The Skála, a microcosm of Hungarian capitalism

The seventies were the best days of Hungarian gulash communism, and the symbol of this modest prosperity was a new, by socialist standards, very modern department store, the Skála (Scale). It opened its doors in 1976 with great fanfare. The Skála, located in the center of Buda, became the largest department store in the country, surpassing the Corvin, built in 1927. While the Corvin, under different names, became state property, the Skála was a cooperative venture. The energetic new manager of the Skála was a thirty-year-old business genius, Sándor Demján, today the head of a real estate development firm and perhaps the richest man in the country.

Demján looked around in western Europe and shamelessly copied. The model for the Skála was the Viennese Staffa cooperative department store, quite ordinary in Western Europe but fantastically modern by socialist standards. There were escalators, piped-in music, a long row of cash registers, and self-service. The store had a parking area for 400 cars, which was a great asset in comparison to Corvin with only a handful of parking places.The staff were trained to be polite, smiling, and helpful; each of the salespersons wore a name tag. They advertised a lot and the ads were quite clever. Their advertising got them into trouble with the authorities because–as I found out just yesterday–it was forbidden to advertise imported items. The Skála knew that very well, but it still advertised these goods and preferred to pay the fines.

When the central planners agreed to the venture, they were sure that the department store would not be profitable. The decision was made ahead of time that if the losses reached 50 million forints the state would nationalize the store. This certainly didn’t happen. By 1979 the Skála had become a business empire–a whole chain of Skála stores, competing successfully with the state-owned Centrum chain. The chain’s name was changed to Skála-Coop Rt. (Rt. stands for részvénytársaság, that is "incorporated"). By 1985 Skála-Coop operated 15,000 smaller ABC stores and 60 department stores. Demján even began a joint venture with a West German company producing color television sets. In 1979 the Skála had profits amounting to 7 billion forints. By 1985 profits were 25 billion.

After the change of regime the German Tengelmann Group purchased the chain. In 1999 the new owner also purchased the Centrum chain and merged the two. Even with the infusion of foreign capital some people were skeptical about the survival of this chain against the hypermarkets, shopping centers, and new chains. They were right. In 2001, the Capital Rt. purchased the Skála Coop, trimmed off some of its smaller components and struggled along until 2005. In 2005 the Skála store in Buda was purchased by the ING Group, a Hungarian subsidiary of the Dutch financial conglomerate.

The purchase was strictly a real estate venture. The idea was to tear down the Skála and in its place build the Új Buda Városközpont (New Buda City Center), a very ambitious project. There will be a 40,000 m² shopping center, a housing complex of 100 spacious apartments, an underground garage for 1,200 cars, and a multiplex with 13 movie theaters. In addition there will be a Spar supermarket. The street next to the complex will be transformed into a car-free promenade. The building of the complex will cost about 35 billion forints.

Are people sad to see the Skála go? Some members of the older generation are, but even people who had managerial positions in the store admit that life left the Skála behind. It was nice, it was wonderful at the time of scarcity in the stores, but thirty years later it couldn’t compete with the shopping centers and hypermarkets. New times, new challenges. One of the former managers was interviewed this morning on MTV’s Napkelte and every second word that came out of her mouth was English: it was real "brainstorming" in those days, real "teamwork," it was a question of "marketing." New times, new vocabulary, new thinking.