Tokmanni Group Oyj (TOKMAN) Earnings Call Transcript & Summary

Good afternoon, and welcome to Tokmanni's Virtual Capital Day 2021. I'm Maarit Mikkonen, Head of Investor Relations and Communications at Tokmanni. Let's have a look shortly of the agenda for today. We have, altogether, 3 presentation and short recorded videos from the head of different business functions. The event will, altogether, take about 2 hours, but the timeframe is flexible depending on the amount of questions that we have. Okay, the agenda is the following. Tokmanni's CEO, Mika Rautiainen, will tell us first about Tokmanni's story and the steps the company have taken since 2018. Mika will also go through the Tokmanni's new target. Then Janne Pihkala, Strategy and Business Development Director, will tell us about the variety discount market. After these 2 presentations, we have about a 5-minute break. After the break, Mika will continue and tell us how Tokmanni story continues, and what next-generation variety discount retailer means. In the last presentation slot, Tokmanni's CFO, Markku Pirskanen, goes through Tokmanni's finance approach. [Operator Instructions]. After all these presentations, we open the telephone line for more questions. Without any further ado, let's start it. Mika, the floor is yours.

Thank you, Maarit. My pleasure. Ladies and gentlemen, good afternoon. Thank you for joining Tokmanni Capital Markets Day. I hope our presentations regarding Tokmanni and variety discount retailing, you will find them useful and informative. Our target is that after today's session, you will have a clear understanding on 3 points. First, the key success factors for Tokmanni and other variety discount retailers in general. Second, the Tokmanni new strategic targets. And the third, how do we plan to reach these targets. I will start with key success factors. First, I'll give you a short recap on the strategy period, which just ended. We called it, "Focus on customer confidence." It was launched of 2018. At that time, Tokmanni didn't have any other choice but to concentrate on customer confidence. We have to prove to our customers that Tokmanni is a real variety discount retailer and not, for example, a local department store. The most important part of this was the price level. We just had to convince our customers that they can trust in the Tokmanni low prices. In the beginning, we had to invest in this ourselves quite a lot. But today, according to the customer surveys, Tokmanni's price image is one of the best in the market. The customer confidence is definitely about the unbeatable prices, but it's not about -- it's not only about the prices. It's also about the assortment. Limited assortment is obviously the most efficient way to run retail business. Our customers gave us the feedback that they want to have better service from Tokmanni in form of wider assortment. And during the last 3 years, we've been adding more than 10,000 SKUs in our assortment. Most of them in -- obviously, in our destination categories to make them better. And also the majority of the added SKUs are in online. It's -- it wasn't probably the most efficient way to improve, well, the company efficiency, but it definitely improved customer satisfaction and customer confidence. The third part of improving customer confidence was and still is the constant improve-al (sic) [ improvement ] of our store concept and stores. During the last 3 years, we've been renewing more than 1/3 of our stores. We have been closing the smaller ones, the smaller stores, the older stores, and at the same time, we increased the store network with, altogether, 17 stores. during the 3 years' time. With our marketing, we decided that we didn't want to be shy. We started proudly to tell our customers about the wider assortment and the low prices, not forgetting the positive attitude and down to earth touch that Tokmanni has. Today, the brand image of Tokmanni that we've been creating for the last 3 years really make us proud and happy. We made hundreds of remarkable and meaningful actions to improve our customer confidence. But I have to say that the most impressive action was to involve all Tokmanni employees to join the work and get their fair share in Tokmanni success. This has made Tokmanni company culture and values very strong. And it all started to show also in the results. Here's the like-for-like customer visits during -- starting from 2014 until 2020. Clear turnaround starting from 2018 with the like-for-like customer visits. Personally, I'm very happy about the results from the customer NPS survey, which was actually conducted 2 weeks ago. Pretty bad timing with this pandemic, but still Tokmanni received the result of 55 as customer NPS. That is very good result from our point of view. With wider assortment, the average basket size started to grow as well starting from 2018. Obviously, last year, with more than 10% growth with average basket is due to the pandemic. And obviously, the customer behavior has changed actually quite a lot during the last 12 months. It's less visits from customers but bigger basket. Last year showed also that Tokmanni became a variety discount retailer for everybody in Finland. 20% of our customers last year were new customers. That's fantastic. It's also a great support for reaching the new target for this coming strategy period. And of course, it all sold also with the company results. Strong revenue growth, as we can see from here, and, well, even stronger EBIT growth. I think it's awesome. Obviously, decisions made and actions take were right. It's my pleasure to introduce you the team who also made these decisions and who -- the team who was leading that change. Here's the Tokmanni executive team. Together with this team, we feel very confident to start with a new strategy period and the new targets. And we're very confident at the moment with the new strategy. And actually, let's move to the strategy targets. The period is 2021 to 2025. And here are the new targets. First of all, our target is to continue the strong growth. Revenue target of 1.5 billion at the end of 2025. Our target is to continue also with the strong a EBIT growth. The EBIT target is EUR 150 million in the end of 2025. The target for store network, over 220 stores in Finland, and in the end of last year, and actually today, the store network is 192 stores. The efficient capital structure stays the same basically. Net debt divided with -- by EBITDA below 3.2, and at the end of last year, it was 2.0. Also, the dividend policy stays the same. Approximately 70% of net results. And the Board of Directors' dividend proposal for 2020 for the Annual General Meeting is EUR 0.85, and that's 70.2% of the net result for the financial year. And by the way, the Annual General Meeting for Tokmanni is tomorrow. So if we compare these new targets with the previous targets, the change is basically with the revenue target, with the EBIT target and with the store network. Net debt divided by EBITDA as well as dividend policy stays the same. In addition to this, we will also start an active evaluation of international cooperation and expansion. As soon as the COVID-19 is in better control in Europe. Here was a quick recap Tokmanni key success drivers and the new strategic targets. Next part is with Janne Pihkala, our Strategy and Development Director. Janne will give you a bit wider perspective on the variety discount retail market. Janne, please go ahead.

