Kesko Food plans to reform operations and organisation

13/10/05 K-food stores have over one million customers every day. In all K-food stores, customers are served by K-retailers and their staff. In order to improve K-food stores' customer satisfaction and competitiveness Kesko Food is reforming its operations and organisation. Chain operations are intensified and cooperation between chains in purchasing, marketing and logistics will increase markedly. Excellent service and price competitiveness are the key priorities.

Kesko Food manages the K-food store chains and is responsible for purchasing, marketing and logistics operations and store sites. The management of the K-food stores is concentrated from six to three units, which are K-citymarket (51 stores), K-supermarket (152 stores) and K-market (all other K-food stores incl. K-extra, K-pikkolo and Cassa stores, 850 in all). In addition, the K-food stores' service and price competitiveness will be markedly improved as a result of Kesko Food's intensified control of the operations chain from customers to suppliers.

Logistical improvements will mainly focus on enhancing the operational base of logistics control as a whole. Plans have also been prepared to transfer Kesko Food's warehouse production to Kesped Ltd, responsible for Kesko Corporation's transport and terminal operations. Kesped will become a Kesko Food subsidiary and its name will be changed to Keslog Oy. This arrangement will take effect from the beginning of next year and it will not have any immediate effects on personnel.

The reforms are aimed at outperforming the competition in terms of sales development. Within the next few years, over 300 million euros are planned to be invested in store sites. The enhancement of Kesko Food's operating efficiency started in the spring 2005 generates some 20 million euros in savings compared to the earlier level. Capital spending will be enhanced by divesting store sites while making investments in the retail store network and improving its sales performance. Store site capital is planned to remain at the present level.

Chain management is the responsibility of Kesko Food's Executive Vice President Harri Sivula (K-citymarket), Vice President Minna Kurunsaari (K-supermarket) and Vice President Mika Rautiainen (K-market). Vice President Ari Akseli is responsible for commerce. Human resources, concept development, marketing support and K-Plus Oy are the responsibilities of Vice President Niila Rajala. Vice President Kari Heiskanen is responsible for store sites and retailer programme. Vice President Petteri Niemi, who has acted as Director of the Commercial Division at Tuko Logistics Oy, is responsible for delivery chain management, information management and finance. Keslog Oy's Managing Director is Mika Salmijärvi.