Kesko Corporation considers setting up logistics centre in Estonia

Land reserved in Kerava for new Citymarket warehouse

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The Kesko retail and wholesale conglomerate could build a second major logistics centre in Kerava, north of Helsinki. Last autumn, a semi-automated warehouse costing EUR 50 million for the Anttila department store chain was taken into use.
      Now plans are for another logistics centre for the Citymarket chain, next to the Anttila centre. Kesko CEO Matti Halmesmäki says that the company is currently assessing the costs of a new warehouse and a possible schedule for its construction.
     
The Anttila logistics centre, comprising 350,000 cubic metres of storage space, is one of the biggest investments in Kesko’s history. The centre employs 180 people, and serves Anttila department stores, its online sales department, and the Kodin Ykkönen stores. Currently Citymarket has a warehouse in the Hakkila district of Vantaa.
      The Citymarket storage area would differ from the Anttila facility in that it would also involve the distribution of food, which comprises the greater part of its sales.
     
The logistics centre would also serve online sales, as Kesko is planning to extend electronic commerce to all of its trade in home and specialty goods.
      Halmesmäki sees electronic sales to be both an opportunity and a threat. He notes that online commerce puts retailers in different countries on different types of footing. He notes that if the gap in value-added tax levels in Finland and other countries grows too much, retailers will have to consider where to keep their merchandise.
     
Kesko has already been offered storage space in Estonia, which is logistically closer to the south of Finland than Oulu, for instance. Estonia also has cheaper available labour and a lower VAT rate.
      Halmesmäki says that the possibility of setting up an automated logistics area in Estonia, “where workers appreciate jobs in commerce” is under consideration. He said that Estonia could also serve as a gateway to Russia.
     
Halmesmäki does not believe in the horror scenario according to which ordinary retail outlets would end up being mere “fitting rooms”, where customers would go to check out products, and then buy them on line.
      “The experience of shopping is also very important for customers.”
      He emphasised that Finland is always the first priority for Kesko, but added that commerce cannot nail itself to the home country if the possibilities for competition disappear.
      Last year Kesko invested about EUR 300 million in Finland.
     


Previously in HS International Edition:
  Retailer Kesko counts on groceries and "the ketchup effect" (4.2.2011)

Links:
  Kesko annual summary 2011

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