Market
The Finnish grocery retail market totals
about €14.2 billion. The average monthly
increase in grocery prices compared with
the previous year was 7.6% during 2008
(Statistics Finland).
In addition to K-food stores, primary
operators include Prisma, S-market and
Alepa (S Group), Valintatalo, Siwa and
Euromarket (Suomen Lähikauppa Oy, previously
Tradeka), and Lidl. The estimated
market share of the K-food stores is
33.4% (own estimate).
The Finnish HoReCa (hotels, restaurants
and catering) market's purchases in Finland
totalled about €2.5 billion in 2008
(own estimate). Kesko Food's subsidiary
Kespro Ltd is the leading wholesaler in
the Finnish HoReCa business. Kespro's
main competitors are Meiranova Oy,
Metro-tukku and Heinon Tukku Oy.
The aim is to provide successful customer experiences
At the end of 2008, there were 1,055
K-food stores. They are visited by nearly
840,000 customers every day. In 2008,
the total number of customer visits was
nearly 310 million. Every customer
encounter is important when it comes to
our success. Success is ensured by the
highest quality and most comprehensive
selections on the market, combined with
the best service and favourable prices.
Local K-retailers are responsible for the
customer service, competence of personnel,
and profitability of business at their
stores. Retailers are able to react quickly
to their customers' wishes and to build
selections and services that meet their
needs.
Kesko Food manages the operations of
the chains made up by the stores. Cooperation
between Kesko Food and the
K-retailer is based on the chain operations
defined in the chain agreement.
Chain operations ensure higher competitiveness
for the entire chain. Key factors
contributing to competitiveness in chain
operations include customer-orientation
and operational efficiency.
Major duties include centralised purchasing
of goods and logistics, chain
concepts and their development, formation
of selections that are available
throughout the entire chain, the chains'
marketing, data management and store
site operations, and management.
K-food stores have their
own quality system. Its
objective is to ensure continuous,
systematic development
of the operations of the
store and the whole chain to
best serve the customers. The
quality system includes measuring
customer satisfaction,
measuring the store's condition,
assessing price control, and
assessing management. The best
retailing competence is maintained
with the help of constant
training in cooperation with the
K-instituutti, the K-Group's training
centre.
The high quality of products
is assured by Kesko Food's own
Product Research Unit and K-test
kitchen. All Pirkka products have
been tested by the Product
Research Unit and all recipes published
in Kesko Food's own media
have been developed and tested by
the K-test kitchen. Food recipes are
published in Pirkka, the K-Group's
magazine distributed to loyal customers,
and on the largest Finnish
online cookery book Pirkka.fi. They
are also featured on the K-Ruoka-
Pirkka leaflet that is published weekly
and available at all K-food stores, and
shown on the TV programme “What are
we having today?”.
Favourable prices are a prerequisite
for growth and customer satisfaction.
The basis for favourable prices is built
with the help of the basic selection that
is available throughout the chain, permanently
low-priced Pirkka products,
the chain's campaigns and store-specific
activities.
Pirkka products combine targeted
quality and low prices in the most concrete
way. In 2008, the sales growth of
Pirkka products was nearly double that
of the groceries and the total number of
products reached about 1,700 at the end
of the year. The number of Pirkka products
has increased by about 200 during
the past three years. According to consumer
studies, customers feel that Pirkka
products are an easy and safe choice
because of their high quality and low price. The most recent consumer survey,
conducted in the autumn 2008, confirms
that customers consider low prices, reliability,
Finnish origin and constant
renewing as the greatest strengths of the
Pirkka range. Pirkka also has the following
sub-ranges: Pirkka organic, Pirkka
Fairtrade and Pirkka Parhaat, which consists
of premium products.
K-citymarkets offer their customers
diversified and wide selections of groceries
and home and speciality goods. Their
low prices, committed personnel and the
best selections strengthen the customer
promise which is “Good shopping. And a
whole lot more.” There are 64 K-citymarkets
in Finland in 49 towns. In 2008, new
K-citymarkets were opened in Kuopio,
Pori, Jämsä, Tornio, Klaukkala in Nurmijärvi,
Kemi, Ylivieska and Oulu. Currently
there are K-citymarkets under construction
in Koivukylä in Vantaa, the Skanssi
shopping centre in Turku, Ylöjärvi, Kirkkonummi,
and Linnainmaa in Tampere.
