In 120 years, the S group grew into a giant dominating the grocery store.
Hannu Krook sits down at an old table and picks up a pen. The sturdy, solid wood table looks just like the Big Leader’s table should.
And Krook really is the Big Leader. In present-day Finland, SOK owns half the kingdom. Sokos Hotels is Finland’s best-known and largest hotel chain, the S group’s market share in grocery trade is close to 50 percent. And there is hardly a person in Finland who has never visited an ABC store.
Although the manager’s desk does not belong to Krook, it is in the museum of the S Group headquarters. Krook sits down by it at the cameraman’s request. Actually, his desk is located in an open office with several people.
“Times are changing,” states SOK CEO Krook calmly.
Finland The Central Association of Cooperatives (SOK) celebrated its 120th birthday in March. Times have indeed changed somewhat since 1904, when SOK’s first general director W.A. Lavonius sat at the same table.
Lavonius struggled with different problems than the current CEO. Finland, or rather the Grand Duchy of Finland, was still part of the Russian Empire at that time. The repressive years were going on in Finland, i.e. the period when Finland was attempted to be Russianized.
The majority of Finns lived in the countryside and earned their living from farming. There were about 200 cooperative stores in 1905, and they certainly didn’t offer five different kinds of nougat ice cream. Salt, sugar, flour, coffee and nails were bought in the shops. If there was extra money, sometimes more expensive colonial goods such as spices could also end up in the basket.
Now there are about a thousand stores, and their best-selling food products are prepared foods, meats, candies and milk.
Some things don’t change: coffee is still among the most purchased foods.
The problems of today’s world is overeating, but in 1904 some people suffered from hunger. The year 1902 was a lost year, and to alleviate the famine, emergency relief committees were established around the country.
However, there was something similar in time. There was also a strike in 1905. However, the reasons were partly different. At that time, one of the main goals was to get universal and equal voting rights for citizens. But the goals were the same. Also in the 20th century, improvements in economic conditions were sought.
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Some things don’t change: coffee is still among the most purchased foods.
Is not coincidentally, the cooperative started in these years. There was a real need for organized action.
First, in 1901, Vähäväkisten Osuusliike was founded in Turku, and in 1904, Suomen Cooperatives’ Union SOK. Its task was to manage joint purchases and give advice. SOK’s first production plants, i.e. knitting mill, brush factory, chicory factory, coffee roaster, and spice and tea packaging factory, were established in Helsinki in 1914–1916.
The number of production facilities increased steadily from here until the 1960s when the operation drifted into crisis. People moved out of the country at a rapid pace, and the cooperative business did not keep up with the pace of the changing world. It was thanks to a small thing that the entire SOK did not go bankrupt in the early 1980s. At its worst, SOK’s market share was less than 16 percent.
Hannu Krook believes that the changes made in the 1990s were important for S Group’s current success.
SOK:ssa a fierce renovation was started. That included, among other things, giving up our own industry.
According to Krook, the foundations of SOK’s current success were created in the 1980s and 1990s.
“At that time, regional cooperative stores, chains and procurement were concentrated in one place. In this way, we were able to increase purchase volumes and tighten prices.”
In these years, SOK also invested heavily in large car dealerships. The chosen direction has been a success. Last year, S Group’s operating result rose to 447 million euros.
of the S group however, success comes at a price. At the moment, the grocery store is very concentrated in Finland.
The market was dominated by Kesko and the S group. Kesko’s market share is 34.3 percent and S Group’s 48.3 percent. Lidl’s market share is 9.6 percent. The share of other private individuals is 7.8 percent.
In Krook’s opinion, there is no harm in concentration as long as it is not reflected in prices.
“Then it would be a bad thing if we started to inflate the price. Our price level is quite reasonable compared to other EU countries, and we can prove it with EU comparisons.”
According to the S Group, the taxed price of food in Finland was the ninth highest in the comparison of European countries in 2022. The most expensive food was in Switzerland and Norway, the cheapest in Romania and Poland.
Krook says that people should remember that high value added tax is one of the biggest reasons why food prices are high in Finland, not store pricing.
“In the EU, the average value added tax is seven and in Finland it is 14.”
There are hardly any reductions in the value added tax, rather the opposite. Minister of Finance Riikka Purra (ps) mentioned in Decemberthat the government might at some point raise the value added tax on food.
“From our point of view, it’s a bad idea because it would tax consumers’ purchasing power. And yes, household consumption has sustained the growth of the Finnish economy for several years,” says Krook.
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In Krook’s opinion, there is no harm in concentration as long as it is not reflected in prices.
When Krook was interviewed To Helsingin Sanomat four years ago, he said that one of his goals is to develop S Group’s online store. He has succeeded in that, because the S group is now the number one online store in the grocery side for the second year running.
“We have renewed the entire online shopping platform, and we are constantly developing it. In addition, we have invested in new distribution centers.”
Technology is close to Krook’s heart. He hopes that his time in the S group would be remembered during the time when the S group moved into the digital and modern era.
Online shopping still only accounts for a few percent of grocery sales, but Krook believes it has a future. At the moment, S Group’s online store is not yet profitable.
“I believe that when the process can be automated as far as possible, it will be profitable.”
Krook thinks that the development of online shopping will take time, as consumers must first get used to the new form of shopping.
“But we in cooperatives are used to long development arcs.”
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