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 independent K-retailers run retail stores in Kesko’s chains, namely the grocery store chains, and the K-Rauta and Intersport chains. Some 46% of Kesko’s net sales come from sales to retailers.

Kesko’s own retailing and B2B trade account for some 54% 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 €2.1 billion, or 18%, of Kesko’s net sales in 2023. Kesko operates in eight countries: Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Poland and Denmark*. In addition, K Group operates in Belarus via a joint venture.

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.

* Acquisition in Denmark was completed in January 2024.

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 some 1,100 retailers managing nearly 1,500 stores. Outside Finland, Kesko mainly engages in own retailing and B2B trade.

The cooperation between K-retailers and Kesko is based on equality and desire to develop operations together. The aim is to improve competitiveness and customer satisfaction with lower costs and consistent high quality. 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 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. Retailers establish their own store-specific business ideas based on customer insight and K Group customer data, in order to offer their customers the best services and selections. 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.

All K-retailers are members of K-Retailers’ Association, which guards their shared interests and develops K-retailer operations. K-Retailers’ Association with its related parties is the biggest shareholder in Kesko, and controls 7.5% of the shares and 19.5% of the votes in the company. Many individual K-retailers are also significant Kesko shareholders.

The retailers pay a net sales-based chain fee and a sales margin-based store site fee to Kesko. Store site fees account for approximately half of the fees paid by retailers to Kesko. Other cost-based fees include those related to e.g. marketing, logistics and IT.

Read more in Kesko's Annual Report