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Customers

 

We offer sustainable products and multi-channel services
  • We make people's lives more convenient and easier.
  • We offer healthy products and services that promote wellbeing.
  • We develop our the multi-channel aspect of our store network based on our customers' expectations.
  • We encourage our customers to make sustainable choices.
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Topic Objective
Progress of objectives 2017
Progress of objectives 2016
Progress of objectives 2015

Dialogue with customers

We constantly engage in dialogue with customers in stores and social medial channels. We conduct surveys on customer satisfaction and brand and utilise customer views in the development of our responsibility work.

Listening to our customers and utilising feedback are key factors in Kesko’s strategy when it comes to improving customer experience. We offer our customers an easy-to-use digital feedback channel Hymy. Some one million customer contacts happen through Hymy each year. 

We are testing Kylä, a new type of customer community, to get our customers proactively involved in the development of our operations and services. Read more: Stakeholder perspective.

In the spring of 2017, we conducted a qualitative study concerning K Group’s competitive advantage and strong corporate responsibility to find out what responsible and reliable operations of a trading sector company mean to Finnish consumers. We used the findings to further develop our operations.

The human rights assessment generated invaluable information for developing customer services. We will investigate the possibility of implementing the suggestions we received.

We carried out an extensive study among grocery trade experts, retailers, suppliers and K-Plussa customers on the expected food trends and phenomena of 2017.

The significance of social media channels in customer interaction has grown. In 2017, we will more actively listen to our customers' opinions and carry out more systematic and focused communication within social media communities.

As part of Kesko's human rights assessment, we heard the stakeholders' views on how well they thought human rights were realised, for example, in customer service situations. The online questionnaire was directed at both majority representatives as well as special groups. Kesko was assessed as slightly higher than the average Finnish company in the materialisation of a variety of human rights issues. However, the assessment given by special groups was, with regards to certain aspects (e.g. unrestricted access, accessibility, personnel diversity), considerably poorer when compared to the answers given by majority representatives.

Consultation services to customers

We offer our customers multi-channel information on our products and services.

In September, K-Rauta launched in Finland the Remonttineuvonta renovation consultation service, an example of a multichannel advice service for customers.

K Consumer Service responds to consumer feedback concerning the own brand products (Pirkka, K-Menu, Euro Shopper) and own imports of the grocery trade division. In 2017, K Consumer Service gave 22,218 responses.

Our key customer communication channels are K Group’s social media channels and Pirkka Media, which comprises Pirkka magazine and the digital channels Pirkka.fi and Pirkka’s Facebook, Twitter and Instagram. Pirkka magazine has a readership of 1.7 million (Kansallinen Mediatutkimus, a national media survey, autumn 2016 / spring 2017).

Customer feedback received through the new customer feedback system, launched in summer 2016, increased significantly. The K Group's customer magazine Pirkka was revamped. The K Consumer Service was contacted 19,619 times.

The K Consumer service was contacted 19,770 times. Information about good products and responsible actions was given in stores and marketing with the help of the K-responsibility concept and its slogan ‘Let’s do good. Together.’

Welfare

We offer products and services that promote health and wellbeing.

In 2017, we began work to build a new health and wellbeing store chain Hehku together with the pharmaceutical distributor Oriola. Our goal is to establish a chain of 100 Hehku stores and an online store. If legislation changes, we will expand the business to also include the sale of pharmaceuticals. The first Hehku stores opened in January-February 2018.

We joined the National Nutrition Council of Finland’s nutrition commitment by making a vegetable commitment, which encourages K-food store customers to increase their use of vegetables through the following actions, which extend to year 2020:
• By 2020, at least 400 K-food stores will have a “veggie shelf” for vegetable protein products. In 2017, 250 K-food stores had dedicated veggie shelves.
• We organise at least 250 vegetable-related campaigns at K-food stores each year (2018-2020). In 2017, K-food store chains organised 240 vegetable campaigns. 
• We will add at least 50 new fruit or vegetable products to our selections by 2020. In 2017, we added 55 new fruit and vegetable products to our selections. 

