Kesko sales decline continues

Date : 10 February 2015

Kesko, Finland’s second largest grocery retailer, has reported a 2.6% decline in total sales to €9,071m. Its food business performed slightly better, reporting a 1.6% decline in net sales to €4,316m.

Russia performs despite headwinds

In Russia, food net sales increased by 46.7% to €103m despite, ‘the slowdown of the economy and the weakening of the rouble’. Kesko currently has three new Russian food stores under construction.

New strategy to be presented in spring 2015

In its results announcement, the retailer advised that work is ongoing to develop its strategy, which will be ready in spring 2015. As part of this, Kesko will look to ‘strengthen sales and competitiveness, reduce the cost level through revised functions and develop digital trade and services’.

Kesko ‘to re-define the price-quality ratio’

In a separate announcement, Kesko revealed plans‘to re-define the price-quality ratio’ in Finland. The move follows an extensive survey of 500,000 Finns, the result of which is that ‘food should be more affordable and of higher quality than before’. Since this time, Kesko has permanently lowered the prices of 400 products.

Tomorrow, it plans to take this a step further with the launch of a €10 meal deal to feed a family of four, which has been developed and tested by experts. Further initiatives are anticipated.

Supports local sourcing

Additionally, the retailer is to arrange six Lähiruokatreffit events in this quarter throughout Finland. Here, 500 entrepreneurs will be invited to attend and present their products to Kesko retailers who can select products for sale in-store.

Our view

Kesko’s underperformance suggests that a new strategy would be welcomed, especially as competitor S Group’s food business grew by 1.1% in 2014 and Lidl continues to represent a small but growing share of the Finnish grocery market.

Meanwhile, Kesko’s move ‘to re-define the price-quality ratio’ demonstrates it is able to put the customer at the heart of its strategy, adapting to meet changing needs and priorities accordingly.

Supporting local sourcing is a characteristic of the Finnish grocery market as a whole.

Want to explore a Kesko supermarket? Check out our brand new store visit report.

Harriet Cohen (Senior Retail Analyst)
This article was written by Harriet Cohen who specialises in grocery retailing in Northern and Central Europe. Harriet regularly travels to markets in the region, engaging with retailers and manufacturers. Harriet also brings five years of experience working for UK retailers to IGD. To learn more about how IGD's research can benefit your business further, please get in touch.