Online Store The K and S Group are preparing for the entry of Norwegian competitor Oda by developing their own collection lines

Finns retail giants The K and S Group welcome Norwegian Oda to compete in the food delivery business, but firmly believe in the efficiency in logistics brought by its own store networks and large volumes.

“It’s in the customer’s best interest to have competition. It increases efficiency, ”says the S Group’s Vice President, Grocery Sampo Surface Saw.

“E-commerce operators act well as tighteners,” says the K-Group’s director responsible for e-commerce Antti Rajala.

Odan managing director Karl Munthe-Kaas said in an interview with HS that Oda, which operates on the model of a single collection center and its own transport vehicles, is able to deliver a shopping bag in Norway cheaper to the customer’s doorstep than in K-stores.

According to Munthe-Kaas, the reason is that delivering goods to a collection center and automated collection is much more efficient than first distributing Finnish giants to different stores and collecting them from the store.

He estimates that Oda’s e-commerce collection requires only about a third of the working time the K and S groups spend on similar collection. It brings significant wage cost savings.

Read more: Norwegian online food store comes to Finland and challenges K-store: “In no country do these players compete on the price of products,” says the K-Group

Finns merchant giants, on the other hand, gain efficiency from the high volume of trade.

The S Group sells groceries for more than EUR 8 billion a year, and HOK-Elanto’s turnover in Uusimaa alone is in the order of EUR 2.2 billion.

In its home country of Norway, Oda has achieved sales of an estimated EUR 200 million as the market leader in food e-commerce.

“When it comes to the efficiency and automation of the distribution chain, we have it at Sipoo’s central warehouse,” says the S Group’s Päällysaho.

Sipoon The suppliers deliver the products to the central warehouse in full pallets at the right height, and the sales items leave according to automatic orders largely automatically, either as full pallets or rollers, Päällysaho says.

In the S Group, the online food store is made using a store collection model through 200 retail collection units. E-commerce products are collected in stores.

“Oda may have benefited from its own collection and automation level in Norway in its own competitive field,” Päällysaho admits.

He says the S Group is currently considering investing in automated collection centers in “the most populous areas”. They could be located either on the side of Prisms and S-markets or in separate properties.

“Solutions will be made during the beginning of winter and spring.”

The S Group’s strength in the online food store is Prisma’s wide selection and low price level, says Päällysaho.

The S Group now has more than two hundred food online stores. In total, the S Group has more than a thousand stores, including Salet and Aleppo.

With the K-Group The first automated collection center to be built in connection with the store will be completed in Ruoholahti Citymarket in the first half of 2022, Rajala says.

At the collection point under construction in the basement of Citymarket, 45 robots bring key products to the collection point into the collector’s collection basket, so that the most typical purchases, such as bananas and toilet paper, are picked from adjacent shelves. The rest of the specialty items, such as even Eromanga meat pies or freshly squeezed orange juices, are then picked up from store shelves by collecting.

Rajala says that the equipment supplier has predicted that the collection rate could even quadruple from the current level.

In the UK, grocery chain giant Tesco has said its online food store organized in this way is quite profitable, Rajala recalls.

K-Group is expected to suffer in the competition from the fact that the group ‘s independent traders are very reluctant to give up in – store collection, as they would be in danger of losing their own income.

Rajala says that he sees the cooperation with retailers as a competitive advantage that serves customers.

“Collection efficiency is only one part of efficiency,” says Rajala.

He praises the fact that store collection during the period of strong growth in e-commerce during the corona pandemic was that online services and home deliveries have been launched quickly without major investments.

“At its best, online services were launched in ten days.”

Store collection The K-Group will continue to play a major role, as the network from Hanko to Nuorgam is large, says Rajala.

The K-Group has more than 1,200 stores, 500 of which are in the online food store.

“In November, 1.5 million online deliveries were completed this year, of which 500,000 were picked up. This is no longer marginal. ”

Rajala says that the K-Group has gone through a number of different options in the online food store before it ended up with a service model based on stone-foot shops.

“It was starting to feel obvious. Efficiency, a wide selection and local specialties are crucial. ”

Rajala talks about e-commerce as part of the customer experience of the stone foot trade, which makes the customer more strongly committed to the store. “It is important.”

Rajalan according to which the “speed requirement” is growing all the time.

“At our best, we deliver the goods quarterly,” he praises K-markets’ courier deliveries.

Picking up online purchases from a desired store is also an important competitive factor.

“In Sweden, pick-up covers 50 percent of all online shopping.”

HS: n In an interview, Oda’s CEO Karl Munthe-Kaas says that he is working to change the home delivery of food from a premium service to a mass market service.

“It’s a big promise, if they can,” commented Ada Insights, CEO of the trade Arhi Kivilahti.

He says Oda’s operating model will remove many middlemen from the online food store.

“A truck at just one collection center is better than five at Citymarket. The warehouse is bigger and the loss is easily smaller, ”Kivilahti lists.

The financing of hundreds of millions of euros provided by large investors will also give Oda time to absorb the initial losses in starting up operations, Kivilahti estimates.

However, he predicts that Oda’s biggest difficulty will be in building the trust that the K and S Group have been building in Finland for decades.

“Trading routines are deeply rooted. When you visit K or S 3-4 times a week for tens of years, it pretty much comes from the spinal cord. ”