Kesko Oyj (KESKOB) Earnings Call Transcript & Summary

Welcome to Kesko's Digital Hour. Digitalization has a crucial role in Kesko's transformation in these recent years, and can definitely be seen as a competitive edge. As the title indicates, we have an hour dedicated to Kesko's digitalization. We have a slight change in our original agenda as our President and CEO, Mikko Helander, had some flu-like symptoms and is not attending today. But not to worry, CFO, Jukka Erlund, steps in and presents Mikko's part. After Jukka's presentation, Anni Ronkainen, Kesko's Chief Digital Officer, dives deeper into digitalization. At the end, you have the great opportunity to ask questions. [Operator Instructions] But without further ado, Jukka, please, the stage is yours.

Thank you, Hanna. And good afternoon, ladies and gentlemen on my behalf as well. So let's start with our operations first. As you know, we have 3 divisions, with retail sales of EUR 14 billion. The Finnish cultural trade covering both the consumer-driven retailing sales but also the B2B driven Kespro food service business. Then our building and technical trade in 8 Northern European countries, serving technical trade professional customers as well as builders merchant, professional customers and consumer customers in do-it-yourself operations. And then car trade in Finland having all the operations in the value chain from importing to retailing of new cars and used cars and services as well. Digitalization is -- has a very important role in our strategy. It's one of the growth drivers in our strategy. As you know, we have the growth strategy for all of our 3 divisions. I mentioned earlier, grocery trade, building and technical trade and car trade. And customer experience and digitalization play a very important role in all of those 3 divisions strategies. Looking at our financial performance. Digitalization, data utilization and also technology have contributed strongly into our operations and profitability not just the top line-driven sales growth but also improving our margin and our cost efficiency as well. When we look at the big picture, since 2014, we've been able to grow our operations substantially in our growth business areas and our retail sales have increased more than EUR 4 billion during the last 7 years. A lot of that growth has been enabled by the systems and the platforms that we have had already earlier in our operations. And that has helped us to gather substantial synergies and cost improvements, and our cost ratio has come down substantially also during the last years. When we look at our digital sales, currently, it's around worth EUR 1.4 billion. We have had good growth, both in the B2B-driven digital sales but also in the B2C-driven sales. If we look at, for example, our last 12-month growth in our consumer-driven businesses in online, all of the businesses, groceries, building and home improvement trade and sports trade have increased online sales by more than 50%. And as you can see from the graph here, B2B operations actually play a very important part of our digital sales, both Kespro's B2B customers, around 40% and also Omninen's technical trade around 35%. So it's very important we understand that our digital sales are customer-driven in all of our businesses and customer segments. We want to be the forerunner in trading sector digitalization, and we are using digitalization in 2 ways in a nutshell: to improve our customer experiences; and to make our operations more efficient. We'll deep dive to this in my presentation and also Anni's presentation a bit more in detail, but it's very important to understand that we, at the same time, target for better customer experience and better efficiency in our operations. A few words about the divisions at a very high level. The grocery trade is well positioned to continue sales growth. We do believe that online sales will remain permanently above the prepandemic level and will continue to grow. And we are using, also in the future, customer data to create store-specific business ideas and to use and utilize the data in our core processes in order to make our everyday decisions more wiser and more customer-driven. For example, in replenishment, in assortment planning selections and also in pricing. So it's obvious that we will continue our strong development of our both digital services as well as the online sales in our grocery division also going forward. Looking at the building and technical trade. We have gone through specific actions to support the growth. And it's needless to say that even though we have country-specific actions, we also want to get the synergies between the countries and here, digital, IT and technology plays a big role. As mentioned earlier, we have 3 segments here -- main customer segments here. So it's the professional customers in technical trade, it's the professional customers