In addition to the recipe search function, the K-food mobile app gives the user suggestions about the most popular recipes made with seasonal ingredients. K-stores launched veggie shelves. The product reformulation policy (less salt, sugar and fat) is to be updated in 2017. 

Cello indoor and outdoor paints received the Swan label. Onninen Norway provides welfare technology-related solutions. Intersport organised sports training during different seasons. 

 

In 2015, K-ruoka.fi produced the Keveämpi arki customer programme consisting of recipes and ideas that promote a healthier lifestyle and well-being. Intersport's sports training offered expert tips, inspiring content and exercise programmes for people of different fitness levels.

Sustainable consumption

We help our customers make sustainable choices.

In accordance with our plastics policy, we create operating models that prevent plastics from ending up in water bodies and elsewhere in the environment. We strive to increase awareness of the environmental impacts of plastic waste through active communications in customer channels and at our stores. In 2017, we removed environmentally harmful microbeads from all our own brand cosmetic products. During 2018, microplastics will also be removed from all our own brand detergents. The Pirkka ESSI circular economy bags were introduced to K-food stores' shopping bag selections at the start of 2017. The bags are made of over 90% recycled materials, around half of which is plastic packaging separately collected from households.

In 2017, we took part in the second Ham Trick campaign, where roasted ham fat is used to produce renewable diesel. K-Citymarkets collected fat from 117,000 households, i.e. 81% of the total fat collected in the campaign.

We introduced two products in 2017 that reduce the environmental load on the Baltic Sea: the Pirkka fish patty, which is made from Baltic bream, and the Pirkka Parhaat Benella Rainbow Trout, which is farmed in Finland with feed made from Baltic herring and sprat from the Baltic Sea.

K Group has the most comprehensive neighbourhood store network in Finland. We provide an extensive and free charging network for electric cars. We participated in the Kinkkutemppu campaign which used the roasted ham fat to produce renewable diesel. K-food stores participated in the Food Waste Week campaign organised by the Consumers Union Of Finland. At the start of 2017, Pirkka ESSI circular economy bags were introduced in K-food stores. K-food stores introduced shared vege shelves for all vegetable protein products.

We published our soy policy and committed to it; by 2020, all soy used in the production chain of own-brand products will be sustainably produced RTRS or ProTerra certified soy. We published our plastics policy  and committed to introducing measures to reduce the consumption of plastic bags.

The K-responsibility concept theme "Let's do good. Together" was an essential part of the communication and marketing of the grocery trade, as well as our building and home improvement stores and agricultural stores. Our building and home improvement stores offered their customers energy efficient and environmentally friendly products and services. K-food stores participated in the Food Waste Week campaign organised by the Consumers Union Of Finland.

VV-Auto participated in the Finnish Transport Agency's car scrapping reward trial. The range of electric and hybrid cars available in car dealers widened.

As a new service, we started building new charging points for electric and hybrid cars in the most significant store locations.

Digital services

We offer the best digital services to K Group customers in all divisions.

We utilise artificial intelligence for product and content recommendations in our services, and are improving the customer experience in our digital services. New features in the K-Ruoka mobile application include product information and food purchases via online store. We opened an entirely redesigned online food store and new online stores for Onninen and K-Rauta in Finland. In the car trade, the Caara.fi service was complemented with a new Caara Go service, where you can obtain a car for temporary use, be it a month or a year, for a monthly fee agreed upon beforehand.

We launched Student K-Plussa, a loyalty programme for higher education and university level students that offers e.g. a 5% rebate on purchases at K-food stores. Some 20,000 students joined the programme over the first few months. 

In the autumn of 2017, we began a collaboration with the global online store operator Alibaba to sell Finnish food brands in China. We export Finnish food brands and our own Pirkka products to the growing Chinese market.

Almost 100 K-food stores nationwide offer locally operating online grocery stores and click and collect services. All K-Rauta stores have an online store which also provides a delivery and click and collect service. We developed the K-food mobile app further.

