Kesko

Business purpose

The key focus areas in Kesko's business operations are to strengthen sales growth and the return on capital in all divisions, to exploit business opportunities in e-commerce and in Russia, and to maintain good solvency and dividend payment capacity.

History

Kesko was formed when four regional wholesaling companies that had been founded by retailers were merged in October 1940.

The new Kesko company started operating at the beginning of 1941. The need to purchase goods for the shareholder-retailers and to support their business operations and start cooperation among them resulted in the forming of the K-retailer group.

By the end of the 1940s, Kesko's sales amounted to about 15 billion old Finnish markkas (equivalent to EUR 580 million in 2010), which was about 12% of the overall sales of the central companies operating in the Finnish trading sector.

Food trade

Kesko Food is a key operator in the Finnish grocery trade. Kesko Food's main functions include the centralised purchasing of products, selection management, logistics, and the development of chain concepts and the store network.

Kesko Food manages the K-food store chains, which are K-market, K-supermarket, K-citymarket and K-extra. There were 937 K-food stores in Finland in 2012. The K-food store network is comprehensive in Finland and approximately 50% of Finns live less than a kilometre away from a K-food store.

Formerly Kesko called these four size-grades of their shops K (small), KK (middle-sized), KKK (large), and KKKK (supermarket), but this naming system has been changed.

Kesko Food's private brands include Pirkka and Euro Shopper.

The main competitors are Prisma, S-market and Alepa/Sale of S Group, M chain stores, and Lidl.

Kesko Food’s subsidiary Kespro is the leading wholesaler in the Finnish HoReCa business.

Home and specialty good trade

The home and specialty goods trade comprises K-citymarket's home and speciality goods, Intersport Finland, Indoor's Asko and Sotka, Musta Pörssi and Kenkäkesko.

Kesko's home and specialty goods trade operates in the clothing, home, sports, leisure, home technology, entertainment and furniture product lines.

The most widely recognised chains are:

Building and home improvement trade

Rautakesko is an international service provider which retails building, renovation and home improvement supplies in Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Russia and Belarus.

Rautakesko manages and develops the K-rauta, Rautia, K-maatalous, Byggmakker, Senukai and OMA retail chains and B2B sales in its operating area.

Rautakesko's main functions include the centralised development of chain selections, centralised purchasing and logistics, and the development of chain concepts and the store network.

All stores in Finland are owned by retailer entrepreneurs. There are also approximately 100 retailer-owned stores in Norway. Rautakesko's international business model combines the category management, purchasing, logistics, information system control and network improvements of the company's chains which operate in different countries.

Car and machinery trade

The car and machinery trade segment consists of VV-Auto and Konekesko with their subsidiaries.

VV-Auto and Konekesko represent the leading brands in their market area and are responsible for the sales and after-sales services of these brands either through their own or dealer network. The dealer network is complemented by a network of contract service centres.

Market share and competitors

In 2014, Kesko's market share in food trade in Finland was 33.1% (Nielsen).

Kesko's competitors in food trade are Prisma, S-market and Alepa/Sale of S Group (45.7%), Lidl (7.6%) Valintatalo, Siwa and Euromarket of Suomen Lähikauppa Oy (6.8%) and M chain stores (Nielsen). Kesko later acquired Suomen Lähikauppa in 2016 and the deal increased Kesko's share of the market to about estimated 40%..

Acquisition of Suomen Lähikauppa

In April 2016 Kesko completed the acquisition of a competitor Suomen Lähikauppa's stores. In the deal, Kesko acquired all the Valintatalo and Siwa stores. However the The Finnish Competition and Consumer Authority (FCCA) approved the acquisition with a condition that Kesko must sell at least 60 of the stores to competitors. All the Siwas and Valintatalos are in the process of being rebranded as K-Market stores. The total amount of stores owned by Suomen Lähikauppa before the acquisition was 643 and it employed 4100 employees. In the same acquisition Kesko also was initially obligated to keep using Tuko Logistics Cooperative as the main supplier for the bought stores for 18 months, but FCCA later revoked this decision on appeal.

Stores declared insolvent