in builders merchant and the consumer customers in do-it-yourself. And each of these customer segments need a tailored online and digital services, and that's what we are currently doing according to our strategy. It's also highly important to understand that also the efficiency plays a very important role in building a technical trade. We are reengineering our processes, utilizing our common core ERP systems, et cetera, in order to drive our efficiency even higher going forward. Then shortly about the car trade. The car industry as such is going through transformation and also our division is going through a renewal, which is performing and proceeding really well, and it's really forming the basis for our growth. Digitalization and customer experience is central to the car trade strategy and also the efficiency part is highly important also in our car trade strategy, and we want to serve our customers the best possible way when it comes to selling new cars, used cars and also the services. Good. Then let's look at, very shortly, the efficiency side of our digitalization, IT and technology before we go to Anni's presentation. So when we look at our efficiency, I would raise 3 different areas here: so it's about realizing the synergies; it's about process efficiency and automation; and it's about utilizing the data and analytics in our processes. So let's go a bit deeper in all of these 3 areas. So realizing synergies is really coming from our core common architecture, our core common platforms and systems. So it's about economies of scale, utilizing the platforms that we have currently and especially when we talk about M&A acquisitions. The common core is important, but also it's important to understand that we have a common IT function where we, of course, utilize the IT sourcing, vendor management and IT service consolidation as the one source of our efficiency. So we've been able to drive down our unit cost in IT quite a bit during the last years. So pretty much driving the sales up and at the same time, maintaining a really good efficiency in our IT cost side. The second part is the process efficiency. And like I said, this is highly important because we have a long track record here when it comes to process reengineering. And here, the ERP platforms especially play a big role. So we continue developing our ERP platforms. That's the common core of our operations. But in addition to those ERP platforms, we also have already more than 200 processes automated with our robotic process automation, RPA. The latest technology that we have acquired also is about process mining. So this is a technology that we are utilizing in order to find the bottlenecks and further sort of automation possibilities going further. But it's important to understand that we start with the processes, reengineer those processes, utilize their ERP systems to the maximum and then go to the RPA and process mining technologies. And the third is the data and analytics. So we want our processes to be really data-driven. So we use data and algorithmic capabilities in our core retailing processes. And like I earlier mentioned, this goes to, for example, replenishment, assortment planning and pricing even at the store level according to our store-specific business idea. And then obviously, data-driven decision support is also highly important. So utilizing the data, IT and technology to drive our top line growth, our gross margins and cost efficiency has been very fruitful. Our cost ratio on a comparable basis without the impact of the acquisitions has constantly come down during the last quarters and last years. So we have been able to utilize the platforms that we have in our systems and generated more sales with these platforms. Then last but not least, a few words about the strategy. We have invested quite a bit also during the last years despite the pandemic situation. The store site CapEx is still the biggest part of our investments, but digital and IT has become more important all the time. As you could see from the previous slide, our IT costs are around EUR 100 million per year. So in that sense, the IT CapEx is not sort of telling the whole picture here. But when it comes to new services, the focus area in IT, especially and digital is really building the capabilities when it comes to data, when it comes to e-commerce, online offerings, digital platforms, but also the more traditional common core ERP systems and so on. So this is the journey that we will continue and even speed up a bit going further. So that in a nutshell when it comes to our big picture of the digitalization and the efficiency. And now Anni will come and tell a bit more about the customer experience side, technologies and very interesting deep dives also in the different areas of digital. Please, Anni.

Thank you, Jukka, for the presentation and Anni, the stage is now yours.

