Kesko grocery struggling to keep up with the market

Kesko grocery reported a stunning profit margin of 8,4% for the last quarter of the year. The whole year also had a wonderful profit margin of 7,5%. There is probably no other grocery retailer in the world that can produce similar levels of profits.

Online has become an important growth driver for Kesko and especially for the hypermarket chain K-Citymarket. Online represents 3,1% of all grocery sales. Online grew by 14% during 2021, whereas Kesko grocery growth was basically flat at 0,4%.

The other side of the coin for Kesko is that the market seems to be growing faster. Especially hard this is seen with the K-Supermarket chain, which lost market both during the whole year 2021 and most significantly in the last quarter of the year.

K-Citymarket (hypermarkets) chain has been better in responding to the competition. The competing Prisma chain seems to have grown more during the Q4 as Citymarket lost to the market 0,4%-points.

One explanation for the better performance of the Citymarket chain is the growth of the online channel.

Online grew by 14% and majority of online orders are picked from Citymarket stores. Therefore online is taking a role bigger than its real size. Online is becoming a growth driver in Finnish groceries.