K-supermarkets' customer promise is
“A better than average food store”. Competitive
advantages include food expertise
as well as wide and diversified selections
of fresh products. At K-supermarkets,
in addition to the retailer and other
staff, customers are also served by over
160 employees with a specialist food
manager qualification. These meat and
fish experts give customers cooking
advice. The chain consists of 163 stores.
In 2008, 13 new K-supermarkets were
opened and four K-supermarkets are
currently under construction.
K-markets are high-quality and reliable
food stores located near customers.
In addition to the good basic selections,
K-markets offer customers freshly baked
local bread, high-quality fruit and vegetables,
versatile ready-to-eat food
choices and the best local services. Many
Neste and Teboil service stations also
have a K-market on their premises. The
customer promise is “The retailer takes
care of it”. 14 new
K-extras are neighbourhood stores
which provide customers with daily
essentials and which focus on personal
service. Additionally, as the name
implies, many K-extras located in the
countryside offer extra services, such as
the sale of agricultural and builders’ supplies,
fuel distribution, lottery and postal
services. The customer promise of the
K-extra chain is “Good service for you”.
The chain comprises 210 stores.
The most comprehensive store network in Finland for various customer needs
The K-food store concepts cater for various
consumer needs from daily local
services to hypermarkets which also carry
a wide range of clothing and other home
and speciality goods. The K-food store
network is the most comprehensive in
Finland. More than 45% of Finns live less
than a kilometre away from a K-food
store. The K-Group's neighbourhood
store network is the most comprehensive
in Finland. The total number of K-markets
and K-extras is 679.
Kesko Food actively develops the
K-food store network by investing in
stores of all sizes. The constant development
of the network is required to meet
the needs of ageing stores, expanding
selections, new services and migration.
Efficient operations and use of
customer information enable
high quality and low prices
Through chain operations, Kesko Food
ensures a strong operational base for
K-retailers in terms of sourcing and purchasing,
formation of selections, marketing
and price competition. Permanently
low prices are reinforced by efficient
practices all the way from customer to
supplier, chain operations and long-term
cooperation models with selected partners.
Considerable benefits are obtained
both in Finland and internationally by
combining purchasing volumes. Kesko
Food is a member of the rapidly expanding
international sourcing alliance, Associated
Marketing Services (AMS).
A prerequisite of Kesko Food's success
is customer satisfaction in K-food stores.
The efficient use of customer information,
building store- and chain-specific selections
and services, and fast reaction to
changing customer needs create the basis
for improving customer satisfaction. Leveraging
customer information relies on
customer and product group level information
produced by K-Plus Oy.
Store- and chain-specific customer
programmes as well as those available
in all chains are built on the basis of the
information to ensure that customers'
service experience in K-food stores will
be as good as possible. Extensive information
about the customer groups' purchasing
behaviour which is produced by
K-Plussa, the K-Group's customer loyalty
card, is used for the benefit of customers
in selection planning, targeted special
offers and rewarding customers.
Year 2008
Kesko Food's net sales totalled €4,110
million in 2008, an increase of 6.2%.
Kesko Food's operating profit excluding
non-recurring items was €135.2 million,
which represented a decrease of €16.2
million from 2007. The retail sales of
K-food store chains totalled €5,351 million
in 2008, an increase of 6.0% over
the previous year.
It is estimated that the total grocery
market in Finland grew in January-
December 2008 by approximately 9%
over the previous year (own estimate)
and the average monthly increase in
prices was about 7.6% (Statistics Finland).
During the year, eight new K-citymarkets,
13 K-supermarkets, 14 K-markets
and five K-extras were opened. A total of
40 new food stores were opened, three
of which replaced existing stores. Ten
extension projects and several renovations
were also carried out in 2008.
Objectives
The implementation of Kesko Food's
strategy aims at growth faster than the
market, higher customer satisfaction and
competitiveness. Kesko Food's opportunities
for internationalisation will also be
actively surveyed.
Anttila, home and speciality goods of
K-citymarket and other home and speciality
goods companies of the Kesko Group
will intensify their cooperation in 2009.
Synergy benefits are sought, above all,
in product sourcing and purchasing,
management and customer relationship
management.