Yes. Good afternoon, ladies and gentlemen, on my behalf. I'm really happy to be here and share some insight about how we are doing and what kind of cases we are having in the field of digitization (sic) [ digitalization ] at K Group. As Jukka mentioned, we are deploying a growth strategy, and we believe strongly that in order to be successful here, we also have to be successful in customer experience, digitalization and sustainability. And in the following 30 minutes or so, I will touch more on the first 2 topics, customer experience and digitalization. When we talk about digitalization, we always come back to the data. And data is actually in the heart of everything. And at Kesko K Group, we aim to become a truly data-driven organization where with data, analytics and AI, we support our businesses, as Jukka mentioned, to both strategic and operating level and give value also to our customers. So where do we get the data? And what are the kind of interesting and important data sources for us? So obviously, there are several data sources, but when we are talking about the customer data, we have almost 25-year old loyalty program called Plussa here in Finland. It's a waste asset for us. We have 3.3 million active K-Plussa loyal customers in our database, meaning that they are regularly using Plussa card when visiting our online or off-line stores. We get information about customers when they are visiting our digital sites in Finland, for example, K-Ruoka or K-Rauta sites. We get tons of feedback from our customers on a yearly basis, more than 2 million instances of feedback from our grocery and digital service customers. All in all, we kind of get almost 40 million registered purchases per month at K Group's and K-Rauta stores. This means that 40 million times a customer shows his or her K-Plussa loyalty card and registers the purchases. This is a great source of data for us. And then one more number to bring up is that we get 1.1 million visits to the K-Ruoka mobile app up in a week. And in the Finnish context, this is the one of the most famous or most used applications in the local market. In today's presentation, we have a strong focus on grocery trade. But at the end, we will also have a quick view on car and building and technical trade as well. Our data adds value to all stakeholders. It's good to remember that it's not just the customers. As Jukka mentioned earlier, we are using data also developing various kinds of services to all our stakeholders. This means to our own purposes so that we can develop our core processes to be more, for example, efficient in what we are doing in our daily routines. We want to add really value to our customers by developing new services that helps our customers to have a better everyday life. Then, of course, super important role is our retailers. We want to provide our retailers with different kind of data sets and tools so that they are able to better run store-specific business ideas in their particular stores. And of course, last but not least, our partners, our vendors and suppliers, we are really trying to provide them with more data and information so that they are also be able -- so they will also be more successful in their operations, in our network. Store-specific business idea. As you might know, it's one of the cornerstones in our strategy. Every physical store has a store-specific business idea in the grocery business in Finland. This means that every single store is tailored to the [ clientele ] of the particular stores. This means that we want to equip our retailers with a good data set, with a good insight about what their clients look like, what they desire, what is the purchasing power in the area or what does the competition look like? And at the other hand, we help them with the data to run their day-to-day operation and help them to make operative -- better operating decisions based on the facts. This is one example. But in addition to that, our retailers have a bunch of different kind of tools in use so that they can run their store-specific business idea. To mention a few, we have a tool to take care of the selection and product recommendations. We have tool for marketing. We have tools for online grocery operations, for customer feedback and to store reporting. And obviously, it's super important that these tools are easy to use for the retailers, and they have a very, very strong mobile access. Next example is about digital signage. So the digitalization entering in the digital -- in the physical stores as well. And currently, we are building a nationwide retail media in Finland. Digital marketing streams bring the media inside the store, close to the purchasing decisions. And this combined with the data adds a big value to the advertisers and the suppliers and also at the same time times this improves customer experience in store. The other side of the digital store concept is electronic shelf labels, which have twofold kind of gains. First, they make store operations more efficient and also customer happier because we are able to minimize errors in pricing. We are able to save the store's staff times as shelf prices are automatically obtained from the register system. We are able to provide more information on diets and allergens automatically. And also, there's a sustainability angle. And this saves tons of paper and discarded data strips are recycled into new plastics products as well. Third case is about personalized customer experience in digital channels. And as an example, there's a Ostokset service called purchase service, where we are sharing our customers' data with them. We are not only sharing the data but also providing customers with suggestions according