Glossary

In this glossary we have compiled a list of some key terms used in the Annual Report.

AFTER-SALES MARKETING refers in the car and machinery trade in particular to after-sales activities, such as maintenance, repairs, sales of spare parts, accessories and equipment.

AMS is an abbreviation of AMS Sourcing BV. Kesko Food works in cooperation with major European food chains in AMS.

BRAND is a trademark, logo or branded product. It is an embodiment of all information relating to the company product or service. A brand is an image, created by the way of doing things, by quality and the willingness to reach the set destination.

CERTIFICATION OF GOODS SOLD BY STORES is an audit carried out by an independent third to verify the compliance of operating systems with certain criteria (e.g. with an ISO standard).

CHAIN AGREEMENT is a contract between the retailer and Kesko that enables the retailer join one of Kesko’s retail store chains. Under the terms of the chain agreement, the retailer and Kesko agree on their rights and responsibilities regarding chain operations.

CHAIN CONCEPT is a comprehensive description of retail business operations and guidelines for their similar implementation in all stores of the chain.

CHAIN SELECTION in the K-Group is that part of a selection which is the same in all stores of the chain. The chain unit makes decisions concerning the selection.

CHAIN UNIT is the Kesko unit responsible for store chain operations and chain concept development in the K-Group. It has decision-making power in matters concerning the chain.

CORPORATE RESPONSIBILITY refers to voluntary responsibility towards key stakeholders. It is measurable, based on the company’s values and objectives, and is divided into economic, social and environmental responsibility.

DEALER, for instance in the car trade, is a company authorised by the importer to sell and service branded products. The dealer meets the quality standards set by the manufacturer and the importer.

DEPARTMENT STORE is a retail store that sells a wide variety of goods. Its sales area is at least 2,500 m2. In a department store, no product category accounts for over half of the total sales area.

DISTANCE SALES refers to trading activities where customers do not visit store premises, but instead trade through the Internet, other electronic media or mail order.

FAIRTRADE is a form of international trade, illustrated by a formalised parrot logo. The logo indicates that business is carried out directly with small producers of the third world avoiding intermediaries. Producers receive a guaranteed price for their products that is usually significantly higher that the world market price. They are also given guarantees of long contracts and opportunities for advance financing.

GROCERIES refer to food and other everyday products that people are used to buying when they shop for food. Groceries include food, beverages, tobacco, home chemical products, household papers, magazines and cosmetics.

GROCERY STORE is, in most cases, a self-service food store that sells the full range of the above groceries. Food accounts for about 80% of grocery stores’ total sales.

HOME AND SPECIALITY goods stores include clothing, shoe, sports, home technology, home goods, furniture and interior decoration stores.

HORECA is a category consisting of large customers in the food trade, including hotels, restaurants and other catering companies.

HYPERMARKET is a retail store selling a wide variety of goods mainly on the selfservice principle. Its sales area exceeds 2,500 m². In a hypermarket, food accounts for about half of the total area, but sales focus on groceries (food and other everyday items).

K-GROUP consists of the K-retailers, the K-Retailers’ Association and the Kesko Group.

K-RETAILER is an independent chain entrepreneur who, through good service, competence and local expertise, provides additional strength for chain operations. The K-retailer entrepreneurs are responsible for their stores’ customer satisfaction, personnel and profitable business operations.

K-RETAILERS’ ASSOCIATION looks after the interests and promotes the cooperation of the K-retailers. Its key function is to enhance and strengthen K-retailer entrepreneurship and promote the interests of its members. All the K-retailers – about 1,230 – are members of the K-Retailers’ Association.

LOGISTICS is a process in which information management is used to direct the goods flow and related services throughout the entire supply chain. Logistics help optimise the quality and cost-efficiency of operations.

NEIGHBOURHOOD STORE is usually a small grocery store, located close to consumers and easily accessible by foot. It is usually a self-service store of less than 400 m². In Finland they have unrestricted opening hours even in town plan areas.

NEW ESTABLISHMENT (greenfielding) refers to new store sites or business premises.

OPERATIONS CONTROL SYSTEM (ERP Enterprise Resource Planning system) is an information system that supports the planning and control of business operations. It includes the information systems supporting the core processes of the company, such as category management and purchasing logistics in the trading sector, e.g. SAP R3.

ORGANIC PRODUCT is, according to the EU regulation on organic production, a product in which at least 95% of the raw materials of agricultural origin have been organically produced.

PRIVATE LABEL (own brand, house brand) product is a branded product made for the trading company by a manufacturer and marketed as part of a larger product family under one brand name. A company markets its private label products through its own network.

RETAIL TRADE refers to sales to consumer customers.

SALES AREA refers to the store area reserved for sales, such as goods areas, aisles, service counters, checkout areas and air lock entrances.

SELECTION is the range of products sold for the same purpose, for instance a selection of bread. Speciality stores carry a deep selection in the category.

SELF-CONTROL is an entrepreneur’s own control system, the purpose of which is to prevent problems arising in food hygiene. In compliance with legislation, self-control is based on HACCP (Hazard Analysis and Critical Control Points) principles. The hazards related to products are assessed, the critical control points needed for hazard monitoring are identified and then controlled. The system is applied to the hygiene of manufacturing plants’ machinery and equipment, the quality of raw materials and products, the effectiveness of manufacturing processes, and transportation and warehousing conditions.

SERVICE COMPANY is an enterprise that offers all the products and services wanted or expected by customers at the same time. The service company provides customers with a combination of products and related services, taking care of product assemblies and other user functions that may be required.

SHOPPING CENTRE houses many trading companies, but has joint management and marketing. A shopping centre has one or more main companies, but no individual store accounts for over 50% of the total business premises. A shopping centre has a minimum of 10 stores, in most cases joined by a common mall.

STORE-SPECIFIC selection in the K-Group is that part of the selection of a store that is adapted for the special needs of the local market.

STORE SITE is a business property or premises where the chain concept and related auxiliary services are carried out.

STORE SITE FEE is the term used for the payment made by the retailer to Kesko as a compensation for the use of the store site under the chain agreement and the related services offered by Kesko. The store site fee is, as a rule, calculated as a percentage of the retailer’s gross profit or net sales.

STRATEGY is a comprehensive plan of the means the organisation intends to use in order to achieve its visions and goals.

SUPERMARKET is a grocery store that focuses on food sales and works on a selfservice principle. Its sales area is at least 400 m², with food accounting for over half of the total sales area.

WHOLESALE trade is purchasing from suppliers in large quantities and then selling to enterprises engaged in the retail trade.