We developed a joint online store solution for the business customers of building and home improvement stores and Onninen. We launched a new concept online: a used car store, Caara.fi.

We opened a new K Digital unit and recruited dozens of new digital experts. The five trainees that completed the K Digital Trainee programme found employment in various digital positions within the K Group.

Stores' click and collect services became more common. We published a K-food mobile app, which offers personalised benefits and shop-specific offers and a smart shopping list. Sotka's online store was opened.

Management by information

Each K-store is customised to meet its local customer demand by utilising customer data.

We created three new applications for all K-food stores, which support store management by information. New tools combined with our existing customer data-based application that supports store-specific business ideas clearly improve the ability to run stores based on customer insight and data. The number of users for new tools aimed at store management by information has tripled within a year.

The retailers received a new application based on customer data, among other things, that supports store management and offers a tool for targeted product ranges and marketing.

We will revamp the K-food store chains. We will revamp our entire hypermarket concept and all K-Citymarkets by the end of 2018. We will revamp the K-Rauta brand in all its countries of operation in stages.

Dozens of new ideas and operational models were tested in K-Myllypuro over a year. The test store's customers and customer jury were asked for feedback on a regular basis. Based on customer wishes, the test store became a K-Supermarket in August 2016. The experiences gathered from the K-Myllypuro test store were used in the planning of the renewal of the K-Market chain.

Using marketing based on customer data, we offer our customers the best customer experience in the trading sector.

We continued the systematic development of K Group’s marketing through marketing process automation and increased investments in the development and utilisation of marketing technologies. Our objective is to utilise customer data better in our marketing so we can offer our customers a better, more personalised customer experience. In 2016, our own team of experts initiated programmatic targeted marketing using customer data, and nearly half of all digital marketing is now programmatic marketing.

We expanded the K Group's targeted marketing using customer data and began carrying out programmatic marketing relying on our own team of experts. Using our customer data, we offer our customers more personalised, interactive and multi-channel services. The revamped K-Plussa loyal customer card ensures personalised, targeted benefits for customers. We developed the K-food mobile app further.

Personalised marketing based on purchase history means that customers receive benefits better suited to them. After purchasing, customers receive service messages, customer questionnaires or personalised offers using their chosen channel.

Additional services in connection to stores

We want to offer our customers a convenient shopping experience.

GRI 203-1

We offer our customers the chance to recycle packaging plastics in 173 RINKI eco take-back points located at K-store premises. To increase shopping convenience, self-service checkouts are available for customers at hundreds of K-food stores.

In connection to K-food stores, there were 396 consumer packaging recycling Rinki eco points, of which 160 also collected plastic. Many eco points also accepted paper and used clothing. All K-food stores have reverse vending machines for returning beverage containers.

Core additional services in K-food stores were: Post Office service points in 327 stores, Matkahuolto parcel points in 568 stores, DHL service points in 27 stores, Post Office parcel lockers in 144 stores and Osta & Nosta cash points in 1,011 stores. We provide an extensive and free charging network for electric cars. The Liiteri service tested the rental service for K-Rauta's tools.

There were 255 consumer packaging recycling eco points at K-food stores. 38 eco points collected plastic. Many eco points also accepted paper and used clothing. All K-food stores have reverse vending machines for returning beverage containers. Posti and DHL expanded their operations into K-food stores. DHL Express and the K Group started cooperation which will bring 250-300 DHL service points nationwide in food stores and building and home improvements stores. There were 137 SmartPost self-service parcel lockers at K-stores.

       

Store network

203-1 Development and impact of infrastructure investments and services supported

Kesko operates in the grocery trade, the building and technical trade, and the car trade. In 2017, Kesko had approximately 1,800 stores engaged in chain operations in Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Poland, Belarus and Russia. On 16 February 2018, we announced we would discontinue our building and home improvement trade operations in Russia.

