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Annual report 2013

Home improvement and speciality goods trade

The home improvement and speciality goods trade division that started at the beginning of 2015 provides customers with the widest selections of products for building and home improvement, leisure and agriculture in Finland and a highly accessible retail store network, online stores and e-services. The home improvement and speciality goods trade has operations in eight countries. The division also included Anttila Oy, which was divested on 16 March 2015.

The aim of the new division is to increase competitiveness and improve profitability as a result of concept renovation and combining support functions. All stores of the home improvement and speciality goods trade aim to provide a more uniform customer experience and greater customer satisfaction. The objective is to offer customers an easier multi-channel shopping experience in physical and online stores.

The home improvement and speciality goods trade operates in Finland,  Sweden, Norway, Estonia, Latvia, Lithuania, Russia and Belarus. The total number of employees was around 14,000 at the end of year 2014. Rautakesko is the fifth largest company in the European building and home improvement market.

The division’s chains are K-rauta, Rautia, K-maatalous, Byggmakker, Senukai, OMA, Intersport and Budget Sport, Asko and Sotka, Musta Pörssi, and Kookenkä. Rautakesko B2B Service serves large business customers in the building and home improvement trade.

In addition to a comprehensive store site network, customers have access to several online stores and multi-channel e-services. Centralised development of e-services and online stores generates significant synergy benefits for all chains.

The most important online stores include Intersport.fi, Budgetsport.fi and Mustaporssi.fi. Some of the local building and home improvement stores in Finland also operate their own online stores. E-services, such as home renovation planning tools, demand calculators and mobile applications, make shopping and transactions easier for customers.

Our own brands, Cello, PROF and FXA, provide customers of building and home improvement stores with reliable and affordable products.

Competitive advantages in the home improvement and speciality goods trade:
    • Chain concepts and service offering based on customer needs
    • Comprehensive store network and extensive e-services
    • Efficient combination of online retailing and a physical store network
    • Skilled customer service in stores and e-channels
    • Well-known, reliable store chains and product brands
    • Efficient sourcing and logistics
    • Internationally uniform business models
Strategic emphases
Strategic objective Achieved in 2014 What next
Improving sales and profitability in all chains:
K-rauta, Rautia, K-maatalous, Byggmakker, Senukai, OMA, Intersport, Budget Sport, Asko, Sotka, Musta Pörssi and Kookenkä.
Comparable retail sales in local currencies increased in all of Rautakesko’s foreign chains: K-rauta (Sweden, Estonia, Latvia and Russia), Byggmakker, Senukai and OMA. All Rautakesko’s foreign chains also improved profitability. The results of Intersport Finland and Budget Sport, and Asko and Sotka remained at a good level. Development work for increasing sales and profitability will be continued in all of the chains for instance by concept renovation as part of the new divisional structure.
Enhancing e-commerce and e-services in all chains. Online stores and new e-services were launched. The building and home improvement trade’s click&collect service was opened up. The Intersport.fi online store was launched.
More extensive product, price and availability information was added to the web and the selections offered by online stores were expanded.
New online stores will be opened and e-services will be introduced. The building and home improvement trade’s click&collect service will be expanded to include home deliveries.
Supporting store processes and seeking uniform core functions in order to improve efficiency and profitability in Rautakesko. Activities in line with the strategy have been successful and profitability has improved clearly. The activities that were started to increase efficiency and profitability will be continued across the division. The focus will be on seeking internal synergies.
Implementation of a uniform core selection in Rautakesko. Harmonisation of selections has proceeded as planned. Selection management will be developed across the division.

 

Did you know?

  • Intersport Club is Intersport’s customer programme. Electronic sport programmes launched by Intersport have become very popular among customers.
  • NetAnttila was chosen the best online store in Finland in 2014 in the Digital Leaders in Finland 2014 research.
  • Sotka has the largest Facebook community in the Finnish furniture retail business.
 

Building and home improvement trade 

K-rauta

The international K-rauta chain offers products and services for building, renovation, yard and garden, interior decoration and furnishing to consumers and B2B customers. There are K-rauta stores in five countries. All K-rauta stores in Finland are run by retailer entrepreneurs.

Rautia

Rautia serves especially builders, renovators and building professionals with the most extensive building and home improvement store network in Finland. All Rautia stores are run by retailer entrepreneurs.

K-maatalous

In Finland, agricultural customers are served by a comprehensive network of K-maatalous stores. K-maatalous retailers’ customers include agricultural entrepreneurs, machinery contractors, and equestrian professionals and enthusiasts. Many K-maatalous stores operate in connection with Rautia stores.

Byggmakker

Byggmakker is a key building and home improvement trade operator in Norway. Its store network extends throughout the country and B2B customer expertise is extremely strong. Most of the Byggmakker stores operate under a retailer business model.

Senukai

Senukai’s stores in Lithuania offer customers almost every product related to building and living.

OMA

OMA is the largest building and home improvement store chain in Belarus.