Thanks, Mika, and happy to be here. And yes, as Mika mentioned, I'm here to tell you about variety discount market and our views regarding the market development, and this section is actually based on our continuous research on the market. So we actively look at our markets and our competitors or their companies in the market. And we basically feel that based on this section, we want to give you an understanding on our new financial targets and actions that Mika will later present for you. And if you look at the content, we are going to have a short recap on what is variety discount retailing, then we move on future trends in our segment, and these are global trends that we are going to talk about. Then we are going to look at the key business drivers for our segments. And finally, look, how the segment of us and our peer companies have performed in their markets. The list of peer companies here is not all-inclusive, but it does include some of the most relevant peer companies we have. Okay, if we move forward to variety discount retailing, so what is variety discount retailing? It's a good question. By default, the definition of the market for variety discount retailing is a tricky one. You could take all variety discount retailers and sum their revenues up to end up to some market. But then again, it wouldn't be realistic in a sense that you could also look at the categories that all these variety discount retailers are selling and look at the markets for those categories. So we end up from -- in Finnish markets, around 2 billion to more than 20 billion market with this setup. And if you think about it, it's actually a combination of this both in a sense that if a person who wouldn't have money to afford a new grill now has the chance to buy the grill from variety discounting or variety discounter, meaning that the market would grow this way. Or if you think about it, there could be a person who would already decided to buy a grill, but now buys it from variety discounter as he or she gets it with lower price. So we would take market from other competitors. So as a sum, we end up that the market is probably growing for us, and it's probably huge. And if we look at our research and how we see things, we can conclude that there is a strong evidence that our segment is one of the fastest-growing ones. According to our analysis, only online segment can rival ours in growth rates, you can later see the growth rates in the final section of my presentation here. And then one can ask what makes variety discounting fast growing. Basically, if you are not into the market, you could argue that what's the difference between a department store and variety discounter. Both sell a lot of different categories and products. And this first section is basically stating those differences, how we see it, what differs us from department store. And the first one of those differentiating factors is this top of mind place to shop different categories, meaning that variety discounters tend to gain this top of mind perception for selected categories where they are very strong. And typically, if you look at the global market, there are typically seasonal categories for celebrations. Then again, many variety discount retailers have selected a set of categories where they want to be the first place to shop those products. And finally, we see that a lot of variety discounters are pushing their own private labels and exclusive products to market, making situations such that if a consumer wants those products, he or she have to visit this variety discount retailer. Then the next one is obvious, low prices. So variety discount retailing is all about variety, meaning assortment; and value, meaning low prices. And there are multiple different ways to make prices lowest. And here is some list of what typical actions we see on the market, what our peer companies are executing and we as well. So we have price cuts, promotions, price sale-ing, fixed price points, bigger packages and price comparisons to mention a few. And then finally, we have this shopping experience that should differ from department store, meaning that in variety discount retailing, it should be exciting to visit online or store. Meaning that you can make treasure hunting there, meaning that you find bargains and limited items during your visits. And then it's all about making the visit fun and surprising. So that each time you come to the store or online, it's unique. There is something different, something new to find when you visit online or store. And this concludes the differentiating factors that we see differs us from department stores. And finally, in this section, to mention, basically all varies discount retailers execute this element in different ways. So there are a lot of variation, but these top elements stay the same. Okay, this was a short introduction to variety discount retailing. And now we are going to look a bit about future trends. And keep in mind that this is going to be a global perspective. So some of this might sound a little outdated from Nordics' perspective as we have very high standards, for example, in sustainability and so forth. So but yes, let's look at the future trends. And what our peer companies are planning to do in next 5 years. Okay, and I'm going to just go this through quite quickly because of the time limitation we have here. To start with, we see that our segment's growth accelerates. And this is due to the more and more -- so the -- this is due to the fact that [ raw ] prices are becoming more and more important for consumers. And this reflects our segment's growth so that we see that the growth rates are accelerating and our segment is actually gaining quite nice growth figures that you can see later in my presentation. The next one is about unbeatable prices. We see that variety discounters that have had low price level, now try to have lowest price level, at least in some products. This is new in a sense that, typically, you don't take a stand where everything is at the lowest price. But in our segment, we haven't really seen that this -- at this extent that we now see that there are multiple products that you can actually find at the lowest price in the market from our peer companies. Then regarding assortment, we see that our peer companies are pushing new categories, new products, their assortments. And especially food categories have been very popular. And this all aims at the fact that our peer companies try to fulfill more and more missions for consumers so that one-stop shopping experience would be strengthened. So this all is aims to the fact that you could buy everything with 1 visit. And I think the pandemic situation has strengthened even this phenomenon. Okay, and then if we move forward, we have private labels. And yes, variety discount retailing is partly about private labels in a sense that it's a very important and significant part of the business. And we see that our peer companies are pushing more and more their own product ranges, different categories, even to the ones that are typically dominated by strong brands like in cosmetics category, for example. And then if you look at the next one, it's e-commerce. I think it's good to note that traditionally, online hasn't been very strong in our segment, that there are many variety discounters who doesn't even have online sites and are still growing very strong. But latest development show that variety discount retailers are taking online seriously. And if one thing to mention about online and variety discount retailing is that variety discounters are used to making profit. And they don't accept models which don't yield high profits or are very, very low or even negative on their profit. So meaning that variety discounters are experimenting ways to make online profitable. And we see that some have succeeded in that. And yes, this means heavy investments to online in the upcoming years. And followed by online, we see digital solutions. And yes, in variety discount retailing, all the digital solutions aim to increase efficiency or some other key performance indicator that -- meaning that variety discount retailers don't just do digital solutions by fun. They want to get results from those. And we typically see when we look at the market globally, we see that these type of solutions are implemented in stores or in supply chain. And we also see that the customer data takes a stronger stand in variety discount retailers, meaning that we are likely to see teams focused on utilization of shopper data and insights. Then we see that our peer companies across the globe start to take a stronger stand in their local communities, meaning that they try to support the communities and give back to communities. They already provide low prices to communities, but they are taking actions to support well-being of citizens in their communities. And we see that with this, they want to be part of the community and create loyalty towards their brand. And then finally, we have sustainability. And yes, many of our peer companies, especially the leading ones, are taking sustainability in their strategic agenda. And we expect that variety discount retailers actually are starting to catch up to leading retailers in Europe with this topic. Meaning that there will be investments done to the sustainability. And this concludes the future trend section of variety discount retailing. And if we move forward, the next section is about the key drivers in our segment. And just to remind you that we presented key drivers you -- during our last CMD 2018. And this is basically an update based on our understanding on the key drivers. And let's start with key revenue drivers where we basically see that there are 3 key drivers for growth, where the first one is store network expansion, then we have e-commerce and then we have this variety discount concept which we went through earlier. And to start with, new store openings. We see that this is still the most significant driver for growth for most companies in our segment. Roughly 75% of growth is based on new store openings. If you look at the growth figures. So a very important factor for building growth in our segment. Then online. Based on our analysis, when it comes to e-commerce, we have seen that retailers who have omni-channel or whatever you want to call it, unified retailing, bricks and clicks, tend to be the most successful ones in the long run. And we see that this model becomes increasingly important once variety discount retailer starts to have large store network that can be utilized to support e-commerce. And this kind of brings it back to the omni-channel retailing. And we strongly believe that this is the future of our segment in the long run. And finally, we have the concept. And it would seem that low prices are never out of fashion in a sense that we have peer companies who have done less -- I think Dollar General has like 29 or 30 consequent years of like-for-like growth behind them. And we typically see that this type of business model yields 3% to 5% yearly like-for-like sales growth in other markets. Okay. And these were the revenue drivers. And then we have also the profitability drivers that we have seen in our segment. And if you look at those, we have category sales mix, direct sourcing and private labels, stock lots and parallel imports and everyday low-cost as the last one. And from here, the category sales mix is probably the most significant factor determining the gross margin levels of different variety discount retailers. If you are a variety discount retailer who has a strong emphasis on grocery categories. You typically have 5% to 10% lower gross margin levels than a company who doesn't have that type of focus. So that's good to keep in mind. Then, of course, we have direct sourcing and private labels that go in hand-to-hand in a sense that when you do direct sourcing, you typically do it with your own label. And this is, of course, something that will boost your gross margin higher. And then we have stock lots and parallel imports, which are also boosting your gross margin to higher. And these are basically the key drivers for gross margin. Then we have operating expenses where everyday low-cost is a key theme, meaning that keeping the operating expenses as low as possible yields the best results in our segment. Okay. And here was a short presentation of our segments, key drivers. And now next, we are going to kind of look at the actual figures, which might be quite interesting. So to start with, and as I mentioned, the list of companies here is not all-inclusive, but it should include all -- some of the most interesting companies. And if you look at the growth figures here, we can see that during the last years, the growth has been, on average, 16.2 percentages, which is quite high in retail markets, so to speak. And please note that as we are in the middle of the season where companies published their figures, not all the figures are from the last year. But we thought that this would still give you a good overall impression on numbers. Okay, so very strong growth for our peer companies during last years. Then if we drill down where the growth has come, we see that new store openings and the share of new stores is very high with most of the companies, meaning that it has been kept our most significant driver for revenue growth for these companies. And in the next slide, we have a like-for-like growth, which has been also very high in our segment. And you can see us and Europris to stand out in this crowd. And it's good to note that the current pandemic situation, of course, has helped us in these figures. But you can see also that for the rest, rest players or peer companies there, the like-for-like is around there where it should be, even though they might have had to close some stores during the pandemic. Okay, and then if you look at the growth figures in the longer run, we see that it's even higher if you take the average, 17.5%. And very consistent performance from our peer companies there. So these figures basically demonstrate that our segment is growing if you belong to variety discount retailing. And then one can ask that, okay, so this growth figures are quite good. How is the profitability? Well, 9.1%, meaning that the segment is actually making very strong growth with very high profitability, an average of 9.1% profitability. And by the way, here, you can see quite well the difference between companies that have a stronger focus in grocery categories and who's not. So there are companies like Home Bargains, [ BTM ], Dollar General, who have strong grocery offering. And their gross margin is then closer to 30%. And then you have companies who don't have that strong focus like Europris, Ollie's Bargain Outlet and Rusta, whose gross margin is way above 30% -- closer to 40% or even over 40%. And it's good to note that if you sell groceries and you have strong focus, you probably generate more sales and more gross margin euros, even though your profitability margin is not that high. That's good to note here. But yes, let's move forward. So we have here a segment which is, on the long run, growing 17.5% and making 9.1% profit. So in next slide, we strongly believe that these type of figures interest investors. And we believe that some might be interested to be part of this type of segment. And we have closely monitored what's happening in the market, and we see that the pandemic has affected the market. In a way that now it's probably not the good time to consolidate or move to new markets. And -- but seeing those figures, we anticipate that the market consolidation will accelerate after COVID-19 pandemic is over. So here is just a few latest transactions that has happened in the market during the last years. And finally, to see to the future, we have included this slide where we have compared our peer company's growth after they have reached EUR 1 billion. And you can actually see from the slide that -- where our peer companies have been able to grow in the next 10 years by being variety discounters. And yes, we are now at year 0. And I think it's quite interesting to see where we end up after 10 years. And here was the variety discount review for you. Thank you. And let's have a short break here, a 5-minute break. I think 13 -- we will continue at 13:45. Thank you. [Break]

