"The capability of a central warehouse is mind-blowing" - Kesko's daily consumer good sales are kept flowing with strong operation
04 Sep 2020
The Finnish retailing conglomerate Kesko’s daily consumer goods business has been steadily growing in the last few years. In April 2016, Kesko bought the entire share capital of Suomen Lähikauppa Oy. This meant hundreds of new local shops and, along with them, a sharp increase in the already massive volume of the daily consumer goods logistics operations. Kesko’s central warehouse in Vantaa’s Hakkila no longer had the capacity to satisfy the growth, so Kesko took on a major expansion project with Logicor as its partner. Because of the importance of the negotiated issues and the strategic significance of the site, it is of utmost importance to Kesko that communication with the landlord is smooth and Kesko and the landlord have a shared vision for the future.
Kesko outsourced the ownership of the central warehouse at the core of its daily consumer goods operations years ago through a leaseback arrangement, because Kesko wanted to invest its property capital in strategically important trade locations. Now, with Logicor as its landlord, Kesko can rest assured that the heart of the daily consumer goods operations keeps pumping, meeting the requirements for growth without needing to tie down capital in property.
“Whilst the central warehouse is an important and strategic site for us, it is not as strategic as a Citymarket store located in an excellent place of business. That’s why we are investing heavily in our network of stores and outsourcing our logistics sites. However, we want to hold on to the management of our central warehouse, so we need a reliable and financially sound lessor that can offer long-term leases. Our current arrangement with Logicor ticks all the boxes,” says Construction and Maintenance Director Jukka K. Anttila from Kesko Oyj.
“I appreciate the fact that the division of labour works and the agreements clearly specify the responsibilities of each party. What makes the collaboration especially smooth is that even though Logicor is a global company, it has management in Finland with whom we can talk. Compared to many other international lessors, working with Logicor has been easy.” – Jukka K. Anttila, Kesko Oyj
The massive expansion of the warehouse also enables future growth
Several expansions have already been implemented in the property in the past as daily consumer goods sales have increased and Kesko has sought to improve the efficiency of its business by terminating regional warehouses and concentrating operations at a central warehouse. Nonetheless, the already massive capacity of the central warehouse was rendered insufficient when, in 2016, Kesko bought the operations of Suomen Lähikauppa Oy, adding hundreds of new K Supermarkets into the chain.
The central warehouse runs around the clock nearly every day of the year. There are 500 lorries coming and going on a daily basis, and the warehouse has a staff of 1,000 logistics and office workers.
The planning of the three-stage expansion currently underway looks far into the future, and the current (75,000 m2) central warehouse will grow by 20,000 square metres to encompass a total area of 95,000 square metres. The additional capacity will secure Kesko’s daily consumer goods operations for a long time.
Kesko’s future logistics and warehousing needs are at the core of the cooperation
The site and the expansion project are of great strategic importance to both Kesko and Logicor, so the smooth running of the project is ensured via close cooperation and the efficient utilisation of networks.
“Kesko is in charge of planning, and we approve the plans. The contractors have been selected together. We have put together the best possible team for the expansion project and harnessed the strongest resources of our partners for the project,” explains Jorma Lehtonen, Managing Director, Logicor Nordics.
Anttila and Lehtonen agree that Logicor and Kesko are satisfying and reliable partners for each other. Kesko’s future and needs are mutually supported.
“The cooperation has gone incredibly smoothly. We have been able to trust Logicor to listen to our needs also for the future. With the latest site sales, we have been able to expand according to our needs, and the site has served our purpose extremely well. Even though the current expansion should suffice for a long time yet, if need be, we will still have room for growth in the future, which is important for Kesko and Logicor alike,” says Anttila.
“Our position as the landlord is a position of trust as we own the buildings at the heart of Kesko’s daily consumer goods operations.” – Jorma Lehtonen, Logicor
Kesko’s central warehouse in numbers
The daily consumer goods sector is Kesko’s major line of business. The central daily consumer goods warehouse in Vantaa’s Hakkila dispatches goods to all corners of Finland around the clock. Almost all products of Kesko’s more than one thousand daily consumer goods stores travel via the warehouse, so the daily volume is massive and the circulation fast. Indeed, the logistics centre is one of the major employers and corporate tax payers in Vantaa.
Site: Kyytitie 31, Vantaa
Old premises 75,944 sqm + expansion 20,000 sqm = 95,000 sqm
Central warehouse for 1,350 K-Group grocery stores
800 suppliers in 60 countries
17,000 items in stock (dry goods, fresh produce, vegetables and fruit, other than food stuffs)
12,000 outgoing castor pallets daily
400,000 outgoing packages daily
500 incoming and outgoing lorries daily
1,000 logistics and office workers
operations running 24/7 throughout the year