Rautakesko B2B Service

Customers of Rautakesko B2B Service include national and large regional construction companies, property maintenance companies, customers from the house building industry and other business customers. The strength of the B2B Service is its wide selections of building and home improvement products and close cooperation with the K-rauta and Rautia networks through which warehouse deliveries are made.

Asko

Asko provides home decorators with a wide range of furniture and interior decoration items combined with reliable service. Asko has stores in Finland and Estonia and also operates an online store in Estonia.

Sotka

Sotka provides its customers with wide and affordable selections of furniture and interior decoration items. Sotka has physical stores and an online store both in Finland and Estonia.

Speciality goods trade

Intersport, Intersport.fi

The Intersport chain's stores and online store provide customers with products and equipment for active sports, keeping fit and for leisure activities in Finland and Russia. The Intersport stores in Russia are mainly located in the St. Petersburg and Moscow areas.

Budget Sport, Budgetsport.fi

Budget Sport stores offer products for physical activities, outdoor sports and leisure easily and affordably. Customers are also served by the diverse Budgetsport.fi online store.

Musta Pörssi, Mustaporssi.fi

The Musta Pörssi online store offers its customers home technology products and related services.

Kookenkä, Kookenka.fi

Kookenkä is Finland’s biggest speciality shoe store chain for the whole family. Kookenkä also operates an online store.

Market

The building and home improvement markets by operating country and their development from the previous year (retail trade, VAT 0%)

The total market in building and home improvement is around €30 billion*
Finland €3.1 billion (-4.2%), (Finnish Hardware Association DIY)
Sweden €3.6 billion (1.7%), (HUI)
Norway €4.1 billion (4.7%), (Virke)
Estonia €0.3 billion (8.0%)*
Latvia €0.4 billion (6.0%)*
Lithuania €0.5 billion (6.0%)*
Russia €16.1 billion (2.5%), (PMR)
Belarus €0.7 billion (0.0%)*

The interior decoration items and furniture trade around €1.5 billion (-2.4%)

The agricultural market in Finland

The agricultural market is about €1.9 billion (0.0%)*

The speciality goods markets in Finland and their development from the previous year (retail trade, VAT 0%)

The sports trade is about €0.8 billion (0%) (Kesko's own estimate and TMA)
The market for home electronics and entertainment products is about €1.8 billion (-2%), (Kotek and Kesko’s own estimate)
The shoe trade is about €0.4 billion (-5.2%), (Kesko’s own estimate and TMA)

* Kesko’s own estimate

Market shares

Building and home improvement trade

Finland 40% (Finnish Hardware Association DIY). Main competitors: Starkki, Kodin Terra, S-rauta, Agrimarket, Bauhaus.
Sweden 6%*. Main competitors: Bauhaus, Byggmax, Beijer Bygg and Hornbach.
Norway 17% (Virke, Kesko's own estimate). Main competitors: Monter/Optimera, Maxbo, Coop and XL Bygg.
Estonia 23%*. Main competitors: Ehitus ABC, Bauhof, Espak and Bauhaus.
Latvia 14%*. Main competitors: Depo DIY and Kursi.
Lithuania 30%*. Main competitors: Ermitazas and Moki-Vezi.
Northwestern and central Russia 7%* (St. Petersburg and Moscow). Main competitors: Leroy Merlin, OBI, Castorama, Maxidom, Metrika.
Belarus 10%*. Main competitors: Novoselkin, Materik.

Agricultural trade

Finland 27%*
Main competitors: DLA/Danish Agro (Agrimarket), Turun Konekeskus/Konefarmi, Raisioagro

Sports trade

Intersport, Budget Sport and Kesport
Finland 33%*
Competitors: Sportia, Top Sport, Stadium, department stores and hypermarkets, and other speciality sports stores

Furniture trade

Asko and Sotka
Finland 23%*
Competitors: furniture stores

Home technology trade

Musta Pörssi and Musta Pörssi Partneri
Finland 1%*
Competitors: stores specialising in home technology, hypermarkets and online stores.

Shoe trade

Kookenkä and Kenkäexpertti
Finland 10%*
Competitors: other speciality stores, department stores, hypermarkets, sports stores and online stores

* Kesko's own estimate


Home improvement and speciality goods trade in figures
 

Number

Sales (VAT 0%),

€ million

Retail sales and number of stores

2014

2013

2014

2013

K-rauta*

42

42

560

565

Rautia*

96

99

443

460

Rautakesko B2B Service

   