to their wishes. And what does this Ostokset service stands for? It's a service inside K-Ruoka mobile app or website. And we are delivering customers data back to them in a very practical format. Customers have an insight over the past 5 years to their purchases from a category level into the detailed product level. Secondly, they can have a look what's a share of the domestic so Finnish produce in their grocery purchases. They can also set targets to increase the share of these products in the shopping basket and if they wish, they can also get some suggestions on matching Finnish products if they kind of wish to have more domestic products in their baskets. There's also health indicators, for example, showing how much customers have bought red meat, sugar, salt, vegetables, fish, and how these purchases match with national health recommendations. And last but not least, you can follow your carbon footprint. So what's the share of your grocery purchases? What kind of carbon footprint you have created? And what kind of tools of ideas you have to bring it a little bit down. Then about online grocery. This is a highly interesting topic in the market at the moment and obviously a really, really focal part of our strategy at K Group as well. According to customer feedback, K-Ruoka is the most user-friendly online grocery service on the market. We provide the largest selection of products of up to 30,000 SKUs with very competitive prices. We have several kind of delivery options from home delivery to click and collect services and our service network is nationwide from very south to up to north. K-Ruoka is currently a market leader in the online grocery in Finland. There is 500 individual grocery stores offering online grocery services to the Finnish customers. The year-on-year growth in 2020 was almost 400%. And during the first 9 months this year, the growth has been about 25 years (sic) [ 25% ] year-on-year. But as you can see on the graph here on the left-hand side, the first, if you compare to the 2019, the current volumes are approximately fourfold over 2 years. During the pandemic time, we have been successful in gaining market share. Our market share in 2019 was 41% and in 2020 about 54%. And we really expect that online grocery sales will remain at high level in Finland also after postpandemic and continue to grow. That said, however, the competition is intensifying, and we are seeing new players entering to the Finnish market. We are investing and developing online grocery very holistically. First of all, we really believe that we have to win in the digital customer experience. Currently, the NPS shows that we have been quite successful on that. And we have really invest on the development on the continuous basis. Currently, we are renewing our both the mobile application and the website to really support the seamless customer experience between channels and enhance also so many times earlier mentioned store-specific business idea implementation. Then we are developing in-store picking. Majority of the deliveries are picked in store. And of course, the picking efficiency is super important for retailers. And at the same time and a few more words about that is later is that we are piloting the first micro fulfillment center here in Finland. Then we are developing various delivery models. So click and collect is one key driver in here. Our target is to increase click and collect volumes as it brings both flexibility to our customers and also it's very cost efficient for the retailers. And then last mile logistics. We are developing fast deliveries further. We are investing in delivery planning and customer communication software so that we are really able to communicate to our customers about their deliveries when they are arriving and so forth. And also Kesko-operated delivery service for high-volume stores is already in place in several hypermarkets at the moment. Let's have a look on fulfillment models next. As said, we are focusing on several fulfillment models or delivery models of which one is click and collect. Click and collect has been underdeveloped in the market and overshadowed by home delivery. Our click and collect share has been around 36%. And if you compare that share in Sweden, the corresponding number is 50%. And only 20% in the Helsinki region deliveries are click and collect. And the development of click and collect services is important, as I mentioned, for further growth in online grocery and also to give more options to our customers. Currently, home delivery, the next one, is very much preferred by our customers. This Kesko-operated K-Transport services is operational already in major cities for stores, which have very high order volumes. And at the moment, we are further developing home delivery services to even have a better customer experience, as mentioned earlier, with better customer communication and versatile delivery windows and also trying to really manage the cost of that delivery channel. Last but not least, a few words about fast deliveries. As you know, fast deliveries are growing -- is a growing global trend, and we see the same trend happening here in Finland. We have had some pilots ongoing and the first results are very promising, and we are developing the fast deliveries further. In this case, our primary focus is our nationwide network of local neighborhood stores. And why these? Because the kind of average radius of deliveries is about 1.5 kilometers. So we really need to have an intense network in here. Then about micro fulfillment center, I know this is a very big interest to you. So we recently announced that Kesko is building the first MFC in Helsinki to meet the growing customer demand