Grocery trade strategy

K Group is the second biggest grocery trade operator in Finland. Some 900 independent K-retailers ensure good customer experiences for 1.2 million daily customers at K Group’s 1,200 grocery stores. Over 700 of the stores also offer online grocery services, also with fast deliveries in collaboration with Wolt. Our grocery store chains are K-Citymarket, K-Supermarket, K-Market and Neste K. Kespro is the leading foodservice wholesale provider in Finland.

Strategic focus areas

Our strategic objective is to maintain our position as the most customer-oriented and profitable grocery retailer in Finland, and the market leader in online grocery.

Business environment 

• Price competition increasing

• Polarisation and significant changes in population structure

• Increased importance of hybrid consumption and individuality

• Blending the roles of stores and restaurants: trends in eating out and popularity of takeaway meals

• Accelerating evolution of digitalisation and AI, seamless customer experience combining digital and physical

• Responsibility and sustainability required from operations and concepts

• Climate change and environmental awareness emphasised

Strategic objectives 

• Strengthening our price competitiveness and price image

• Constantly updating store-specific business ideas to match the operating environment

• The best multichannel customer experience

• Leading quality and selection image and differentiation

  Decision-making based on data and customer insight

• Enabling sustainable choices for customers

• The best selection and service in the foodservice business

• The most attractive partner and business platform

Year 2023

Our strong position in Finnish food trade yields good results

In the grocery trade division, Kesko’s goal is to be the most customer-oriented and profitable food trade operator in Finnish B2C and B2B trade, and the market leader in online grocery trade. The growth strategy is based on store-specific business ideas, data and customer insight driven decision-making and strong digital capabilities, as well as efficient processes.

In the foodservice business, our aim is to further strengthen our market position by offering the best selection in the business and a comprehensive service concept. Kespro’s business model is based on strong partnerships with the customers, with both Kespro and the customers benefiting from business development.

Our strong position in both B2C and B2B trade creates important strategic synergies in purchasing, logistics, common operations and IT investments.

In 2023, net sales and sales continued to grow in both the grocery store business and the foodservice business. In the grocery stores, campaigns and other marketing efforts saw customer flows and sales increase, although K Group’s market share decreased slightly. Kespro’s sales grew forcefully and outperformed the market. Profitability in grocery trade was dampened by the impact rising prices had on consumer behaviour as well as the growing share of campaign sales year-on-year. Profitability was also weakened by the rise in costs related to inflation.

Strategy focus heavily on customer experience and managing price image

We introduce new products and services to our grocery stores based on customer data and local preferences.

The rise in food prices, which began in 2022, accelerated in early 2023, affecting consumer behaviour. Price continued to be a big factor for consumers, but demand for premium products recovered somewhat in the second year-half.

In 2023, we continued to focus on store-specific business ideas and differentiation, as well as on improving our price competitiveness and price image.

When it comes to managing price image, our private labels – K-Menu and Pirkka – play a key role alongside campaigns and offers. The private labels accounted for over 20% of retail sales in grocery trade. The Pirkka range offers a good price-to-quality ratio, and its products have been successful in many comparisons and competitions. It also enables many smaller producers to get their products on store shelves across the country. 

Notable investments in store sites

During the year, we invested €251.2 million in our store site network. We will continue to update existing stores and will open several new grocery stores in Finnish growth centres in upcoming years. In line with our growth strategy, we will be investing some €200–250 million annually in developing our network of store sites.

Sales of Kesko’s K-Citymarket hypermarket stores in particular have been growing considerably, and the hypermarkets have a crucial impact on the profitability and market share of Kesko’s grocery store business. Over the next few years, we will build new K-Citymarket stores in Helsinki, Vantaa, Lahti, Kuopio and Lempäälä near Tampere. We also acquired the Espoontori shopping centre in Espoo, and plan to build a big store there. We will also be updating 13 K-Citymarket stores in 2024.

Capacity grew in online grocery

Online grocery sales have risen to a new level in recent years. Our retailer business model has enabled us to increase online service capacity further. In our view, combining physical stores with online services is an effective way to do business. At the end of the year, over 730 K Group grocery stores offered online services. Online grocery sales in 2023 grew by 5.7% and totalled around €249 million (€236 million, incl. VAT). Online accounted for some 3.2% of the division’s sales. 

The fastest growing area in online grocery is the express delivery concept we offer together with Wolt. At the end of 2023, some 300 K Group grocery stores around Finland offered express  deliveries. Express deliveries play a significant role in the overall growth of online grocery and especially sales for the K-Market chain.

K-retailer entrepreneurs as our competitive advantage

Kesko’s grocery store business relies heavily on retailer entrepreneurs. There are in total some 900 K-retailers in grocery trade. K-retailers handle selections, quality, customer service, staff and competencies, and business performance in their stores, based on individual store-specific business ideas. Data-driven management is a central part of store operations, and we utilise customer data in supporting the retailers in defining their store-specific business ideas. 

Kespro creates services based on customer insight

Kespro is Kesko’s own business, and the leading foodservice wholesale company in Finland. Kespro accounts for 18% of Kesko’s grocery trade business, with net sales of €1,154.9 million and an operating profit of €75.0 million. Kespro’s customers include restaurants, hotels, cafes, service stations, public institutions, K Group stores and retailers. Kespro’s competitive advantages include its extensive high-quality selections, wide network, and reliable digital and personal services.

Read more in Kesko's Annual Report.