Puuilo’s golden ages are over (and let history judge me for this provocatively bold headline)
I have been riding along with Puuilo for about two years. Now the time has come to jump off – Puuilo has been a star in the retail sector in many different ways. I have given the most praise to, and valued most in Puuilo, what I consider the most important KPI in retail: Comp. Growth, which has guaranteed a long-lasting, exceptional +17% earnings level. I have preached about Comp Growth many times, at least in the Tokmanni thread, as it is the foundation of profit-making. From a profitability perspective, it is highly significant whether growth comes with the same “old” rent, staff, store manager and administration, heating, electricity, security, POS system, store fixtures, central logistics (packing 3 products for the same store versus 3 products for different stores), and internal logistics (taking those 3 socket wrenches to the sales location of 3 different stores individually versus 3 products at once to one sales location in one store). Not to mention how comp. growth improves the most important KPIs of inventory turnover and marketing on an almost exponential curve…
According to my analysis, Puuilo is now in a situation where the clearly most profitable growth is starting to be behind it. A few short justifications:
• Cannibalization of new store openings
I quickly calculated that about 70% of Puuilo’s current and future store openings involve a significant cannibalization effect. Hollola, Holma, Lentola, Vaajakoski… When opening in the same market area less than a 20-minute drive from the previous store, it categorically leads to 15-25% cannibalization in one’s own competing “old store.” Why? I hope that you forum members would think about your own Puuilo behavior. Puuilo doesn’t need to be in your suburb (like a K-Market); you can easily drive a short distance to a Puuilo. On the other hand, Puuilo is not such an excellent store in terms of experience, price level, or selection that you would always be ready to drive 40–60 minutes just for Puuilo. Therefore, one can conclude that the average catchment area driving time for Puuilo could typically be around 20 minutes. The Lahti region could be a good case example of this. Puuilo Renkomäki’s catchment area has practically been the whole of Lahti – an internal monopoly. In a year, there will also be Puuilo stores in Hollola and Holma. How many of Renkomäki Puuilo’s current customers have come from the future catchment areas of the Hollola and Holma stores?
Will Puuilo’s sales in the Lahti region double with 2 new stores over the next year? Likely! Will Puuilo’s expenses in the Lahti region triple over the next year? Certainly!
…that comp growth… If any of the forum members know the store manager of Renkomäki in Lahti, you should ask him next time over a Friday sausage what his plan is to cut his own store’s costs by 20-30% so that relative profitability remains the same?
Expansion potential
Puuilo seems to have just over 50 stores now. In Finland, around 40-50 stores is quite a nice distance in a growth strategy regarding growth. That’s likely where the expansion sweet spot lies: 80% of the postcodes with the highest purchasing power within one’s own catchment area, a well-known brand throughout Finland, and logistics scaling. Tell me, where are those next 20 Puuilo store locations where
A) there is a low rent level (part of the Puuilo concept)
B) they are located in postcode areas that belong to the 80% with the highest purchasing power in Finland
C) they do not cannibalize existing Puuilo stores
Tokmanni’s disease can be contagious for Puuilo too. It’s worth noting that the symptoms start gradually…
Competitors
Puuilo has shown its strong competitiveness against Tokmanni. There is no doubt about that. But competitors Rusta, Jula, and Biltema have only just gained momentum in their expansion. Puuilo’s true competitiveness against these chains has not yet been measured. We will see that over the next 2 years. Puuilo may be a winner, but it is also likely that as challengers grow into its territory, the competitive situation will tighten and be reflected in a slowdown of growth rate/profitability.
The slump in construction & housing trade continues
It has become certain that the weakness in the construction, renovation, and DIY categories will continue until at least early 2027. Puuilo’s shopping basket includes building supplies, tools, HVAC and electrical supplies, car accessories, garden, pet products, and household goods. The company is therefore quite strongly tied to home, renovation, and leisure consumption, even though it is not a pure hardware store. The Confederation of Finnish Construction Industries RT estimated in March 2026 that residential building starts will remain at only about 15,000 apartments this year and next, clearly below the long-term need. Nordea, for its part, pushed back the timing of growth in the housing market again. There is no “market growth tailwind” coming for the most important categories for the next year.
Strait of Hormuz & inflation
Even if the Strait of Hormuz were to open on Monday, the already realized 5.5-8 mb/d “oil deficit” from the markets is historic. The effects will come with a delay, but it is certain that the biggest strategic external sufferers of the Persian Gulf oil shortage/inflation are Asia and Europe. When Puuilo’s production in Asia becomes more expensive and the Finnish consumer’s purchasing power is inflated again, the combination is not a treat for Puuilo. Of course, if the situation escalates and we end up in a genuine oil shortage/forced remote work/flight cancellations etc… “forced staying-at-home” and the cottage boom could have a momentary positive effect on the DIY market. But the other disadvantages of this horror scenario would outweigh the benefits of DIY demand.
Concept development phase
Puuilo’s concept developed strongly between 2000 and 2020. For the last 5 years, the concept has hardly developed (store concept, selection, marketing, etc.). In short: 2000-2020 the concept was developed. 20-25 the concept was refined and expanded. This is exactly the right strategic development of a retail chain by management. But unfortunately, it also has implications. The “easiest development” has now been done. You don’t easily and cheaply add new product areas to current stores. Selection development in the future will be more about replacing, not adding. The PL (Private Label) range is being developed, yes, but even there, the easiest product areas are already within the PL sphere. The 80/20 range curve works in every store. The “weakest part” of the selection that remains without PL is not the most delicious part of the range in terms of volume or margins… in other words, management has done a good job and developed the concept and fine-tuned it wonderfully to a 17% earnings level. The next development steps are no longer fine-tuning but systematically more challenging, such as efficient multi-channeling with robot warehouses or localizing the concept to another country…
@Juippi1, @enska and @Flouride: Unfortunately, I do not agree with you. State construction stimulus will go, if it goes anywhere, mostly into the pockets of Onninen and Kesko. And I already wrote about the effects of new stores above…
As I started, in a couple of years we will see if my thinking was correct. 
And note! There is still potential for Puuilo in Sweden. However, there are still many uncertainties regarding its realization. At best, a new buffer will be found in Sweden, where growth more profitable than in Finland replaces the “weakened profitability growth phase” in Finland.