Welcome back to Tokmanni Capital Markets Day. In the second part of the Capital Markets Day, we will -- well, basically, we will tell you how the Tokmanni story will continue, and how are we going to reach the ambitious targets for the new strategy period. We call it actually in Finnish, we call it, [Foreign Language], in English, it's -- we're basically building a next-generation variety discount retailer. We believe we'll reach the ambitious revenue target with strong focus on customer confidence and customer engagement. To improve the customer confidence and engagement, there are 6 elements to drive customer confidence and customer engagement. We know that these are the elements, the most important elements for our customers as well when they evaluate Tokmanni every day when they are visiting Tokmanni. Our customers, they evaluate whether Tokmanni is having an interesting and wide enough assortment. They are evaluating whether Tokmanni has the lowest possible price level, whether the shopping experience or whether it is fast and easy to shop and whether the shopping experience is personalized and exciting. And of course, when visiting the stores, our customers evaluate whether the store personnel are friendly and helpful. And last but not least, our customers today, more than ever before, they evaluate whether Tokmanni offers a sustainable choice for shopping. Next, we'll present you what kind of action points are we taking with each one of these elements to improve the customer confidence and customer engagement. Let's start with the widest possible assortment. Now our plan during the first part of the strategy period is to double Tokmanni's assortment. During the last strategy period, we already had excellent experiences from our customers when we were offering a little bit wider assortment. Now this time, we're going to do it big. We're going to be expanding our current destination categories. And the current destination categories, by the way, they are garden, DIY, home decoration, washing and cleaning, health and beauty care and apparel. We will also be introducing new destination categories. We will be introducing new private label ranges and A-brands. Right now, before the start of the spring season over here in Finland, we have approximately active in our active assortment, approximately 25,000 SKUs. So this means as said, during the first part of our strategy period, it will be -- it will mean that we will have more than 50,000 SKUs in our assortment. Obviously, most of them will be in the online store. The next one is the lowest possible prices. This part is extremely crucial for Tokmanni, obviously, since we are a variety discounter. First of all, it's in our mission to provide lowest possible prices to our customers, and it's a crucial part of our competitive advantage as well. The lowest possible prices mean, to Tokmanni, it means best price with entry level products; best value with private labels; best deals with A-brands; and best campaigns. To make sure that we succeed with this, we have an algorithm, which is basically comparing more than 10,000 SKUs every week with -- in 6 -- more than 600 competitor stores. This is making sure that we stay and we are in the lowest possible price level in Finland and we can compete with the prices. The next one is fast and easy to shop. This element is probably our biggest effort during the strategy period, building a winning concept for omni-channel retailing. We all know that customers -- it's a new normal to our customers to use online and store visit combined. It's very easy to -- basically, to check the new products product availability and the prices on your mobile and then go to a store to pick up the goods or the other way around. Maybe you're visiting the Tokmanni store, you see something nice and after the store visit at home, you will do an online order for the products. Now this is the new normal, and it's getting very smooth and effortless all the time. Our aim is to win -- basically to build a winning concept on this one. It doesn't matter, if you call it omni-channel retailing or unified commerce or bricks and clicks retailing, it's all the same, the combination of online and stores. We think that we have a very good position to this because we have a nationwide store network, and it definitely helps, especially if you think about fast deliveries. As a part of this, we will be also launching a new large store concept. Obviously, it's for the wider assortment but the large store concept will also be working as a hub for the fast deliveries through online store. We are planning, at the moment, to have these larger stores, obviously, in the bigger cities or larger cities in Finland. And in the end of 2025, we'll have over 220 stores to serve Tokmanni customers only in 5 minutes reach. The next one is personal and exciting shopping experience. We will launch Tokmanni Club by the end of 2021. Tokmanni Club will offer its members personalized offers, personalized benefits and exclusive deals. Obviously, the customer data is extremely important for Tokmanni. So we will obviously use this information for becoming more -- efficiency and so on. But anyway, this will be, as said, by the end of this year. We do also have corporate clients. Actually, Tokmanni has more than 30,000 corporate clients at the moment. We will -- for these customers, we will also develop the online services, and we will strengthen the offer, make it more easier and effortless for our corporate clients to buy from Tokmanni and especially from Tokmanni online. We see here a huge potential. And obviously, for all our customers, we will have new products, bargains during every store visit. We also will bring in products that cannot be found anywhere else in Finland with the help of our direct sourcing channels. The next one is friendly and knowledgeable personnel. One of our key drivers, business drivers has been this best place to work in retail. It's been a very good business driver. And here, actually, I would like to give a chance for our HR Director, Sirpa Huuskonen, to tell a little bit more about this. So Sirpa. Please go ahead.

