Business models

Kesko's business model 

Kesko’s business model comprises Kesko’s own retailing and B2B trade, and the chain business model.

In Finland, the biggest business model is the chain business model, in which K-retailer entrepreneurs run retail stores in Kesko’s chains, namely the grocery store chains, and the K-Rauta and Intersport chains. Some  45% of Kesko’s net sales come from sales to retailers.

Kesko’s own retailing and B2B trade account for some 55% of net sales. In Finland, Kesko’s own retailing and B2B trade comprise e.g. car trade, Kespro, Onninen, non-food sales at K-Citymarket hypermarkets, and part of the Intersport sales and Budget Sport. B2B trade in particular is a strongly growing part of Kesko’s business operations. Outside Finland, Kesko mainly engages in own retailing and B2B trade.

Net sales from international operations totalled some  €2.4 billion, or 20%, of Kesko’s net sales in 2024. Kesko operates in eight countries: Finland, Sweden, Norway, Denmark, Estonia, Latvia, Lithuania and Poland.

The constant improvement of customer experiences and further development of digital services are at the heart of our growth strategy. We use quality and customer experience to differentiate ourselves from the competition in both our stores and digital services.

K-retailer operations in Finland

In Finland, Kesko’s principal business model is the chain business model, in which independent entrepreneurs – usually referred to as K-retailers – operate retail stores in Kesko’s chains. These include the grocery store chains and the K-Rauta and Intersport chains. In total, there are 1,015 retailers in Finland: 856 grocery retailers, 107 building and home improvement retailers, and 52 sports retailers. Outside Finland, Kesko mainly engages in own retailing and B2B trade.

Cooperation between the K-retailers and Kesko is based on equality and a desire to develop operations together. The aim is to improve competitiveness and customer satisfaction while ensuring high quality and lower costs. The respective rights and duties of Kesko and the K-retailers are determined in a chain agreement. Combining systematic chain operations and K-retailer entrepreneurship under one unified ‘K’ brand lends us a competitive advantage.

Kesko is responsible for the continuous development of the operating model and store concepts, for steering chain operations, and for purchasing products included in chain selections. Kesko offers the retailers a retail price service which gives a recommended or maximum price for nearly all store products. The service can be applied to store-specific business ideas, and the retailer may set prices below the recommended or maximum price. Kesko is also responsible for the store site network and for obtaining new store sites. Kesko either owns or leases the store sites and is responsible for developing them.

Kesko engages in long-standing cooperation with partners such as suppliers and logistics operators. International sourcing cooperation and private labels such as Pirkka and K-Menu play a significant role in ensuring that the selections offered to customers are versatile and competitively priced.

K-retailers are responsible for the business operations of their store, their store-specific business ideas, customer satisfaction, store personnel and sales and profit. Each retailer establishes their own store-specific business idea based on customer insight and K Group customer data, in order to offer the best services and selections for their customers. The multi-store model, in which one retailer can have multiple stores, creates synergies in e.g. management, personnel resourcing, and product selections. Each K Group store is part of its larger community and society, and the retailer entrepreneurs work with various stakeholders.

K-retailers typically have a university or college degree, or education in business. The personality, values and attitudes of a retailer candidate are also important. The first step towards becoming a retailer is a year-long trainee programme, which consists of practical training under the guidance of a retailer mentor, online studies, and on-the-job learning and in-store training. After completing the programme, the trainees are ready to start their career as K-retailer entrepreneurs. Kesko aims to offer each candidate who has finished the training a store that is the best fit for all parties. In 2024, 57 new K-retailers launched their careers.

All K-retailers are members of K-Retailers’ Association, which promotes their shared interests and develops K-retailer operations. The association also coordinates the commercial collaboration between the retailers and Kesko, and offers its members e.g. legal advice, training and events. K-Retailers’ Association with its related parties is the biggest shareholder in Kesko, and controls 7.54% of the shares and 19.56% of the votes in the company. Many individual K-retailers are also significant Kesko shareholders.

Read more in Kesko's Annual Report