The assortment is not just suitable anymore, we are hitting right in the target.

-Ari Akseli

The customer

Kesko is a major Finnish retail specialist operating in the Nordic and Baltic countries, Russia and Belarus. It operates in the food, home and specialty goods, building and home improvement, as well as in car and machinery trades.

Kesko has approximately 2.000 stores in eight countries and their total retail and B2B net sales is 11 billion euros.

 

Benefits

5 %

5 % increase in sales

25 %

25 % increase in customer loyalty

Ari Akseli, Kesko Food: "Our main competitive advantage is having the right products"

Ari Akseli, former Senior Vice President of Kesko Food and present CEO of KCM-Anttila which is part of Kesko, a Finland-based retailing giant, explains how Analyse² helped Kesko Food start building store-level assortments, resulting in various benefits. With the help of Analyse², Kesko Food´s gross margins increased by one percent and its sales by five percent, yielding over 40 million euros of yearly benefit. Analyse² also helped Kesko Food dramatically reduce the time needed to build the assortments for the K-chains.

The Challenge for Kesko

In the 1980′s K-Citymarket stores had around 5000 different stock keeping units (SKU) in the food section. Today there are around 20 000 – 25 000 units. With such a large number of SKU’s and the stores being so different, it is impossible to plan assortments without suitable tools.

In addition, according to Akseli the basic most important 1000 products still stand for 50% of the sales and the most popular brands remain the same from year to year for all the chains. The remaining percentage of sales is the big question; it varies enormously at store level. This is the assortment that should be planned most carefully and which gives every store its competitive advantage. This is where Analyse² comes in.

“We thought about this problem and started to solve it together with Analyse², and soon found a common idea of how to do it” , Akseli says.

Analyse² Solution

Analyse² and Kesko Food Commercial Department launched the category management tools related to assortment planning and pricing and a supplier collaboration system in the beginning of 2008.

According to Akseli the uniqueness of the system is that you can combine three important elements: the customer loyalty card (K-Plussa in Kesko’s case), rich product information linked to customer needs, and store level point of sales (POS) data. 
“This combination is so effective that we are able to build very unique assortments at store level for the customers. It depends a lot on what kind of shopping the customers are doing in the store” , Akseli says.

With the Analyse² solution, Kesko can now find trends and look at the customer base in the stores. In addition they can see what shopping behavior is typical in each store, allowing them to better build the assortments.

“The assortment is not anymore just suitable, we are hitting right in the target.”   Akseli says. 

According to Akseli retail is  “basically a very simple business” , but he adds that if a company wants to have a competitive advantage towards its competitors, it has to be open to new solutions. They are simply necessary.

“You may lose some money (while investing), but you can make hundred thousands more” , he says.

Akseli believes that you cannot compare standard software like ERP for assortment building to the versatile Analyse² Galaxy solution. He adds that the  “safe road” , meaning using one integrated solution from one provider, is very typical of the IT department. It does not, however, always mean it is the best way to operate.

“It’s easy for the IT managers, but you are not the best in the business if you take decisions like that.”  Akseli says.

Next Steps for Kesko

Akseli says the next step would be to refine the assortment planning tool to make the store level assortment planning even more accurate.

“Our main competitive advantage is having the right products. I think it’s one of the most important advantages; maybe the most important one” , he adds. It is therefore also the area he believes Kesko should focus on developing.

He concludes in reference to Kesko,  “we are not the cheapest, but our pricing is very reasonable. We have better assortments for the customers, and they are not built only with what the customers are saying, they are built by what they are actually doing, and th at’s the big difference.

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