Thank you, Mika. Our personnel has been our #1 priority since 2018. We have, altogether, 4,065 employees in Tokmanni, and it is our goal to make Tokmanni the best place to work in retail in Finland. We believe that if our employees are happy, they will serve our customers better, which will eventually make our investors happy also. So we look at our sales success through our employees, friendly and knowledgeable service. We have 4 key drivers that lead us on our journey in becoming the preferred place to work in retail. To begin with, we take pride in leadership. It is essential that all of our team leaders lead our people according to our values and leadership principles. We have more than 400 team leaders in Tokmanni. All of them go through our leadership training and yearly evaluations. We believe that all of our employees have the right to good leadership. Next, we train and develop our people while Tokmanni is growing. Last year, over 3,200 of our employees participated in our trainings, and this number does not include onboarding trainings. Last year, we also had 200 employees participating in 1.5 or 2-year long apprenticeships. We also invest in developing our middle management and creating career paths to our employees. Also, the success of Tokmanni is shared success for the whole personnel. All of our employees are part of our rewarding program. If we reach our quarterly targets, all of our employees get their fair share of our success. Last year, we used almost EUR 4 million to reward our employees. We also do our very best to have a Fair Wage Policy in Tokmanni. Salaries are based on collective agreements or requirement assessments of positions. And our company benefits belong to all of our employees equally. Furthermore, we have long careers because we take care of our employees. It is very important for us that our employees have safe and healthy environment at work. Our personnel representatives are part of HR team, and we work together to solve our daily challenges. We also take pride in the fact that many of our store employees are able to work with us until their old-age pension. We have about 160 employees who worked -- who have worked with us over 25 or 30 years, while the average length of a career in Tokmanni is about 8.5 years. Our latest employees' Net Promoter Score was 36, while that of all of our store employees was 38, and the Net Promoter Score of our headquarters specialists was as high as 46. Finally, during the past 3 years, we have created and strengthened our company culture, which we are very proud of. Our culture is strong because it's based on mutual respect and our values. We are proud that we can offer customers low prices every day. We dare to renew, and we are not afraid of making mistakes. When we succeed we celebrate our success together. And we believe that we reach our targets together because we are all in the same Tokmanni track.

Thank you, Sirpa. It definitely sounds impressive. Then as mentioned, last but not least comes sustainability. As mentioned, it's -- today, it's more than before -- ever before, it's more important for our customers that we can also offer our customers sustainable choice. Let's give our Emilia Koski, Head of Sustainability, a chance to tell a little bit more about sustainable issues. Please, Emilia, go ahead.

Thanks, Mika. We have indeed raised the bar high in our sustainability work. We have set ambitious sustainability targets to develop even more sustainable discount retailing. Tokmanni will be a sustainable choice, both as a company and through offering our customers sustainable choices. As next-generation discount retailer, we will work hard on the following 5 points. First of all, Tokmanni will increase offering sustainable and traceable products and services. We increased per share of products with sustainability labels in all product categories and increased certification rates for all of our 4 high-risk raw materials. Cotton is the most important of them, and we will only source sustainably produced cotton in private labels by the end of 2024. Secondly, we will be carbon neutral regarding our own operations in 2025. We'll continue to reduce CO2 emissions and waste and increase the share of renewable energy. All of our electricity is already now renewable. In the summer of 2020, we became a global pioneer by adapting climate targets that are officially approved by the science-based targets initiative and in line with the Paris agreement. We were the third retailer in the Nordics to set approved climate targets to limit the temperature rise to 1.5 degrees. We work hard to reach these targets, both in our own operations and through engaging with our suppliers. Thirdly, we respect human rights in all of our activities, and we know where our products come from. We closely monitor our supply chain and all of our factories are audited by third parties. In addition, we increased the number of our own factory inspections, especially in China. And simultaneously, the improved transparency regarding products and supply chain also to our several customers. Fourthly, we foster diversity, equality and inclusion. Tokmanni is for everybody. We hire diverse people to better serve our increasing diverse clientele. We will coach all of our employees in manager position and diversity and inclusion. And our ambition is that we manage to keep our long-term employees at work until retirement age through modifying their work task and simultaneously continue to attract younger employees. And finally, we strive to be a sustainable discount retailer also in the future. We're doing everything we can to ensure integrity and responsibility of our operations now and in the future. We continue to make ambitious sustainability openings in discount retail, and we work hard to ensure that our customers and other stakeholders can trust that Tokmanni's sustainability actions are enduring, consistent and impactful.

Thank you, Emilia. The bar really is set high, and that's good. I like the fact that Tokmanni is for everybody. So anyway, these are the 6 elements to improve customer confidence and customer engagement and drive the revenue growth. Obviously, we have actions to each one of these elements, and we will be presenting this during the strategy period, also how we succeed with these elements. But it's not only about the customer confidence and engagement. It's also about the strong growth and focus on everyday low cost. These are the elements. We feel that with this, we're going to achieve also the EBIT target, ambitious EBIT target. I will tell you a little bit more about this. We have here now the 6 elements for strong growth. And then the 3 elements to drive efficiency and low cost. Obviously, the cost consciousness is a crucial part of Tokmanni. It's about everyday low-cost in everything we do. As we call it, keep your eyes on the price. So let's start, actually, where our business really starts from, and it starts from sourcing and buying. And here, we give the chance to tell a little bit more about Tokmanni's sourcing and buying during the coming years to our Sourcing Director, Juha Valtonen. Juha, please go ahead.