Kesko’s principal business model in the Finnish market is the chain business model, in which independent K-retailers run retail stores in Kesko's chains. Retailer operations accounted for 43% of Kesko’s net sales in 2017. At the end of 2017, Kesko had over 1,100 independent K-retailer entrepreneurs as partners. Kesko and K-retailers form K Group, whose retail sales (pro forma) totalled around €13 billion (VAT 0%) in 2017. K Group employs around 42,000 people.

Outside Finland, Kesko mainly engages in own retailing and B2B trade. B2B trade accounted for 35% of Kesko’s net sales in 2017. Kesko’s own retailing accounted for 22% of net sales.

Kesko hosts a comprehensive K-food store network in Finland, and there are K-food stores in most Finnish municipalities. K-food stores are visited by around 1.2 million customers every day.

K-food stores in Finnish municipalities at 31 Dec. 2017

Especially outside growth centres, retail stores can offer community services which may otherwise be scarcely available. In 2017, the following services were located in connection with K-food stores:

  • Cashback services at more than 1,200 stores
  • Parcel and postal services at over 800 stores

The store site network is a strategic competitive factor for K Group. In 2017, Kesko’s total capital expenditure in store sites amounted to €256 million (2016: €217 million). Kesko’s most significant recent store site project is the new shopping centre, Easton Helsinki, in Itäkeskus, Eastern Helsinki. The capital expenditure is valued at €100 million, with an employment impact of approximately 250 person-years for a period of two years. Easton Helsinki was opened in October 2017 and it offers people in the region the best and most versatile food selections both in the physical store as well as online. Easton is a forerunner in combining digital and physical channels and services. The new shopping centre and its occupants provide employment to some 300 people.

In addition to statutory waste recycling obligations, K-stores provide the following recycling services:

  • Collection of impregnated wood.
  • Collection of clothing.

Waste statistics are presented under 306-2 Waste.

Kesko’s community investments are presented under Society in the Responsibility programme.

GRI management approach

Material aspects

  • Customer health
  • Product safety

Policies and commitments

The K-responsibility concept is used to tell customers about the store's good deeds and to help them make healthy and sustainable choices easily. The K-responsibility concept is in use in K-food stores and K-Rauta stores.

Customers' needs and consumption behaviour change greatly as new electronic services and, particularly, mobile services become increasingly widespread. Kesko's key strategic objective is to serve customers in all of its divisions by using the opportunities provided by mobile services, online services and digital marketing.

Monitoring and control systems

Kesko Product Research Unit's laboratory monitors the safety and quality of groceries and home and speciality goods sold by K-food stores and K-Citymarket hypermarkets.

In addition to the laboratory, the Product Research Unit includes a test kitchen and K-Consumer Service. The test kitchen's duties include sensory evaluations of products and the testing of their cooking properties. The consumer service provides information on Pirkka products: customers can give feedback on products and ask about various aspects of our products, such as product origins, ingredients, their suitability for different kinds of users and instructions for use and preparation.

Responsibilities and resources

  • Kesko's divisions
  • Kesko's Product Research Unit
  • K-stores

Programmes, projects and initiatives

The home economics teachers in Kesko's grocery trade's marketing unit develop and test hundreds of new food recipes annually. The recipes in the K-ruoka.fi service include the nutritional content of each dish to make it easier for people to make choices.

In the building and home improvement store operations, the assessment of a store's operational responsibility comprises the store's annual self-assessment, the criteria defined in the store's quality system and a responsibility audit performed by an external party on a specified sample. The auditor reports the results to the store and to Kesko. Food store operations utilise the Hymy quality review system.

The service level, recognition level and images of Kesko's chains are regularly monitored in brand surveys targeted at consumers in all product lines. The same practice is applied to the K-Plussa customer loyalty programme and the grocery trade's own-brand products. Store-level customer satisfaction is measured by customer satisfaction surveys and the mystery shopping method in food stores and building and home improvement stores.

Grievance mechanisms

  • Plussa.com
  • K-Consumer Service
  • Chain's customer feedback systems

Boundaries

Customer health and safety Kesko Group - Own-brand products and own imports
Product and service information Kesko Group - Own-brand products and own imports
Marketing communications Kesko Group
Compliance Kesko Group