187

187

Asko

36

36

91

93

Sotka

50

49

97

102

Anttila department stores*

26

31

218

263

Kodin1 department stores for interior decoration and home goods*

13

13

97

116

Intersport*

62

63

195

212

Budget Sport*

12

11

41

41

Musta Pörssi*

1

6

18

32

Kookenkä*

44

46

35

37

K-maatalous**

81

83

463

460

Others***

79

88

77

78

Finland, total

542

567

2,522

2,649

K-rauta, Sweden

20

20

197

207

Byggmakker, Norway

82

91

671

720

Other Nordic countries, total

102

111

868

927

K-rauta, Estonia

8

8

78

69

K-rauta, Latvia

8

8

53

52

Senukai, Lithuania

19

18

317

266

Anttila, Baltic countries (NetAnttila)*

3

3

6

6

Asko and Sotka, Estonia*

10

10

9

8

Baltic countries, total

48

47

462

401

K-rauta, Russia

13

13

250

272

Intersport, Russia

19

21

15

18

OMA, Belarus

11

10

125

106

Russia and Belarus, total

43

44

390

396

Home improvement and speciality goods trade, outside Finland, total

193

202

1,720

1,724

Home improvement and speciality goods trade, total

735

769

4,242

4,373

* incl. online sales

 

** in 2014, 46 Rautia stores also operated as K-maatalous stores. In 2013, 47 Rautia stores also operated as K-maatalous stores

 

*** the figures include 30 building and home improvement stores, 16 Kenkäexpertti stores, 29 Kesport stores and 4 Musta Pörssi Partneri stores


 

Home improvement and speciality goods trade, key figures

   

2014

2013

Net sales

 

€ million

3,324

3,440

Operating profit

 

€ million

-52.6

-5.3

Operating profit excl. non-recurring items

 

€ million

-0.3

-10.2

Operating profit excl. non-recurring items as % of net sales

 

%

0.0

-0.3

Capital expenditure

 

€ million

71

51

Capital employed

 

€ million

876

925

Return on capital employed excl. non-recurring items

 

%

0.0

-1.1

Personnel average

   

12,105

11,854

         

Properties

   

2014

2013

Owned properties, capital

 

€ million

430

432

Owned properties, area

 

1,000 m²

450

448

Leased properties, lease liabilities

 

€ million

745

821

Leased properties, area

 

1,000 m²

1,153

1,191

         
         


CASE: RESPONSIBILITY MADE VISIBLE IN BUILDING AND HOME IMPROVEMENT STORES

 

 

Rautakesko’s K-trainee Mirjana Stenbom coordinates the implementation of the K-responsibility concept in K-rauta Vantaanportti.

K-Group’s building and home improvement stores help customers make responsible choices

The new K-responsibility concept was introduced to the K-Group’s building and home improvement stores in Finland over the course of 2014. The concept will bring corporate responsibility issues closer to customers. Store staff have been trained to give customers guidance on corporate responsibility, and the principles of responsible purchasing have been defined and introduced. Information about product responsibility is provided to customers with the help of shelf labelling and responsibility boards.

Competence in responsibility is part of good customer service, which has been identified as a competitive advantage of the K-Group’s building and home improvement stores.

”Our aim is to give customers as much benefit as possible. In addition to good product choices, customers can get installation and care instructions from us. We can also deliver turnkey solutions. The result is a functional and durable package, made of responsible, high-quality products,” says Jesse Mether, Rautakesko’s Sustainability Manager.

The K-responsibility concept was first introduced in K-food stores in 2013. In 2014, the concept was adopted by K-rauta stores and the introduction to the stores in the Rautia chain started. During 2015, the concept will be introduced to all Rautia stores and in the K-maatalous chain.

See more about responsibility in building and home improvement stores: 

 

 

CASE BYGGMAKKER: DEMANDING TAX EXEMPTIONS FOR ENERGY EFFICIENCY

 

Global climate change has revitalized the need to upgrade especially older homes to be better prepared against cold winters and more extreme weather in Norway. Rautakesko’s subsidiary in Norway, Byggmakker, in close cooperation with environmental organizations and other actors in the building supply industry, has for several years wanted a tax exemption scheme for energy efficiency measures of private houses.

In 2014, Byggmakker created a population survey and asked nearly 2,000 Norwegians what they thought about energy efficiency of homes.

"The purpose with this survey was to show policy-makers in Norway that most people in Norway are concerned and see a great need for energy efficiency of their own homes. We sent the report to nearly 200 key influencers and decision makers, and the report was well received", says Managing Director Knut Strand Jacobsen in Byggmakker.

Most popular measures - windows, doors and attics

The report shows that 6 out of 10 homeowners will consider more energy efficiency measures in their own homes, if the government introduces a new tax deduction scheme.

When the respondents were asked what energy efficiency measures that would most appropriate for their own home, if these were tax deductible, replacement of windows came at the top (42%). The further ranking were isolation of the attic (25%), purchase of air-to-air heat pump and replacement of doors (24%), roof insulation (20%) , isolation of floor (19%) and replacement of stove (15%).

Continuing pressure on government

According to Strand Jacobsen, Byggmakker has not given up hope of getting a tax exemption scheme.


"It´s positive that the Norwegian Government has increased the financial support to an existing scheme. The Government has said that they will come back to a more detailed assessment of a tax exemption scheme. We will continue our work to give them good arguments and evidence that such an arrangement is good for consumers, building industry and the climate", says Strand Jacobsen.