Thanks, Mika. Smart sourcing and buying ensures the success of the whole company. We are evaluating each and every of our existing categories, finding the new interesting product every day and improving the assortments continuously. When we keep the supply chain as short as possible, we are able to eliminate unnecessary costs. We will also have a better control for social compliance, raw materials, supply chain, and we will make sure that the level of quality is what we want. We are working really closely together with Tokmanni Europris sourcing office in Shanghai, and it creates a lot of value to Tokmanni. We are continuously developing our processes and our way of working with our sourcing office. We will open the sourcing office in Vietnam, together with Europris by end of this year, depending on the COVID-19 situation for sure. Our plan is to open the sourcing office to Bangladesh during 2022. This will support, especially Tokmanni's apparel business where we want to be the #1 retailer in Finland. With short delivery times, Europe has an important role as well, especially Eastern Europe has multiple countries with high-quality manufacturing capabilities for products in many different categories. Stock lots and parallel importing are playing very important growth for Tokmanni as well. We will actively manage our private label portfolio. Our multi-brand strategy is working very well. Just mentioning a few examples of our private labels. Our private label in home categories is Kotikulta. And it is already approximately 5% of our total sales. In 2018, we launched Brücke for power tools and DIY. And it's already now one of the most successful private label at Tokmanni. In the past 2 years, we have launched 4 new private labels, NATUR PREMIUM PET, [ Iisi ] Perfekt+, Pisara. In 2021 and '22, there will be at least 3 new private label brands into our portfolio. We have already made a plan of our private labels until 2025. Tokmanni's private labels have a significant role in building our growth for the coming years.

Thank you, Juha. I'm sure everybody is looking forward to see the new Tokmanni private label ranges. But let's move from sourcing and buying to the next corner, which in a logical way, it's supply chain management. And here, here we can listen to what Tokmanni IT and Supply Chain Director, Timo Heimo can tell us a little bit more about the Tokmanni plans for supply chain. Timo, please go ahead.

Tokmanni main target is supply chain management is to ensure high product availability for our customers with lower possible costs. Yes, 2020 was very challenging from a logistics point of view, but at the same time, it helped us to clarify our main development priorities, and now we are more ready for future. High product availability for our customers' demands constant improvement of forecasting to answer steady flow of goods. It demands, also, strong cooperation with partners to provide flexibility in shipments and warehouse workforce. And we will launch click-and-collect concept, we improved online services and delivery times, improving supply chain post efficiency means impound, warehouse logistics and store deliveries optimization. It means also the streamlining of processes with digital development. Tokmanni will create future warehouse solution in Mantsala or other location, and we take advantage of automation in warehouse. Automation is probably for e-com solutions. My target is to decrease sale of logistics costs from 5% to 10%.

Thank you, Timo. Timo, for your information, the decrease can be even more than 10%. It's acceptable. Okay, and then the last corner, it's about digitalization. It will sure help stock money during the strategy period with efficiency and customer engagement. Janne will come over here to tell you a little bit more about this. Janne, please go ahead.

Thanks, Mika. To start with, we look to improve our customer engagement and efficiency even further with digital solutions. And it's good to note that regarding digital solutions, we are going to evaluate and trial the following topics during the strategy period. In case we see a business case in any of them after the trial we are going to roll them out in large. So to start with, in order to drive customer engagement, we are looking to explore utilization of advanced analytics in assortment decisions. Optimized and store specific assortment, price optimization to ensure lowest prices for our customers, personalized customer offering and experience and, of course, digital in-store solutions to support fast and effortless customer journey. Then if you look at the digital solutions to improve efficiency and lower costs, we are looking to advanced analytics or even artificial intelligence to -- for forecasting and replenishment, improved supply chain visibility and predictability, automation and robotic process automation solutions for warehouse and headquarter operations, warehouse optimization, workforce optimization and digital solutions to improve store efficiency. And that's basically the tool kit we are looking at, at least during this strategic period regarding digitalization. Back to you, Mika.

Thank you, Janne. So as conclusion, here, we have the elements for building the next-generation variety discount retailer. And basically, we have action points to drive business through each one of these elements over here. But as a next part, let's get a little bit deeper dive in how it looks from the financial point of view. And here, we get the company CFO, Mr. Markku Pirskanen over here to tell you a little bit more about the financial path to our targets. Please, Markku.

