Grocery trade strategy

In the grocery trade division, Kesko will strive to maintain its position as the most customer-oriented and profitable grocery retailer in Finland and the market leader in online grocery trade. The growth strategy is based on store-specific business ideas, extensive utilisation of data and strong digital capabilities, combined with efficient processes. The division aims to further strengthen its market-leading position in Finnish foodservice.

K Group is the 2nd 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 600 of the stores also offer online grocery services, K-Markets also 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 

  • 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
  • Price competition increasing
  • Accelerating evolution of digitalisation and AI, seamless customer experience combining digital and physical
  • Climate change and environmental awareness emphasised
  • Responsibility and sustainability required from operations and concepts

Strategic objectives 

  • Making store-specific business ideas clearly visible to customers
  • The best multichannel customer experience 
  • Leading selection image and differentiation
  • Strengthening price competitiveness and price image
  • Decision-making based on data and customer insight
  • Enabling sustainable choices for customers
  • The best selection and service in the foodservice sector
  • The most attractive partner and business platform

Year 2022

Strong position in all areas of Finnish food trade

In the grocery trade division, Kesko strives to maintain its position as 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 2022, we honed store-specific business ideas and focused in particular on strengthening our price image and price competitiveness. In the foodservice business, the aim is to further strengthen our market position by offering the best selection and service. Our strong position in both consumer trade and B2B trade brings us strategically important synergies in purchasing, logistics and IT investments. Net sales and sales continued to grow in both grocery stores and foodservice. Towards the end of the year changes in customer behaviour due to the rise in food prices and growth in the share of campaign sales year-on-year had a diminishing impact on profitability. The increase in costs resulting from rising inflation also had a negative impact on profitability.

During the year, we invested € 230.5 million in our store network. Our focus is on updating existing store sites, with new stores opened mainly in growth centres.

Strategy focus heavily on customer experience and managing price image

In 2022, our strategic focus was especially on making store-specific business ideas visible, and on strengthening price competitiveness, price image, selection image and differentiation. For price image, we launched the “both premium and bargains” marketing concept, which emphasises how our stores offer both affordable private label products and offers as well as premium options. Thus customers have a one-stop shop for both affordable everyday items and treats for the weekend and special occasions. Price image management relies heavily on our private labels K-Menu and Pirkka.

Online grocery sales capacity grew

Online grocery sales have risen clearly above pre-pandemic levels. Our retailer business model enabled us to increase online service capacity further. In our view, physical stores and online sales are an effective combination. At the end of the year, more than 600 K Group grocery stores offered online services. Online grocery sales in 2022 totalled around €236 million (incl. VAT), down by 3.3%. Online accounted for 3.1% of the division’s sales.

Together with Wolt, we have created an efficient fast-delivery concept for groceries in Finland. At the end of 2022, some 160 K-Market stores around Finland offered fast deliveries, covering a range of as many as 5,000 grocery store products. Demand for fast deliveries has been strong, and they play a significant role in both the growth of the online grocery business and the sales development of the K-Market chain.

2022 PT_net_sales.svg

Read more about the year 2022 and grocery trade strategy in Kesko's 2022 Annual Report.

Market

In 2022, the Finnish grocery retail market totalled some €21-22 billion (incl. VAT), representing a growth of some 3.3% (Finnish Grocery Trade Association’s statistics). Strong food price inflation decreased volumes, but increased sales in euro terms. Consumer purchase behaviour has changed, with emphasis on price and often favouring more affordable alternatives. Sales volumes were also impacted by people returning to offices and restrictions on restaurants, events and travel being lifted. Price competition in the Finnish grocery trade market has intensified due to the strong rise in prices. Online grocery sales have continued to grow, while the relative share of online of the total market has decreased.

Market shares

Grocery trade

Kesko’s market share in Finland was 35.3% (Kesko’s own estimate based on Nielsen’s comparison group which includes discount stores and service stations as well as grocery stores). K Group is the second biggest operator in Finnish grocery trade. Our market share decreased slightly in 2022 due to the changes in our operating environment and competitors establishing more new stores. Competitors: Prisma, S-market, Alepa/Sale and Food Market Herkku, ABC (S Group), Lidl, Tokmanni, Minimani, Halpa-Halli, R-kioski and M-chain stores.

The market share for K-Citymarket’s home and speciality goods (non-food) cannot be reliably calculated. Competitors: hypermarkets, department stores, discounters, specialist chains, and online stores.

Kespro foodservice 

Pandemic-related restrictions on restaurants, events and travel, and recommendations to work from home in the first quarter of 2022 impacted the foodservice business negatively, after that the market returned to almost normal levels. Kespro’s market share is estimated to have grown and to stand at 46.1% (in the Finnish Grocery Trade Association’s Foodservice wholesale peer group). Competitors: Meira Nova, Metro-tukku, Valio Aimo, Suomen Palvelutukkurit.

 K Group's grocery trade

Number of stores

Retail and BtoB sales, VAT 0%,
€ million

 

2022

2022

Change, %

K foodstores

1,220

6,456.5

-0.2

K-Citymarket, non-food

81

607.8

-2.1

Kespro

 - 

1,067.0

21.6

Grocery trade, total

1,220

8,131.3

2.1

In addition, over 600 K-food stores offer e-commerce services to their customers.

Kespro has 14 cash & carry outlets and an online outlet.

 

Key figures

2022

2021

Net sales, € million

6,124.7

5,909.0

Operating profit, comparable, € million 

460.4

442.9

Operating margin, comparable

7.5

7.5

Return on capital employed, comparable, %

19.6

20.6

Capital expenditure, € million

257.6

122.8

Personnel, average

6,288

6,126

       

Properties

2022

2021

Owned properties, capital, € million

943

817

Owned properties, area, 1,000 m²

598

550

Leased properties, area, 1,000 m²

1,434

1,480

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