and be able to deliver groceries faster and in a more cost-effective way. And currently, we are building the first implementation. It will be located in the K-Citymarket in Ruoholahti in Helsinki, very downtown. It includes 45 robots and is based on the micro fulfillment center concept, for example, used by Walmart and Tesco. And that will -- the collection efficiency will be about fourfold compared to the manual in-store picking. So a huge leap in the efficiency is expected here. But on top of that, we have access to the store-wide selections, including specialties, which is really, really important to our customers. The -- our estimated average investment is EUR 10 million in this implementation and the completion should be done by -- during the first half of next year. And Dematic is our contractor and technology provider in here. So how does micro fulfillment center work in practice? We believe that this is the way that complements our competitive advantages in online grocery. The picking happens from 3 different zones. Main volume comes from automization (sic) [ automation ] and fast-picking area to ensure cost efficiency. So goods to person picking covers major part of the volume, about 50% to 60% and the picking efficiency is as high as up to 650 rows an hour. Then we have the fast picking area covering around 30% of the volume and picking efficiency is around 120 to 200 rows per hour, and this covers all the temperatures, also frozen products. And then the smallest part, but super important in terms of customer experience, is the in-store picking, covering from 5% to 10% of the volume. And as you can see, this is a reason why we need to improve our efficiency because the picking efficiency on average in stores is 50 to -- from 50 to 70 rows an hour. And this is the kind of the tip of the iceberg where we can add of the specialties and the super important products to their customers' baskets. And then -- from these 3 different zones, we marshal the basket and then delivery groceries to our customers. All right, then we a little bit move to another business areas and one part of our division business is Kespro, which is one of the largest wholesalers of food in Finland. And Kespro is having -- Kespro is really a digital player in the market. As you can see here that over 80% of the sales goes through digital channels. It's a B2B service. So the logistic -- logic is a little bit different here. So it's tailor-made service for each customer with customer-specific selection, pricing, delivery times and logistical models. And as this is a B2B service, you can see very high conversion rates here as well. Customers are happy, NPS is more than 80 and value of the digital sales on annual level is approximately EUR 580 million. Then when it comes to digitalization in building and technical trade and Jukka already mentioned earlier that in building and technical trade, we need to serve 3 very different customer groups' needs. We have technical professionals, professional builders and consumers and where the technical professional builders value very wide selection, very high-quality and rich product information together with very reliable deliveries at the agreed time, our DIY customers, so consumers, they value good enough product information, high-quality products and competitive prices and delivery fees with very inspirational content. An example about building and technical trade success stories is Omninen. Omninen is in business where they offer services for technical builders. So very much in digital sales comps, very much in digital channels, almost 40%. They are selling huge variety of products. Their web stores are also tailored for the customer needs with EDI and punch out possibilities. And also, we are -- there are a lot of tools for sales personnel in the store level. Customers also -- Omninen customers value these services a lot and the digital sales is valued at EUR 520 million on annual basis. Last but not least, a few words about the car trade. The whole car industry, as mentioned, is going through a profound transformation. And digitalization once again is a big change driver. And we, at K Group, all, obviously, want to be part of this story. This means that also in car trade the digitalization has a remarkable impact in all our business areas, new cars, used cars and services, but also to all supporting and back-office functions such as finance and IT. In car trade, we are in the beginning of the digital journey, but we see a lot of untapped potential here as well. From the current digital presence, a few key numbers, especially in service business, the role of digital channel is crucial. 50% of service bookings are made through digital channels. Annual digital service sales is about EUR 25 million currently. Also, the digital channels as customer acquisition channel is super important. We get millions of visits. People are configuring their cars. 250,000 completed car configurations so far and also these configurations and visits, they are very important sales and service leads to our personnel. And it's worth mentioning that 50% of media spend in car trade goes to online media. So how we go from here on. Obviously, our digital journey continues. And as it's said that it's still early morning on the web, but it's really, really early morning in utilizing data. And if we currently use about 25% of the data we are having, we believe that in the coming few years, our data utilization might be around 50%. That said, at the same time, the data assets get better and the opportunities to use data in our core business and for our customers are getting more versatile. So the journey continues from here. Thank you very much.