Thank you, Mika. Good afternoon from my side also to everybody. So now we have heard about new targets, we have heard about actions that we are doing. And let's look at the -- also a little bit of a financial aspect to these actions and targets. And basically, what I'm doing is mostly look at the EBIT side, how we are going to make these steps from last year's EUR 100 million to EUR 100 billion EBIT level. So let's look first the profitability drivers for Tokmanni. Basically, we have 3 clear drivers we can speak about: sales growth, number one; number two, gross margin percentage; and number three, operating expenses percentage. And basically, these operating expenses percentage is operating expenses against the revenue. So I have, many times, thought about how it is always the balance in between the sales and the gross margin. It's quite easy to make the sales if you sell with, okay, low prices, but too low prices. So that, of course, hurts the gross margin percent. Gross margin percentage is affected also by category sales mix, meaning what kind of products we are selling. And also it is depending if we are selling the online. The online has a bit different product mix of today. And of course, if it's different, it start to affect our gross margin percentage. But on the other hand, it is good to remember that online sales has a bit different cost structure also, which of course, means that it has an effect to the operating expenses also. But next let's go through all of these 3 different elements, and let's start from revenue. As already said many times, we have a target to make a strong growth. So revenue, EUR 1.5 billion at the year 2025, which, of course, means that we have to make over EUR 400 million more what we made last year. And how we are going to do it? Mika already mentioned the business-to-business sales. We haven't spoken about that too much earlier. It's still a small portion from our revenues, but we clearly see big potential on that side also. And if you think about our assortment, it's clear that we need to have a wider assortment and we need to have a new product areas. And we need to have new stores to sell more. And if you put all of these together to sell more products, new products, new product areas, it means, that we have to make a successful combination between online and our stores. And that's what we are targeting. So basically, over EUR 400 million more revenue during the next 5 years' time. And if we start to calculate and we take the profitability level of what we have last year, 2020, 9.3% EBIT and calculate it with a little bit over EUR 400 million, this means roughly EUR 40 million more EBIT. That's #1 item here, sales growth. And next, we are going to move to gross margin and gross margin percentage. On the left side, you see the bars, which are telling how we have developed from year 2018 to 2020. We started from the level of 33.9% and ended last year to 34.6%. The development last year was not so good here. And we all remember that apparel sales was not so good last year due to the corona pandemic. And that, of course, affected our gross margin percentage because we all know that we have a good private levels, a share in apparel, which, of course, means a higher gross margin percentage. So on the right-hand side, you see the box, and I'd like to remind you what we discussed in CMD 2018. At that time, we estimated that we have a potential for gross margin percentage, something like 1% to 2%. And now if we calculate it, the difference between year '18 to '20, we see that we have achieved 0.7% out of that 1% to 2%. Now we have made a new estimation and thinking what is the potential in gross margin percentage and ended up with a final potential, which is saying that in the future, we can make 0.5% to 1% higher gross margin percentage. And next, we are going to follow how we are going to make it. Of course, these actions basically are the same what we have communicated earlier. And also, we have already done different kind of actions there. But we are going to continue. And as you heard from Jura, for example, if you look at private labels, we have a different kind of actions. But let's first look how we have performed when we look with private labels. The target is to increase private label. And looking 2018, 31.7%. And now last year, 31.8% we have to say that development has not been too successful because we have had a target to increase private label share. But of course, when we are looking at the 2020 year and this corona pandemic, it has been difficult because, as I already mentioned, the apparel share was lower last year. Due to the reason that the apparel market was very difficult. But we are going to continue work to increase the private label share. And as you have said, we are going to bring the new private label brands in the coming years. And I'm convinced that we are able to increase this year certainly. Next action, indirect increase for direct sourcing. Basically, here, if you look what has been the development during the last 3 years' time, basically, we have succeeded quite well from 24.4% to 26.6%. And if we look from where we have got this improvement, it has come from our Shanghai office work. So basically, we have been able to utilize better our office in Shanghai. So -- where share has increased from 14.7%, up to 16.5%. And if you think the direct sourcing has a total, as Jura already mentioned, we are going to open the new sourcing offices, and that should help us to still increase the direct sourcing there in the future. These 2 elements increased the private labels and increased the direct sourcing, where are the main actions. But still, we have something more to come. So basically, what we can do to achieve our targets. First of all, we can increase gross margin of our branded label products through increased volumes, meaning that when we are growing as a company, we are able to negotiate better prices for branded products. And we really believe that it's possible. The second thing increased, the stock lots. We have made good work to be more prepared, better -- to have a credit processes to increase the stock lots. And stock lots gives us also the possibility to sell with cheaper prices to have a good picture from price point of view to our customers. At the third one here, I refer to Timo Heimo's speech, we are going to increase our supply chain efficiency, and that will also have an effect to our gross margin. But after all, saying all these 5 different aspects, I'd still like to remind you that there are effects or other things which effects to gross margin. And it's still the category sales mix being, what kind of products we are selling. It really affects the gross margin. It can affect upwards or downwards, but still it affects. And online sales, as I already said, it's also affecting gross margin percentage because of different types of product mix inside the online sales. But also it has an effect to the next item, what I'm going to show to you. So basically, as stated in the big number presentation, online sales has a different kind of cost structure. So operating expenses. This is interesting, really interesting. Here is the same kind of picture. Left side bars, telling to you how it has been developed from 2018 to 2020. From year 2018, we were level 21.8%; and 2020, we were at the level of 16 -- sorry, 19.6%. And again, if we look at the box on the right-hand side, what we said on CMD 2018, we were very cautious. We estimate a potential of 0.5% and 1.5%. And now we have already has achieved 2.2%. So we are over what we thought at that time. But now how it is with the future? I'd like to remind you the context of operating expenses and remind that the salaries are over half of this roughly 20% expenses. And mostly, the salaries are variable expenses, meaning that when the revenue is going upwards, salaries are following. Of course, if we are able to improve our processes, it means that the share of salaries will be lower. But it's not so easy if you look this kind of development there. But still, we think that certain processes, we are able to improve. Some expenses here are still almost fixed and if you are able to improve your revenue or increase your revenue, you will improve your operating expense percentage ratio. And what we are thinking. We are thinking about 0.2% up to 0.5% is the potential. So now looking the sales growth, looking the gross margin percentage, looking the operating expenses percentage, just putting these together and looking how it is, our EBIT. EUR 150 million, it's tough targets, that's clear. But if you look for elements there, starting from left side, EBIT 2020, EUR 100 million, looking the effect of sales growth of over EUR 400 million will mean roughly EUR 40 million to our EBIT. Looking to element of improving gross margin percentage from 0.5% to 1% means in euro-wise, roughly EUR 7.5 million to EUR 15 million. And taking the third element, operating expenses improvement, 0.2% to 0.5%, meaning in euro, roughly 2.5% to 7.5%. So summing up these 3 different elements. We are on target, EUR 150 million at the end of 2025. So let's about the financial bridge, and I'd like to give the speech to Mika to summarize a little bit and perhaps say some key takeaways. Go ahead, Mika. Thank you all.

Thank you, Markku, too, for presenting the financial bridges, very important part of the whole story. Now we are -- at the moment, we're basically in the end of the presentations. As key takeaways from Tokmanni Capital Markets Day. I would like you to remember that we are building a next-generation variety discount retailer. We have ambitious targets, tough targets, as Markku mentioned, EUR 1.5 billion revenue, EUR 150 million EBIT target. And here is also the framework, how we're going to look at the growth targets, whether it's revenue or EBIT. And obviously, we will be telling you a lot more about the actions while proceeding with the strategy period, but already now I can say that they are very remarkable actions that we are doing, because that's the only way to proceed due to the ambitious targets. Thank you very much. I believe now it's time for questions.

Let's start with the questions we got through the chat.

Sure.

The first question is are there any certain product segments you are looking to enter or to focus more?

Yes. As mentioned in the presentation, we will introduce new destination categories. But at this moment, we will surprise our customers, and hopefully, also our competitors. So we're not telling exact categories which we are entering.

Okay. The next one. You have previously communicated that there would be room for roughly 200 Tokmanni stores in Finland. As you're approaching this number, do you have any updated view of this number and potential locations?

As already mentioned in the presentation, so we are looking for 220 stores. Quickly calculated, it's almost 30 new stores. As mentioned several times before, the white spots for Tokmanni are in the capital region area, especially Helsinki and Espoo. But of course, there are still a lot -- several towns for future locations.

You have told us that we are going -- that Tokmanni is going abroad. Do you have any plans which countries and cities you are going?

I said we are actively evaluating the situation. Obviously, pandemic -- due to the pandemic, it's a little bit different. It's not as easy, but there are several different alternatives with this one.

The next one is do you see any rationale emerging with Europris since you already cooperate with them, especially in respect to sourcing to create an undisputed Nordic champion?

No other comments over here, but let's put it this way. Europris in Norway is a fantastic company.

Okay. How large of share of total revenue do you think business to business could become?

How large share? I believe it -- at the moment, it's maybe a bit over 3% or something like this. We don't have an exact share target for that, but we have a strong growth target for it.

How would you explain this small online sales in -- of Tokmanni revenue? Do you have any plans to increase it?

That is a good question. Janne over here is actually responsible for the online business. The way we see it at the moment, we don't look at the -- let's say we don't think that any of the Tokmanni customers will shop only online. It's a combination, online and stores. And therefore, it's a little bit -- it's -- we'd like to talk about the growth in -- both in online and in our stores, and we don't want to move any of the business from our stores to online or vice versa. So it's more like a combination. For example, last year -- and Janne, please correct me if I'm wrong. But last year, I think that the visitors on our website, it was 5 to 10x more than previous year, so it's a combination. People are looking from the online tools. They are looking at the products and prices and visiting the store and so on. Would you like to...

