The giants of the trade industry have announced significant price promotions this week.
Grocery store Kesko said on Thursday that he had reduced the price of 1,200 products in K-group stores.
Of these, 200 products are products belonging to the K group’s own Pirkka series. The price reductions have entered into force in January.
S group had announced a few days earlier that it would lower the price of 600 products. The price calculation applies to all products of the chain’s own Xtra brand and almost 200 other branded products.
Trade industry analyst Arhi Kivilahti Ada Insights -research company states that the discount on the S group’s products was probably a fairly mundane early-year campaign to remind customers to compare prices.
“However, the invoice mainly concerns the Xtra brand, and not the group’s most important products, such as Kotimaista products.”
Instead, Kivilahti sees Kesko’s decision as a clearly bigger investment.
“This is a significant and long-awaited opening from Kesko.”
The point of comparison can be found in Sweden
Kesko’s CEO changed in February, when Jorma Rauhala started on the job Mikko Helander’s to retire. Since then, it has been guessed when Kesko will launch a price campaign.
“Kesko has lost market share to the S group for the past three years. It has therefore been expected for a long time that Kesko would invest in the price. Until now, the campaigns have concerned individual products or product baskets. Now they are going big, with 1,200 products,” says Kivilahti.
However, he reminds that grocery stores have 20,000–30,000 products in total. The price promotion therefore only applies to a small part of the products.
“The big difference to the S group is that the price drop applies to brand products and Pirkka products, which are, however, from the holy end.”
Kivilahti compares Kesko’s operations to a Swedish one ICA– to the operation of the chain. ICA announced one billion kroner investments in prices a year ago.
A billion crowns is about 88 million euros. Kesko’s price reductions cost the company around 50 million euros.
“ICA did its campaign in such a way that the discount was very strongly visible in the stores. ‘Rea’ was written everywhere in capital letters. The chain managed to win back the lost market share. It’s a good signal for Kesko,” says Kivilahti.
The practical implementation remains to be seen
Kesko states in its press release that the price reductions have been made in close cooperation between Kesko, merchants and supplier partners.
“Of course, this is a difficult whole, how this happens in practice. Kesko can’t inform the merchant that the price will drop this much now,” says Kivilahti.
He estimates that the start of Kesko’s price promotion could hit a good mark in the sense that the worst lows in consumer confidence seem to be behind us now.
“Consumers are starting to be a little more confident and Kesko is getting closer to the S group in terms of price. It can have a positive effect on Kesko’s competitiveness.”