Building and technical trade strategy

The strategic objective for the building and technical trade division is to establish itself as an even stronger operator in Northern Europe. The coronavirus epidemic began to have a significant impact on our operations from mid-March 2020 onwards, but overall the impact on sales for the building and technical trade division has been moderate so far.

We continue the determined execution of our growth strategy, but for now our focus is on managing the crisis brought on by the coronavirus epidemic. Information on the impacts of the epidemic on Kesko’s businesses can be found under the Operating environment section.

 

STRATEGIC OBJECTIVE

WHAT WE ARE DOING

Country focus, with country-specific strategic actions

 

  • Finland: Focusing on fully utilising the potential provided by our market-leading position and constantly improving customer experience by expanding Onninen's services and focusing on implementing storespecific business ideas in K-Rauta; actively developing multichannel business in the leisure trade
  • Norway: Seeking growth in sales and profitability by developing Byggmakker's business
  • Sweden: Continuing measures to improve profitability; utilising synergies from acquisitions and serving our three customer segments comprehensively
  • The Baltics and Belarus: Focusing on growing and redesigning the store network
  • Poland: Systematically developing the business

Serving three different customer segments according to their specific customer needs

  • Continuing digital channel development by customer segment
  • Striving for the best customer experience in all channels

Seeking synergies

  • Actively seeking synergies within operating countries in e.g. logistics and support functions, and between the countries in e.g. in sourcing, digital services and concept development
  • Utilising synergies obtained from integrating acquisitions

Organic growth and profitability improvement

  • Continuing systematic actions to support growth and profitability improvement
  • Increasing the role of our own brand products

Targeted acquisitions

  • Continuing acquisitions in selected markets and segments

Business environment

Megatrends affecting building and technical trade

  • Market consolidation
  • Outsourcing of construction to professionals
  • Growth in renovation building
  • Non-traditional players entering the market
  • Digital becoming increasingly important for the customer journey

Comparable figures, excl. speciality goods trade

 

The building and technical trade strategy review can be read in Kesko's 2019 Annual Report

The building and home improvement trade market by country, along with the improvement from the previous year (retail trade, VAT 0%), market shares and main competitors

Market area  

Market size and change

Market share

Main competitors

Finland 

€3.2 billion (-0,6%), (RaSi ry, Finnish Hardware Association, DIY)

43% (RaSi ry, Finnish Hardware Association, DIY)

STARK, S Group, Bauhaus

Sweden

€4.8 billion (+3.0%), (Byggmaterialhandlarna and Kesko’s own estimate)

8%*

Beijer, XL Bygg, Optimera, Woody, Bauhaus, Byggmax, Bolist

Norway

€5.0 billion (+1.0%), (Virke, Kesko's own estimate)

10%*

Optimera, Mestergruppen, Coop, Maxbo

Estonia

€0.6 billion (+5.5%)**

19%**

Espak, Bauhof

Latvia 

€0.6 billion (+0.9%)**

17%**

Depo, Kursi

Lithuania

€1.1 billion (+5.9%)**

36%**

Ermitazas, Moki-Vezi, Depo

Belarus  

€1.4 billion (+9.1%)*

11%*

Mile, Materik, Praktik

* Kesko’s own estimate

**K-Senukai’s selection, Kesko’s own estimate

 

Onninen’s market by country, along with the improvement from the previous year (retail trade, VAT 0%), market shares and main competitors

Market area

Market size and change

Market share

Main competitors

Finland

€2.2 billion (+1.1%), (STK, Talteka)

38% (STK, Talteka)

Dahl, Ahlsell, SLO, Rexel

Sweden

€2.1 billion (+3.1%), (SEG, electrotechnical trade)

5% (SEG)

Dahl, Ahlsell, Elektroskandia, Rexel

Norway

€1.4 billion (+3.0%), (EFO, electrotechnical trade)

17% (EFO) 

Elektroskandia, Solar, Ahlsell, Berggård Amundsen, Otra

Poland

€5.1 billion (+3.0%)*

5%*

GC Group (BIMs, HTI, Hydrosolar), Grudnik, TIM, Kaczmarek, Alfa Elektro, Grodno

Estonia

€0.4 billion (+8.6%)*

11%*

FEB (Ahlsell), W.E.G (Würth), Dahl, Esvika, SLO

Latvia

€0.4 billion (+11.5%)*

5%*

Sanistal, EVA-SAT, Energokomplekss, SLO

Lithuania

€0.6 billion (+5.4%)*

3%*

Sanistal, Dahlgera, Elektrobalt, SLO

* Kesko’s own estimate

 

The leisure goods market in Finland, along with the improvement from the previous year (retail trade, VAT 0%), market shares and main competitors

Market

Market size and change

Market share

Main competitors

The sports trade  

Around €0.9 billion (-0.3%), (Textile and Fashion Suppliers and Retailers Finland TMA and Kesko’s own estimate)

Intersport, Budget Sport, The Athlete's Foot ja Kesport
28%* 

XXL, Stadium,  hypermarkets and online stores

The shoe trade

Around €0.3 billion (-2.6%), (Textile and Fashion Suppliers and Retailers Finland TMA and Kesko’s own estimate)

Kookenkä and Kenkäexpertti
10%*

Other speciality stores, department stores, hypermarkets, sports stores and online stores

* Kesko’s own estimate

  Number Sales (pro forma) (VAT 0%)*,
€ million
Retail sales and number of stores 2019 2018   2019 Change, %
K-Rauta and Rautia 131 135   1,075.1 1.9
Rautakesko B2B Service  -  -   255.5 -2.4
Onninen, Finland 57 56   926.6 3.3
Leisure trade, Finland 107 109   283.5 -0.2
Finland, total 295 300   2,540.7 1.7
K-Rauta, Sweden 18 18   164.3 -6.3
K-Bygg, Sweden 34 -   204.4 -2.3
Onninen, Sweden - 13   99.4 17.7
Byggmakker, Norway 63 65   485.6 -6.6
Onninen, Norway 18 25   258.1 -5.1
Kesko Senukai, Baltic countries 42 40   723.1 12.6
Onninen, Baltic countries 17 15   85.4 10.5
Machinery trade, Baltic countries  -  -   131.4 -10.4
OMA, Belarus 17 17   146.6 14.4
Onninen, Poland 36 36   283.3 -0.8
Other countries, total 245 229   2,536.5 1.6
Building and technical trade, total  540 529   5,077.2 1.7

In addition, building and technical trade stores offer e-commerce services to their customers.

Two Onninen stores in Finland and one Onninen store in Sweden operate in the same store premises with K-Rauta.  
   

           
Key figures Rolling
12 mts
6/2020
2019 2018
Net sales, € million     4,429.1 4,331.1 4,102.6
Building and technical trade excl. speciality goods trade     - 3,984.5 3,728.0
Speciality goods trade     - 346.7 374.6
Operating profit, comparable, € million     175.6 142.8 126.8
Building and technical trade excl. speciality goods trade     - 133.3 117.5
Speciality goods trade     - 9.5 9.3
Operating margin, comparable, %     4.0 3.3 3.1
Building and technical trade excl. speciality goods trade     - 3.3 3.2
Speciality goods trade     - 2.7 2.5
Return on capital employed, comparable, %, rolling 12 months     8.8 7.4 7.9
Capital expenditure, € million     80.5 332.7 200.7
Personnel, average     - 12,630 11,668
 
Properties   2019 2018
Owned properties, capital, € million     222 169
Owned properties, area, 1,000 m²     298 235
Leased properties, lease liabilities, € million     758 748
Leased properties, area, 1,000 m²     1,253 1,169
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