Thank you, Anni. Thank you, Jukka, for the presentations. I didn't introduce myself in the beginning, I'm Hanna Jaakkola, I'm responsible for Investor Relations at Kesko. I have a couple of questions here, and you have now good time to send new questions. We have some 20 minutes to answer your questions until the hour is completed. Well, let's start with artificial intelligence, Anni. You mentioned that in the beginning of the presentation, is Kesko now using artificial intelligence? And if so, how?

Yes, we are using artificial intelligence, but we are only tapping the surface at this point. So we are using AI for several purposes. We are using that for kind of building better -- for example, building better customer experience, building better web services. We are using that for our assortment planning. We are using that a lot for marketing. And I think that where we are at the far most is especially in the marketing. Currently, we have tens of different kind of cases in production already.

Thank you. Is there any examples in the marketing what type of -- how much marketing is in the digital way nowadays or could you comment a little bit?

Yes, yes. I think that the number is going up all the time. So retail has traditionally been a very kind of old media-driven. But today, our kind of ad spend goes more and more to digital. So I would say that a little bit is depending on the business, as we saw here in car business, 50% is going. But where we are using AI or marketing automation as such, I would say that it's all about 50% of everything what we do. We also, by traditional media based on our data and AI.

About robotics, you talked about automation and robotics in your presentation. Are there any low-hanging fruits in the organization to increase that part of the digitalization?

Yes. Maybe going a bit backwards first of all the sort of starting point. So I think it's important to understand that, first of all, how we look at the situation is that we look at the processes first. So everything starts with reengineering the processes in a way that they are efficient. And then we try to utilize ERP systems and the core systems to sort of maximize the automation. On top of that, if that's not possible in the core systems, then we use robotics to sort of automate those things, which are still manual in addition to the sort of ERP systems. And like I said earlier, we have more than processes there. We have had that already for several years. But as you know, there's a lot of manual things still in the organization and so on. So we constantly add those sort of new processes where we use RPA, but I think it's important to understand that at the same time, we also think about the processes a lot and reengineer those ones and also invest in the ERP systems because that's the sort of backbone of the whole automation.

And to the online grocery business, you mentioned the competition is intensifying. There's a question, do you have any comments on Oda entering the market? What are the advantages and disadvantages in competing for grocery market shares?

Yes. This is a good question. So we have -- it's been a kind of public news already for some time that we are having new players of the market and the Norwegian Oda is currently piloting their services in the Helsinki area. So I think that there's a lot of -- so Finland has been a kind of underdeveloped grocery market. So it's been quite -- it is quite easy for the new players to step in. So that's the first thing. On the other hand, I think that we -- all the players have a little bit different approach to the markets. And we strongly believe on our kind of store-specific business idea. We believe that we have a strong kind of we can strongly lean on our retailers, which do their uttermost best to make customers happy. But at the same time, I think that even though the competition is intensifying, we believe that the market is growing. So we -- but I think we are quite strong in our strategy and really delivering the strong kind of -- strong -- a wide variety of products to our customers and also, which is different from Oda kind of giving several delivery options to our customers.

Anything to add?

Yes, I think it's a combination of a number of things. So like Anni said, it's really about the assortment you can offer to your customers. It's really about the convenience, how convenient is to do the shopping? What are the delivery capabilities that you have? And then it's about the prices of the products and prices of the deliveries and so on. So there's a number of things that you can sort of improve and so on. I think that we have quite a lot of those sort of different kind of capabilities.

And we have the store network.

Yes. Exactly.

So it's quite -- according to our research, we have done a few years back and continuing that there's only a very small amount of people who only want to kind of do online grocery shopping. So we are kind of agnostic with that channel and really want to offer the same experience both online and offline. And also in grocery.

And isn't it so that the customers that are active on online channel are active also in our physical stores.

Yes, they are very valuable customers for us.

Yes.

