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Reaching the age of maturity in a globalized economy
The company was founded in 1970 by Matti Honkala when he was 21. Thirty-one years later, Honkala - Kesko's president and CEO - leads one of the largest operations in Finland. Through the years of entrepreneurship and consolidation, he has gathered intimate knowledge of the Finnish business climate, its culture and key players. International companies have been quick to recognize the benefits of cooperation with Kesko. The company now represents such names as Citizen, Panasonic, Pioneer, Yamaha Outboard Motors, Volkswagen, Audi, and SEAT in the Finnish market. "Internationalization is crucial," Honkala stressed. "We must always be competitive internationally and Japan is a very important market for us, though the domestic market can never be neglected." With a variety of retail outlets and a newly rationalized supply system, Kesko is able to bring any product - from groceries to VCRs - to the Finnish market quickly and cheaply. With 95 percent of sales coming from the domestic market, the pressure for continuous reform increased with the entrance of international trading chains into the Finnish market. "We have met this challenge with a restructuring of our logistics and information systems" Honkala said, "along with investment of nearly $775 million in our operations over the last five years. Our goal is to become the best distribution channel for suppliers and customers alike, through efficient control of goods flow." This strategy has been rewarded with 4.6 percent growth (both the retail and wholesale), while net sales for the group rose by 3.2 percent in 2000. Many companies in Finland have been adjusting to the new economic climate that has evolved in the last decade, and Kesko is no exception. EU membership has brought Finnish companies head to head with large European players, and Kesko has taken advantage of the new opportunities offered by this environment. "Before 1995 we did not have any marketing or retail operations abroad, but today we are the largest do-it-yourself retailer in Estonia, and next year we will be the largest distributor in Finland." Honkala proudly stated. With strong presences in Latvia and Sweden, Kesko now has over 1,000 employees working in retail overseas. All this has been accomplished in the last five years. The company has set a target for the next five years of 20 percent market share in select overseas markets. The reforms already implemented by Kesko, as well as those currently under way, are nearly as important as the founding of the company over 60 years ago, reflecting a radically different market and consumer than existed in the past. Through an effective blend of technology and innovation applied to the traditional structure of the retail industry, Kesko is seeking to compete and excel in an increasingly competitive and challenging global retail market. A strategy dedicated to internationalization of the business has led Honkala to establish local distribution and logistics facilities in the regions where Kesko is most active. A firm relation to local markets along with the benefits that come from economies of scale is a formula that is proving very lucrative for the company. From Kesko Food in the grocery trade to Keswell in retail clothing, Kesko's vision of being the best and most highly regarded trading company in Finland is rapidly being realized. Honkala has been successful in reshaping the company to be an efficient, intelligent, and effective competitor for the 21st century.
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President and CEO Matti Honkala has implemented strategic reforms to position Kesko among the world's best retail and logistics companies.