Yes, yes. Mika, you are absolutely correct here. So the visitors on our site, the numbers are huge. So our site is actually one of the most popular in Finland. But as we have the store network, one of the largest, a lot of people tend to choose to shop from our stores instead of online. Without the store network, our online sales would be totally different. But we don't look it at the channel per channel. We look at the combination here. So that's the key here.

Okay. The next question is related to sustainability and climate, like we are saying that we are bringing and sourcing products from China. The question is that are we going to increase Finnish products, too, sourcing Finnish products?

Markku, would you like to answer this one?

Yes. I can take it. Certainly, we are bringing from China, but we still have to remember at most of -- or a big part of our products are coming from Finland already today. So Finnish producers has -- and Finnish sellers still has a big meaning already today. So that's how it is now.

Okay. The question here is that, hi, could you please elaborate more on the international expansion? You talk about the new sourcing markets, but are you also looking for opening stores outside Finland?

As already mentioned, we will start active evaluation of international cooperation and expansion. But it's -- as soon as the COVID-19 is in better control, obviously, this has something to do with the pandemic also in Europe. In Finland, we've been lucky with the situation. Tokmanni has been developing well and so on. It's not the same story in all European countries. So that's why it's also important to see like what's going to happen after or what is the situation with you different alternatives after pandemic.

Okay. Thanks, Mika. The next question is about our warehouse and logistics. Is it more or less a done deal that you will invest in the new warehouse logistic? If yes, how large will the CapEx be?

As we announce or make a release that we are making the clarification about the enlargement of our warehouse, and it's still on that state, and it's not a done deal. That's clear. It's not a done deal. It's done deal when we have signed the agreements. But as I said, it's under clarifications, and let's see how it goes. But certainly, it will be -- if that will happen, it is a remarkable investment, and it's a couple of tens of millions, but the size of investment is that happens.

Okay. Do you expect the sales growth to line in '21 to '25 or more back-end loaded to about '23 and '25?

So could you repeat that?

Do you expect the sales growth to be linear in '21 or in the beginning of the period or end of the period?

Of course, as we have -- sorry, Mika. I'll take your question. I'm very keen on that.

No problem. Please go ahead.

As we have set the guidance for year '21, we have said that, for this year, we will have a slight revenue growth. And that, of course, means that '21 is slight revenue growth. And of course, after that, we have to have a good or strong revenue growth during the next 4 years after year '21.

Yes, let's -- if -- Markku, if you don't mind, if I add on here.

Absolutely.

Obviously, we have a lot of action points, as just presented, regarding the growth -- but obviously, the pandemic -- I believe that the Finnish government is, during this moment, making decision on restrictions. I hope there won't be any restrictions regarding retailers. But still, the pandemic is affecting the business also in Finland. Even if the restrictions are not for the stores. But still, people are a little bit afraid of going to stores and so on, and there are like different ways of doing shopping. So that's why it's a little bit difficult to say more than we've actually said already with that outlook for this year. But as soon as we are able to do the actions that we're planning, we will be doing that.

Okay. Thanks. Then we have a couple of questions about the food category. I combine those two. How big share of sales come from food products? And are there any -- is that an important segment for Tokmanni also in the future? And also that how the food category has performed during 2018 and 2020, so how important it is and how it has developed.

Yes. Well, for -- it's -- for sure, groceries is it's service for our customers. And during the last 3 years, it has been performing very well as well. Basically, according to Tokmanni's strategy, we are especially investing on the destination categories. In the destination categories, we want to be #1 in Finland. There will be -- we will introduce also new destination categories. But with food, with groceries, we don't believe that we will be #1 in Finland by the end of 2025. So that's probably not going to be one of our destination categories.

Okay. Then one question about the corona crisis. Are you at risk of closing stores in parts of Finland due to the corona restrictions?

No. We don't think that we have a risk of closing any stores. However, there might be some shopping mall locations which maybe might be closed or something like that. But this is typically a little bit smaller stores for Tokmanni, and they are -- less than 10% of our store network are located in the shopping malls. But that's the only part which could cause some problems, but -- so we don't think that there is a risk of closing the stores.

Okay. Then I see the last question from our chat service, but the last question is connected to the online sales. Do you have any idea to initiate home delivery to your online sales?

Janne, would you like to take this one?

Actually, we have already home delivery. You can order items directly to your home from our website, if I got the question right.

Yes. Okay. That's the last question from the chat service. Then operator, do we have any questions on line, telephone lines?

[Operator Instructions] We have question from the line of Maria Wikstrom from Danske Bank.

Can you hear me?

Yes. Yes, we can. Maria.

Yes, perfect. I think some of my questions were already answered, but I still have some. And talking a bit about the -- I mean you mentioned possibilities for further cooperation internationally. And then thinking a little bit along here that is -- what are the product categories you guys source together with Europris? And is it possible to increase that cooperation, thinking a bit that you kind of have chosen at least one of the partners internationally? So how do you see the possibility to increase the cooperation in the future?

Well, we see a lot of potential with that as well. Our cooperation with Europris is, as Juha mentioned earlier, it's really great. The Nordic countries, Finland and Norway, we have a lot of similarities with the products. Obviously, the store concepts are a little bit different, but the products, in several cases, are similar, either exactly the similar products or almost the same. And we can see that there are a lot of potential still to grow with this one. It's -- we do have like -- it's not only China where we are basically buying together. It's -- for example, Vietnam, at the moment, a very important part of also our direct sourcing, and that's why we're planning a new office over there, as well as Bangladesh.

Okay. Good. Then just a bit of an interest as you mentioned that during the COVID times, you saw 20% of the customers were new. I'm just a little bit wondering that, given you haven't had this like a loyal customer program or customer data, which would identify myself if I go to the store, so how do you get to the number that 20% of the customers were new during the COVID time?

Janne, our strategy and development guy, will answer you, Maria, on this one. Janne, please go ahead.

Thanks, Mika. So it's an approximation and based on credit card numbers, so what's the number of new credit cards or share of new credit cards we see -- have seen during last year. So based on that data.

Okay. Very interesting. And then my final question, I mean, would be about these, I mean, recent trends. I mean, you've been -- I mean, you'd be seeing that, obviously, like the COVID situation in Finland, I mean, it's -- I mean, currently, I mean, basically getting worse. But still, if I think the similar trends, I mean, if we talk about DIY have continued on a high level. So do you see that the trading environment is currently pretty similar than it was like the second half of last year and how you would describe that? And then a little bit like when -- to model the sales development further, when should we expect to see the first new destination category launch, so how far you are in the development phase?