Maybe one more thing. So we always start from the customer and the customer needs to fulfill those customer needs. And then we look at how can we do it as profitably as possible in a way. So it's a combination of these. But starting from the customer needs, I think that's important to highlight.

Very good. And then there's a question about CapEx. How CapEx is going to develop in 2020, '23 is the question. I think this is about everything, but maybe you can comment on the general level and then IT as well.

Yes, sure. So we've been investing throughout the years in IT and digital and technology, and we will definitely continue that when we even speed up. It's somewhat -- well, there's multiple areas. So there's the data and those technologies, which related to data are highly important. E-commerce, online offering and those technologies are highly important as well. But still the sort of more traditional ERPs and that kind of systems also need investments and so on. So at least those are some of the marketing sort of technologies that we need to invest and go on and technology is sort of improving all the time, and we need to sort of be very agile in a way to utilize the new kind of technologies as well. So this is the thing where we will never be ready in a way.

You showed us that in recent years, the CapEx has been between EUR 250 million and EUR 300 million approximately. Are there any guidance to that?

Yes, sure. So I think that, obviously, during the last 2 years, 2020 and 2021, this has been the pandemic time and so on. So we have sort of needed to sort of focus a lot what we do and so on to secure the projects that they go well and so on and so on. I think going forward, we are sort of able to boost a bit our agenda, and that means also somewhat higher CapEx, both to store sites, but also to the digital and IT and technology.

And then MFC. What kind of investments do you budget for MFC? Are investments fully scalable up and down? For example, is this EUR 10 million investment in Helsinki higher end than like a lower end. Comment on the MFC investment, anyone.

Yes, I think it's a kind of -- average kind of size of implementation is around about EUR 10 million. And I think that it's kind of -- the size has to be a certain size that it makes sense to have this kind of installations.

Fast deliveries. Will you be working with Wolt mainly? Or do you have other partners or alternatives?

We have piloted with Wolt so far. And as I said, the customers have been quite happy with the service. And also, it has been very, very, very -- or it has shown a lot of interest among our retailers. And we are continuing in piloting and really see where the market goes at this point.

Are there any surprises? Or are people buying mostly snacks and soft drinks or are there any surprises when it comes to the fast deliveries or...

Yes, it's a different basket really. So if you think about -- for some the basket size is much -- is about 1/4 about average size in online grocery. And then it's kind of more kind of occasion-driven, so kind of food for movies or kind of ingredients for salad or candies for children and so forth, not kind of full, for example, lunch baskets or ingredients to make a food.

About car sales, used cars, is there anything you can elaborate about the used car sales digitalization? You mentioned all these different areas that we are focusing on in car sales. Is there anything about used cars? Matti was recently talking about pricing maybe something digital coming into that. Anything?

Yes. So pricing is super important so that we buy and sell at the right price. So we come to the dynamic pricing here and building capabilities to be better on that. And also, I think Matti mentioned also that the used car market is a big, really big market in Finland, and we want to be part of here -- of that game as well. And maybe some of the kind of Finnish people on the line has seen that there's a huge campaign going on in the media at the moment that K-Rauta is buying used cars. So sell the car and you'll a huge amount and you earn Plussa points as well, 100,000.

Yes, you get 100,000. Yes, I saw that. It is amazing. That's very good.

Yes. But it's super important.

Yes. Any other comments on the car trade digitalization or...

Yes. Maybe just what I said earlier as well, that there's both the customer experience side where we are working heavily and this pricing goes to that one as well. But there's quite a bit also in the process reengineering side and efficiency side as well. So in that sense, a lot of work already done, but already ahead as well.

Yes. And I mentioned in my part really quickly. So we are digitalizing all the back office and support functions as well, including finance and all the -- there's a lot of paperwork. There has been kind of traditional lot of paperwork involved in car business. So we're digitizing that as well.

Are we able to buy a car online? Or is it something that you have to do physically?

