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Store sites

The store site network is a strategic competitive factor for the K-Group. It provides opportunities for business operations to develop and sales and customer satisfaction to increase.

The store sites are divided into four categories: strategic properties, standard properties, realisation properties and development properties.

Strategic properties:
  • Kesko prefers to own them
  • In 2015, strategic properties accounted for 64% of all store sites
  • They involve important business interests, such as large retail stores and properties that can be developed into large stores
Standard properties:
  • Kesko owns them but they can be sold and leased back
  • In 2015, standard properties accounted for 26% of all store sites
Realisation properties:
  • Premises for which Kesko has no further business use
Development properties:
  • Sites and properties in need of further development for their intended use

Store sites in figures

Breakdown of owned
properties

Owned properties
by region*

* Book value

Owned properties by division*

* Book value

Capital expenditure

In 2015, Kesko’s capital expenditure in store sites totalled €166.7 (142.7) million

In view of Kesko’s growth, key capital expenditure comprises:

  • Grocery trade properties in the key growth centres in Finland
  • Accurately targeted capital expenditure in store sites in the grocery trade and building and home improvement trade in Russia

Kesko makes capital expenditure only in properties needed for its own or supporting business operations.

At the end of 2015, the most important store sites under construction were:

  • The K-citymarket shopping centre in Itäkeskus, Helsinki 
  • K-citymarket in Sastamala, new K-supermarkets in Tampere, Niipperi and Niittykumpu in Espoo, Lappeenranta, Haapajärvi and Lauttasaari, Töölö and Kalasatama in Helsinki
  • Two new food stores under construction in St. Petersburg in Russia
  • K-rauta stores to Kokkola and Lahti, and a Senukai store to Vilnius

Kesko estimates that its capital expenditure excluding business acquisitions will total approximately €750 million in 2015–2017. In accordance with Kesko’s strategy, capital expenditure in the K-supermarket and K-market chains will increase significantly in the next few years. A completely new store concept is being tested in the grocery retailing market.

Kesko’s real estate arrangement

Kesko Corporation, AMF Pensionsförsäkring AB and Ilmarinen Mutual Pension Insurance Company set up a joint venture called Ankkurikadun Kiinteistöt Oy in June 2015. The joint venture owns, manages and develops store sites primarily used by Kesko Group.

A total of 37 store sites were acquired by Ankkurikadun Kiinteistöt Oy over the course of 2015.

Owned store sites by region, m²

Owned store sites by division, m²

Leased store sites by region, m²

Leased store sites by division, m²

Owned store sites and properties
Book value by region, € million20152014
Finland662988
Other Nordic countries5182
Baltic countries and Belarus3343
Russia361317
Total1,1071,430
Area by region, 1,000 m220152014
Finland540770
Other Nordic countries66117
Baltic countries and Belarus109113
Russia191164
Total9061,164
Book value by division, € million20152014
Grocery trade639880
Home improvement and speciality goods trade357441
Car trade6057
Others5152
Total1,1071,430
Area by division, 1,000 m220152014
Grocery trade410586
Home improvement and speciality goods trade404474
Car trade4747
Others4557
Total9061,164
Leased store sites and properties
Area by region, 1,000 m220152014
Finland2,2742,328
Other Nordic countries180146
Baltic countries and Belarus470459
Russia2725
Total2,9512,958
Lease liabilities by region, € million20152014
Finland2,3482,038
Other Nordic countries4842
Baltic countries and Belarus185175
Russia1320
Total2,5942,276
Lease liabilities, € million20152014
No later than one year347343
Later than one year and no later than five years1,1391,065
Later than five years1,108868
Total2,5942,276
New services at store sites

When designing new grocery stores, the premises needed for online sales are taken into account from the very beginning. In the click and collect business model, a separate storage and packaging area is built in the store for products ordered online. There are parking slots reserved for online customers in the store yard and purchases are paid for at the car when collecting.

K-food stores have long experience in providing postal services and Posti already has service points at about 170 stores. DHL Express and the K-Group started cooperation with the purpose of setting up 250−300 DHL service points at the K-Group’s food stores and building and home improvement stores across Finland.

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Energy-efficient construction and property maintenance

When a new store site or shopping centre is being planned and built, the starting point is sustainable development and energy efficiency. In maintenance and repairs, the starting point is also lowering life-cycle costs. 

Store site projects involve major capital expenditure, the implementation of which requires skilled people, a high-quality network of cooperation and common rules. Kesko has long experience and plenty of competence in the implementation of demanding store site projects.

In order to indicate the high level of requirements, international environmental classification to be carried out by an external assessor is applied for the most significant store site projects.

