimes even the biggest international players are not able to accurately assess current trends. One of their competitors delisted laptops a few years ago, convinced that tablets would replace them completely.
To follow the changing customer demands, Vöröskő decided to transform its management in 2015. Until then, they had recruited senior managers from inside the company. Even their HR manager had been working for the company for 20 years, climbing the corporate ladder. However, they reached a point when they realised that would only be able to stay at the top if they hired top managers from outside. The company structure is still under reconstruction. Over the last few years, the have hired, among others, the marketing director of one of the major online webshops, and the former head of Electrolux, their biggest supplier, who became Vöröskő’s procurement lead. Meanwhile, intergenerational succession is also in process. The founder’s son, Bálint Fazekas, is gradually taking over management. Their success is also reflected by the fact that their company is one of the biggest companies with a sole owner in the international Euronics network. They have 1,250 employees and a market share of almost 20%, while their 2018 revenues surpassed HUF 63 billion.
The recently intensification of cooperation between Euronics members is also proving to be a source of support. Beyond the increasing number of joint development projects, they also coordinate their procurement and marketing activities.
They have ambitious plans for the forthcoming years, including the construction of a new logistics base, and are also setting up self-service systems in their shops.
Now that the Hungarian economy is suffering from a labour shortage, they pay more attention to internal trainings, transforming their internal education and training system so that it can provide new salespersons in three to four months, instead of the previous lead time of one year.
They have also added gardening and DIY products to their product range of household appliances and electronics.
They have also opened towards an entirely new field: manufacturing products abroad under their private label, Dyras. They expect that the new products will generate a HUF 4-5 billion turnover per year even from the first years.
They will also continue to support the needy and, as at the end of each year, donate non-perishable foodstuffs to disadvantaged families. As they have deep roots in Veszprém, the company has been among the top leaders and sponsors of the men’s handball team of Telekom Veszprém KC for 25 years.