This paper aims to give an overview of challenges and competition of the Hungarian food retail sector, and to provide possible answers of small and medium sized enterprises from the point of view of the higher level of service-quality and efficiency achievable through innovation and technological development. Nowadays the innovation efforts in the Hungarian food retail are fundamentally emphasizing the realization of two main objectives, both at sectoral and company level: the improvement of service quality and efficiency of retail activities. These objectives are also the requirements of such development tasks, which are simultaneously solvable through the high standard of information management. In the point of the related expensive technological improvements, the multinational retail companies are in a quite favorable situation, even so the domestic SMEs suffering from the lack of assets also have a fair chance to improve their innovation driven competitiveness and to make up for their relative handicap
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