It is important to keep an eye on the development in the building and energy sector and anticipate changes. Technology is advancing all the time. The rapid development requires expertise to identify when it is the right time to reject the existing technology and move on.

Kesko is participating in the national energy efficiency agreement, in which we are committed to improving our energy consumption by 65 GWh by the end of 2016 through various actions. This amount corresponds to the annual consumption of some 3,200 one-family houses.

By the end of 2015, Kesko had improved its energy consumption by 64 GWh and achieved 97% of its objective.

They include:

  • Solutions that decrease the consumption of materials and energy during the life cycle of the property
  • The lowest life-cycle costs in the trading sector
  • Optimum conditions for customers, employees and products

Retail stores achieve significant energy savings with these energy efficient solutions:

  • Lids and doors on refrigeration equipment
  • Recovery of condensation heat
  • Refrigeration equipment that uses carbon dioxide
  • Adjustable and directional lighting
  • LED technology in neon signs
  • Increased use of LED lighting also inside the store

ENERGY SOLUTIONS IN K-STORES

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in action:
K-MYLLYPURO ─ A COMPLETELY NEW KIND OF STORE

A completely new kind of K-food store was opened in Myllypuro, Helsinki in the autumn of 2015. K-Myllypuro does not belong to any of the current K-food store chains ─ instead, it is the K-Group’s test store.

In the test store, Kesko, in cooperation with the retailer entrepreneur, will boldly experiment with various food store concepts and models. The test store also takes customer-orientation to a completely new level – customers will decide how the store, its product selections and services develop in the future.

K-Myllypuro is an example of the implementation of the K-Group’s strategy and an unprejudiced experimental culture. Agility means that ideas can be rapidly tested in practice. When a new concept is being built, key issues include adapting the store according to the wishes of local customers, which means that the store is being tailored to look how its customers want it to look and to constantly provide them with better service.

Influences were sought for the test store and the most recent retailing trends were gathered from home and across the world. Today, customers particularly appreciate convenient locations and selections of local foods, easy shopping and a wide choice of fresh products, which form the core of the test store.

Read more

DIFFERENT STORES FOR DIFFERENT CUSTOMER NEEDS

Local, service-oriented neighbourhood stores, such as K-market

Local, service-oriented neighbourhood stores, such as K-market

  • Total number of K-markets: 476
  • Average total sales area: 380 m²
  • Average number of products on sale: 5,000
Medium size stores that combine wide selections and good service, such as K-supermarket

Medium size stores that combine wide selections and good service, such as K-supermarket

  • Total number of K-supermarkets: 219
  • Average total sales area: K-supermarket 1,250 m²
  • Average number of products on sale: K-supermarket 10,000
Large retail units, such as K-citymarket or K-rauta

Large retail units, such as K-citymarket or K-rauta

  • Total number of K-citymarkets: 81
  • Total number of K-rauta stores in Finland, Sweden, Estonia, Latvia and Russia: 93
  • Average total sales area: K-citymarket 6,300 m², K-rauta 5,800–9,100 m²
  • Average number of products on sale: K-citymarket groceries 18,000, K-rauta even 170,000

in action:
Itäkeskus is built together

A social media mayor, a harvest party and an art wall painted by the young are some of the new ways of including local inhabitants in the construction of the new centre in eastern Helsinki.

Kesko is building a new urban centre in Itäkeskus, Helsinki. The key themes of the centre are food, social life, easy daily life, leisure and wellbeing.

The building project will take several years. The first part, which will house the new K-citymarket, will be completed at the end of 2017. It is estimated that the second part will be completed in 2019.

The new urban centre is being built in the middle of the compact urban structure. Efforts have been made to include local inhabitants in the project at the construction phase. The aim of this involvement is both to maintain interest in the project and create a strong bond between local inhabitants and the new centre even before it is opened.

The most important channel to reach the public is social media, where Anna, the social media mayor of Itäkeskus, comments on the building project with pictures and postings. The aim is to help information about the project spread easily and to keep the tone of the communications personal and friendly.

During the building project, we are also organising events related to the key themes of the new centre. In September, we held a harvest party where customers had the chance to try street food in the yard of the K-citymarket. Local young students of Helsinki Art School painted a food collage on the temporary inner wall of the current K-citymarket store.

Facts of the project
  • The first phase of the project will comprise 20,000 m2 of rental area, which will also house the new K-citymarket. The opening will be in 2017. The total rental area will be 50,000 m2. The second part of the centre is expected to be completed in 2019.
  • The capital expenditure of the first phase totals €100 million. Its employment impact is about 250 person-years over two years.
  • When fully completed, the area will form the largest commercial cluster in Northern Europe together with the Itis shopping centre.

 

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