Retail expectations for Q2/2021: Finland

Verkkokauppa.com

Verkkokauppa was not the biggest beneficiary of the pandemic in Finland. It has grown, but not as much as some of the bigger successes, such as Musti Group, Kesko or Tokmanni. The results from Verkkokauppa could give us some early indication how the general merchandise sales have performed in Finland over the last months.

It will be interesting to follow whether Verkkokauppa can sustain it's growth and especially how the balance between stores and the online develops. During 2021 the online channel has taken share of revenue from the stores (unclear how Click & Collect is attributed). The share of revenue going through online was 61 % during the latest quarter, whereas it was 56 % in Q2/2020.

Another interesting question with regards to the company's objective to reach one billion euros in revenue is how they are able to increase sales in other categories than electronics.

Kesko

Taking into account how big company Kesko is, it has been probably the biggest success of the Finnish retail sector during the pandemic. Both grocery and DIY sectors flourished during the lockdowns. After multiple positive profit warnings, there are some signs of slowdown, mainly in the grocery business.

The grocery business has been growing, especially driven by the recovering Horeca wholesale business Kespro. However, the sales in the grocery stores seem to have been lagging the market growth. The high sales levels in 2020 are partly the reason why the growth in 2021 has been low. Partly this might be due to the fact that the online grocery business might not have been growing a lot in 2021.  As S-group has started to improve their online offering, it will be more difficult for Kesko to keep on growing the online market share.

It will be interesting to see which parts of the grocery business have been performing above the market and which have been underperforming. In Q2/2021 all chains lost slightly to the market. Will that continue?

Tokmanni

The discount retail category has flourished in Finland over the last years. Tokmanni is the biggest retailer in the category and it's progress could show the way of the larger category. Tokmanni did have very big growth quarters during the pandemic. Partly due to the high revenues in the early 2020, the growth decreased in the latest quarter to the lowest level since the start of the pandemic.

Noticable is the fact the latest quarter was the first time in years, when Tokmanni lost the overall non-food market growth. It will be interesting to see whether they can bounce back to outgrowing the market.

Stockmann

The storied retailer has went through many difficult years of cost cutting and plummeting sales. Before the pandemic there were some small signs of a better future for the department store arm of the company. However, those dreams were shattered quickly. Last quarter saw again some positivie signs for the department stores with +8,9 % of sales growth. But this came on top of a dismal quarter in Q2/2020. The sales are still trailing by -25 % to the numbers from 2019.  

Thus, the coming quarters will be important to tell whether the Stockmann department stores are on the right track to a sustainable recovery.

Another interesting number to follow from Stockmann is whether Lindex, the growth driver of the company, gets back to a longer term growth path? Between 2016 and 2019 Lindex saw only four quraters of growth. That needs to change if Stockmann wants to get a proper chance to growth as the recovery from the department stores is slow.