Thanks, I had missed that 56m. So that’s the food service share at those stations, and the 100m includes car accessories and washes. However, it explains a significant part of Kespro’s growth and partly slows down retail sales in the comparison figures; even though they are not large figures at the group level, they now represent a significant portion of those one percent changes.
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When talking about Kesko’s logistics, the product range differs at the warehouse level for K-stores and Horeca. Neste retailers have long been cross-ordering goods from Kespro’s Horeca selection and K-stores’ selection. It’s a different matter how these are defined in accounting, but logically, internal invoicing works and goods purchased from Kespro are reflected in Kespro’s sales figures.
It can be stated with considerable certainty that the matter is not quite that straightforward. Of course, this trickery does not have much impact on Kesko’s figures.
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Does Keskola have automated picking in its warehouses? Didn’t S-Group automate its entire warehouse, one would think that this too already has a significant impact on margins.
Oops, I accidentally deleted my own comment when I tried to clarify its message. So I wrote that Kesko’s new logistics center is being completed in Hyvinkää in phases between 2025-2030, and it would primarily serve the needs of Onninen and car retail, and that it would be fully automated.
So, to clarify, that warehouse will be fully automated, not the entire logistics center. In Hakkila, Vantaa, which serves the grocery retail side, there is some automated technology, but not to the same extent as in the new one.
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It’s the same in Onninen’s “old” warehouse; about 60% of the line items probably go through automated picking. Not all products in technical wholesale can ever go through automated picking, due to size, weight, volume, etc., or even profitability.
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Business is what pays off
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In economics, it is thought that exceptional profits attract new companies to the market, which increases competition and lowers profits to a normal level. The Finnish grocery trade is somewhat an exception to the rule. Why?
The market is exceptionally concentrated. The barrier to entry is high, and the size of the K Group and S Group already gives them very strong cost and efficiency advantages from the outset.
Grocery retail is a business of large volumes and small margins.
The strong brand and reputation of the S Group and Kesko also strengthen their competitive advantage. This is also why they are difficult to challenge – especially for a completely new player. Just the current store network of the S Group and K Group gives them an advantage. The best store locations are fundamentally reserved, and new ones are created limitedly. Zoning is a slow process.
I would also count the advantage brought by the so-called learning curve as a competitive advantage. Over the years, companies have accumulated expertise that is difficult to copy quickly. For example, organizing functional logistics: theoretically easy, but often not in practice. Or customer understanding. It took a long time for Lidl to understand that small checkouts do not work in Finland.
None of this means that Kesko and the S Group cannot be challenged. It’s just more difficult than average. And not very appealing. The Finnish daily consumer goods market is too small for most to compete fiercely.
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In that regard, a somewhat misleading story concerning Kesko, as Kesko operates mainly as a wholesaler in the food sector. The operating costs of the stores are on the shoulders of the merchants. Against this background, one could assume the margins to be even higher than this.
I’m not sure if I fully grasped what you’re getting at, but I’ll content myself with stating the following on a general level:
The operating profit percentage in the Yle article does not include the merchants’ profits. K-merchants cannot achieve a better operating profit percentage level in their own businesses than the group in the big picture. In addition to merchandise sales, Kesko receives other income, such as a portion of the merchants’ margins, which is essentially “free” in the sense that its own resources are not consumed in the same way, as you mentioned. Of course, Kesko does use resources for the benefit of merchants nationwide, but one way or another, it gets its own back, for example, from IT fees and marketing fees that merchants pay. However, both partners (Kesko and the merchants) need each other.
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Weekend reading tip:
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Neither at Kesko nor at Inex (S Group) have manual order pickers completely disappeared yet. At least at Inex, they have decreased, though. Kesko seems to be lagging a bit behind.
Are you referring to grocery picking or technical wholesale picking, or what are you speculating about?
In the latter case, for example, medium-voltage transformers, cooling equipment, or steel pipes, etc., are probably not picked anywhere by an automated system.
More concrete facts on the matter and less emotional assessment, at least for this forum, please!
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Why not, if they are on pallets or otherwise collectable/automatically processable in modular units? If not, then of course not.
It seems to still be the case, as per my own experience from about 15 years ago, that automation progresses by product category. The collection of sales units in groceries can also be done automatically, but it seems to still be rare, e.g., due to reliability issues. Additionally, at least in the food sector, especially in the fresh produce (HeVi) side, visual quality control is still needed. Pallet by pallet and box by box, on the other hand, has been collected automatically for decades.
Edit: This is only loosely related to Kesko, if at all.
The schedules finally aligned, and we got Sami Kiiski, Kesko’s Divisional Director for Building and Technical Trade, for an inderesTV interview. 
Topics:
00:00 Introduction
03:19 Geographical expansion
04:27 Onninen and international growth
06:17 “The market has been very difficult”
07:40 Acquisitions in practice
13:45 K-Rauta’s and Onninen’s growth opportunities in Finland
17:24 Onnela – Kesko’s largest construction project in history
18:20 “Onnelas” and investments in other markets
19:57 Digitalization and multichannel sales
21:05 Factors improving profitability
24:37 “I believe this will become Kesko’s largest division”
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Kesko’s acquisitions, totaling 1.3 billion euros in turnover reported for 2023-2024, with some occurring at the beginning of the current year. Not many Finnish companies can boast such growth investments. Kesko is preparing well for market recovery, provided there is profitability and the integrations of the acquired businesses are completed.
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Kesko is the largest operator in Finland in terms of security of supply, covering everything from foodstuffs to hardware products. If we consider that Europe’s rearmament, which is now beginning, is underway, then Kesko also benefits from the mandatory security stockpiling of equipment and foodstuffs. That’s true, but I don’t want to create unnecessary fear. Everything will likely happen according to plans that have been known for a long time.
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An interesting stock market day for Kesko. Is it that when “distress” comes, people turn to Kesko, or is it that there are now clear indications of recovery in the construction sector? Even the revitalization of the housing market benefits Kesko. It doesn’t necessarily require a bathroom or sauna renovation, but rather a slight sprucing up of the apartment, i.e., decorating. This is a clear positive, because these interior decoration items can be found at K-Rauta at the same time when renovations are being considered. So even if a renovation isn’t done, interior decoration items surprisingly get picked up.
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In June, Kesko announced a matter that could mean significant additional sales as reconstruction inevitably approaches. Onninen has also reported good growth in Poland.
“Kesko opened a Ukrainian-language construction e-commerce store in Poland – ‘One day Russia’s war of aggression will end’”
The majority of e-commerce orders remain in Poland, but deliveries have already been made to Ukraine. According to surveys by the Federation of Finnish Enterprises and EastCham, Finnish companies are willing to participate in the reconstruction of Ukraine.
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That Ukrainian-language online store was indeed announced in June, but the year was 2023. Some language version of an online store is, in my opinion, pretty much a non-story.
And unfortunately, we are very far from a situation where Ukraine would begin to be massively rebuilt. And even further from a situation where Kesko would be a significant player in that process.
The Polish business certainly looks good. With or without a Ukrainian-language online store.
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Oops, wrong year, but Onninen is indeed doing well. The Ukrainian-language online store will surely promote trade. Typically, in the construction industry, people have a slightly shorter education and weaker language skills, making it easy to buy from a website in their own language. This way, Kesko/Onninen makes it easier for Ukrainians in their purchasing decisions. Currently, Ukrainians are trying to repair extensively, and Ukraine’s own production has been largely harnessed for the war industry, so civilian goods are likely sought extensively from the Polish side.
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