Yes, technically, it's possible and so on, and we even had some pilots earlier on. But I think that like in all of our businesses, I think it's great asset for us that we have the sort of omnichannel offering, having new stores as well as the digital channels and car trade is a business where the unit is fairly expensive and so on. So a lot of the customers prefer searching the car online and checking out the specs and prices and so on, but still the -- of course, after sales and services and so on, but also purchasing car is something that they rather do in-store. So I think omnichannel isn't a way to do that business.

No, you don't yet click the checkout for EUR 100,000 car.

Yes. It's a big investment.

We'll see what the future brings then in 10 years' time.

Yes. It might increase in the future and the customer need might be, so that it's purely digital, but let's see.

Interesting. Then about building and technical trade. How will these online stores will develop further in building and technical trade, K-Rauta in Finland, what are there like biggest advantages at the moment compared to your competitors?

So K-Rauta e-commerce you mean?

Exactly. Yes.

Yes. So the role in -- if you're talking about kind of consumer business or DIY business, the role of kind of online stores is so different compared to the online grocery. So we talk about webcasting and then show casting. So meaning that you kind of explore the product on the web and depending on is it a title or something you really want to have a look in -- how does it look in the physical world. So it kind of drives people into the physical stores as well. So this is also very important to remember. And we believe that this kind of, how would I say, web-assisted sales, the number will increase. And that means that we need to have a really good product information there. We need to have some instructions regarding, for example, installations, or if you are buying some technical part, we need -- we have to tell or inform our customers that you also need this part in order to install something.

Did you forget this?

Yes. Install something and also the inspirational context. Because if we are talking about home decoration and how you kind of paint your house or walls inside your apartment, you want to have some inspiration. And these are the kind of really big kind of potential that we want in the future offer to our customers as well.

Probably also deliveries if you're making a terrace, it's not easy to get there.

Yes. And there are several delivery methods available, so either you can collect them in store, but if you're building a terrace that's not probably an option. And then you can have various kind of home deliveries as well.

Maybe just to add on that one. I think that in the do-it-yourself especially in K-Rauta, their store network is really a strength for us because many times the consumers want the product immediately and therefore, the sort of product availability and especially heavy products, it's super important that you know that is the product available and where is it available and it's a combination of sort of home deliveries and stores. And like Anni said, product information is extremely important because there's hundreds of thousands of products compared to many other categories where we operate.

That's correct. And then back to grocery trade, which has been quite a topic today, of course. Your grocery online market share has increased from 41% in 2019 to 54% in 2020. What is your gut feeling for 2021, up or down?

The whole market is going remarkably up.

Yes.

So we are looking for the 50-plus percent still. That's my gut feeling.

Thank you. And then I think you have -- we have 2 more minutes. So please, one last one. If you have time I will ask here about data usage you showed us in the last page. What -- in what business do you see the greatest opportunities to increase data usage?

I think that we have a lot of potential in all our businesses. And I think that, for example, in grocery trade now, we have implemented the most obvious cases like marketing or recommendations and this so far. But we really haven't touched deeply in the core business. So really kind of bringing the beauty of the AI to, for example, our commercial business is important. And then there's a huge, huge potential in building and technical trade and both in car. So I believe that's the case, but we need to do some data work beyond before it's possible.

How about the synergies between divisions?

Yes. So for example, the customer data is one. Obviously, even though the majority of the customer data get collected in the grocery businesses, the whole potential -- the client potential -- sales potential lies within these customers. So extremely important and useful for all businesses as well. I think that is the Plussa system is the one. Then also the synergies we get is our data platform, which is kind of useful for the businesses.

Maybe just shortly to comment as well that it's the sales possibilities and cross-selling and so on, but also the sort of utilizing the same technologies across our different businesses.

Absolutely.

So that's highly important as well.

Very good. I think that is a very good end to our discussion and the presentation. Thank you both, Jukka and Anni.

Thank you.

And if you have any further questions, don't hesitate to contact me. Thank you.

Thank you.