Retail sector - it's trade that pays off

Stocks
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This would be a truly large-scale arrangement in terms of its size. Europris seems to have its hands full at the moment with the integration of ÖoB. They stated in the Q2 report that they first intend to raise ÖoB’s profitability to 5% and then continue growing the concept in Sweden.

Additionally, Tokmanni’s Dollarstore acquisition slightly complicated this dynamic. Would it be wise to operate competing concepts in the same country? The pricing of the deal should take into account that some (and probably several) locations would inevitably be closed.

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@Arttu_Heikura has provided a good overview of the grocery trade. :slight_smile:

In the attached review, we have examined the recent development of market shares in the Finnish grocery trade. The market shares of Kesko, which we cover, have been on the decline, driven by the recent weak economic environment, but there have been signs from the market of Kesko’s improved potential to stop the decline in market share. In addition to Kesko, the statistics obtained from the Finnish Grocery Trade Association (PTY ry) include Tokmanni among the companies we follow.

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Tokmanni - Mahdollisuuksien valintatalo?
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Motonet continues its growth in Sweden:

During the spring, summer, and early autumn, the chain will open new stores in Gävle, Jönköping, Linköping, Västerås, and Umeå.

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28

I’ll just post this here in case anyone happens to be interested. In the States, “strip malls” are drawing customers away from traditional shopping centers. This means smaller shops are lined up next to a large parking lot without any shared indoor space or other shopping center services. You can drive almost right to the door, and apparently, rents in these are lower than in traditional malls because there’s no common space to pay for.

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29

An article in Helsingin Sanomat about “temuttajat”, or Finnish consumers who order items from the Chinese online store Temu. Behind a paywall: Temuttaja ostaa kritiikistä huolimatta – Temu nousi Suomessa hurjaan suosioon | HS.fi

A few quotes: According to a study published in May by the logistics company Postnord, Temu has surged to second place among the most popular online stores in Finland, right after Zalando. Including all age groups (18–79-year-olds), 24 percent have placed orders from Temu. Among those over 50, it is already the most popular.

Like its competitors, the company is able to drive down prices by bypassing customs and taxation in consumer destination countries, such as the EU area, which many local operators pay.

Then some reflections from one of the interviewees, Pirjo Metiäinen: unfortunately, the average consumer doesn’t really seem to have much information about the difference between, for example, a product imported by Tokmanni compared to one ordered from Temu’s online store, except that the price is many times cheaper in the latter.

“People seem to have the idea that of the products shipped to Finland, some come from better places and some from these bad factories. I personally believe that in reality, everything comes in the same container imports, regardless of the store.”

According to Metiäinen, the same reasoning also applies to concerns about the use of child and exploitative labor. Even if the products sold on Temu were manufactured in factories with poor working conditions, she thinks that is the case almost everywhere.

“There’s a lot of talk about the use of child labor and so on, but few can specify it in more detail…”

Metiäinen emphasizes that she thinks it’s positive that working conditions are being investigated. The journey to getting conditions in low-cost production factories to, say, Finland’s level is just a very long one, she reflects.

“I don’t know why Temu specifically would be any more unethical than many other stores.”

“Of course, it would be sensible if one could try to influence things through purchasing decisions. It’s just pointless for a low-income person to even try going shopping at a Marimekko store. There’s that side to it too.”

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30

This could have the makings of a feel-good news story, as Laihia, known for its frugality, gets a new Halpa-Halli. Of course, there is already a Halpa-Halli in the town, but in the future, it will be in a nicer store property than before. As I recall, Halpa-Halli’s development hasn’t been particularly good in recent years, and this year they have had to carry out change negotiations. As someone who regularly shops at the chain’s stores, I hope this family business continues for a long time, even though the market is otherwise consolidating.

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31

Here is a summary of the situation for companies in the retail sector just before the start of the sector’s earnings season.

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32

@Arhi_Kivilahti has written a piece about the state of the grocery trade; below is the tweet, and below the tweet is the link to the actual article, which is not behind a paywall. :slight_smile:

https://x.com/ArhiKivilahti/status/1850441229319684505

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Here are Arttu’s and Rauli’s comments on the retail sector’s somewhat sluggish performance in September.

The target market for Kesko, Tokmanni, and Lindex’s Stockmann, i.e., the revenue of department store and hypermarket chains, fell by one percent in September.

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@Arhi_Kivilahti has been writing about Normal. (a Danish discount store chain).

https://x.com/ArhiKivilahti/status/1858764592916169023
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https://x.com/ArhiKivilahti/status/1858764595436888384
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Here is also a link to the article itself. :slight_smile:

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@Arhi_Kivilahti and Christmas season :slight_smile:

https://x.com/ArhiKivilahti/status/1861659544658546797
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36

Is there a graph of toy store sales from the last 20 years anywhere? I’ve personally noticed that there are fewer actual toy stores and the toy sections in regular stores have shrunk year by year.

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For three decades now, it has been repeated that the annual turnover of the toy industry in Finland is around 200 million euros. Surely that figure gives at least some direction.

Here’s an article from six years ago where that figure appears:

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38

So, in a way, it atrophies at the rate of inflation because revenue doesn’t grow even though toys get more expensive?

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Arttu and Rauli have reviewed the October performance of department store and hypermarket chains, so this should interest at least the owners of Kesko, Tokmanni, and Lindex. :slight_smile:

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Inderesin kahvihuone (Osa 9)
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I don’t have statistics, but your question brought to mind the circular economy and product durability. When I was little, I “inherited” some toys, but certainly most were bought new from a store. However, quality toys are durable and preferably ones that aren’t just fleeting fads. For example, Lego bricks last from generation to generation and just accumulate and accumulate. :slightly_smiling_face:

The same phenomenon applies to many other product categories, such as furniture. The more durable goods are acquired and the more sensibly unnecessary items circulate to new users, the better.

For this reason, I am somewhat skeptical about the growth of goods trade in general in the long run.

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Here is @Arhi_Kivilahti’s tweet thread about Clasu’s vibe. :slight_smile:

https://x.com/ArhiKivilahti/status/1864196695862501772
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@Arhi_Kivilahti has written about the Swedish grocery market. Below the tweet is a link to the article. :slight_smile:

https://x.com/ArhiKivilahti/status/1881593147396063340

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44

I’m looking for new companies by browsing companies included in indices. I noticed that the Polish company Allegro.eu is included in an index like the Morningstar Global Wide Moat. Allegro is Poland’s most popular e-commerce platform. I haven’t found any discussion about the company here on the forum yet. Does it have the potential to grow into a major player in Eastern Europe?

Q3 2024:
https://about.allegro.eu/system/files-encrypted/nasdaq_kms/assets/2024/11/19/10-33-20/Results%20presentation.pdf

Company presentation slides from spring 2024:
https://about.allegro.eu/static-files/2dcea26c-8aa5-49e8-8b77-cf73b3da57e3

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@Arttu_Heikura and @Rauli_Juva discussed the retail sector’s performance in December.

The target market for Kesko’s Grocery Trade, Tokmanni, and Lindex’s Stockmann division, i.e., the revenue of department store and hypermarket chains, grew by 2% in December, which sealed a retail year that suffered from weak consumer demand.

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