Okay. Maybe the first part, yes, it's -- I don't think that we'll see everybody in Finland going to summer holiday abroad in the coming months. So obviously, there are a lot of trends at the moment which support Tokmanni. For example, I'm sure, Maria, you know also that there is a boom with the summer houses in Finland at the moment, and we have perfect assortment to give service in this boom. So obviously, we think that this will continue. But the -- it's still quite clear that we see a change with the customer behavior. And obviously, we also expect this COVID-19 to be in a better control because we feel that our customers dare to come to stores more often when the pandemic is in control. Regarding the destination categories, we are working at the moment with them all the time, but we won't give any further details on launching the new destination categories.

Okay. And if, I mean, at the later stage, you don't need to -- if there is more questions on the line, but if you could a little bit describe the competition situation at the moment, that will be very helpful. Now I'll just give the turn to somebody else.

And the next question comes from the line of Svante Krokfors from Nordea.

Yes. Svante from Nordea here. Can you hear me?

Yes, we can, Svante.

Great. Many of the questions have already been answered. But perhaps could you a bit -- you didn't give any guidance on CapEx needs, if we can exclude the warehouse, of course. And then perhaps also the question regarding the large store concept and the fact that you will double your number of SKUs from 25,000 to 50,000. Will these large stores also partly take over that warehousing question or...

No. We see that as a little bit separate issue, this large store format and the warehouse. We have -- Markku, would you like to tell a little bit more about the warehouse and large store concept part? But I think that it's a little bit separate issue. We are, anyway, developing the warehouse solutions at the moment, and the large store concept will be more for the wider assortment and then acting also as hubs for the fast online deliveries.

Now about the CapEx level, just a couple of words out of that. So we have announced for this year of a level of EUR 15 million to EUR 18 million, which are basically the normal investments. And I would say that if we look at coming years, basically, when we speak about the larger stores, we are a bit more expensive compared to the ones which we have opened or we still are opening but have opened earlier. Larger stores cost a little bit more, which, of course, means that the investments might be a bit higher level, but I would say in a big scale that we are still on the level of something like EUR 15 million to EUR 18 million per year, which is about -- or roughly the same level where we have been during the last couple of years.

Okay. And then a question in your growth bridge business-to-business clients was a key factor. Could you elaborate a bit more on what kind of B2B clients you are targeting and what kind of product categories does it involve? And does it also have perhaps negative impact on the gross margin?

Well, to answer this last one, the last question regarding gross margin, no, it doesn't have a negative effect on gross margin. And we're talking about -- so we do have more than 30,000 corporate clients at the moment. It's a lot of different kind of companies all around Finland from -- let's say from construction companies to daycare and smaller companies, a little bit bigger companies. It varies a lot over there. And yes, we've noticed -- basically, we have got a lot of feedback from our corporate clients that they would like to buy more from Tokmanni due to the low price level. And now we are basically developing this service as well with developments with the online part because most of the entrepreneurs using this kind of company card -- Tokmanni company card that they have, they would like to have as smooth and as effortless service as possible. And that's our target to renew basically, right, already during this year and then improve the service to our corporate clients.

Okay. And also, I would also repeat Maria's question regarding the competitive landscape, if you have seen any developments there. That's all for me.

Perhaps your comment -- this comment...

Yes, yes. Obviously, the competition is getting harder all the time, for sure. There are a lot of good companies, a lot of good stores in Finland which are basically offering partly the same kind of assortment as we do. I believe that we've been succeeding pretty well. As mentioned before, we do follow the price levels in Finland extremely carefully. That's why we try to do -- we try to be the absolute #1s in our destination categories, which means that we will have the highest volumes in Finland. When you have the highest volumes, you usually have the lowest prices, buying prices. So this obviously is something that we are looking very carefully also and asking our customers and doing customer surveys, like how are we doing compared to our competitors. But yes, every retailer needs to do a lot of things to compete with the competitors, and so are we. Hopefully, we -- the action points we just presented, hopefully, we will be also a stronger competitor for the other companies in the future. I don't know, Markku, Janne, would you like to add anything to the competitive landscape?

Yes, I think so, but you described it quite well. It's clear that the competition is increasing. We are seeing these smaller discounters founding new stores. And of course, this -- in certain area or certain town, it increases the competition. But on the other hand, it, of course, keeps us wake. Also in sometimes, there are more people to come when we have a combination of different kind of companies, so it's plus and minuses in some places. But as a whole, it's tough competition. Yes. That's clear.

Yes. Sorry, regarding the competitive landscape, Janne, you could actually tell a little bit more about Tokmanni setup and then, for example, the online giants which are already in, for example, in Sweden.

Yes. To start with the competition, the way we see it is that, of course, new entrants are coming to the market, but the phase they are entering is not that fast. And then secondly, there aren't actually identical company in the market that would compete directly with Tokmanni, meaning that it would have exactly same categories with same focuses, meaning that they're actually -- there is not a direct competitor for Tokmanni in that sense in the market. So of course, when we have, for example, NORMAL entered just Finland with few stores, but it considers only one segment in certain locations. And it means that it doesn't affect -- it doesn't have significant effect on our business, so to say. And then regarding online players, probably, we have had these discussions over -- I think, over 2 years now that how is, for example, Amazon affecting us. We have search -- researched a lot of different markets where Amazon has existed along and where they have discounters. To start with, U.S. and U.K., and we see that discounters are very strong in those markets. So we believe our business model can coexist with these kind of online giants. Thank you, Mika.

Thanks. Any other questions?

We have one more question from the line of Nicklas Skogman from Handelsbanken.

Thank you for interesting presentations. I still have a couple of questions. So if we start on the top line target, the EUR 1.5 billion turnover target by 2025, that implies just under 7% growth, on average, per year. Given the store guidance, it looks like stores may contribute around 2.5%. The remainder, is that mainly going to be store like-for-like? Or do you expect a pretty big part of that coming from online as well?

Markku, would you like to answer to Nicklas?

Yes. Certainly, if you start about this online part, as Mika already explained, it's somewhat combination of online and stores. It's not just following how much online is increasing. Clearly, of course, if we add certain product groups to online, that affects directly to online sales. Of course, we are expecting to get something out of that. And when you calculate how much are these new stores bringing, Mika mentioned that we are going to bring to market some larger stores. That, of course, means that these units should bring more revenue than or compared to our present stores, if we calculate as average today. But if we made the new ones, which are bigger, clearly, the sales of those stores are higher level.

Yes. That's a good point. And then secondly, on international expansion, you're talking about you're currently evaluating international cooperation and expansion. Kind of interested in what you mean by international cooperation.

Well, there are a lot of different kinds of alternatives. And at this point of time, it would be very, very difficult to start opening up a little bit any more of these questions. There are clearly cooperation alternatives and expansion alternatives, and there are also alternatives where it's combined. But as already mentioned several times, we will actively start evaluating as soon as the pandemic is in better control.

Okay. Could you give some examples of -- sort of other retailers doing this cooperation? I mean what could they look like? Or what have they looked like historically?

No. I don't -- I cannot compare to any other retailers actions with this one, and it's not that we are kind of copying any other retailers' action points regarding expansion or something like that. It depends on the -- a little bit on the business area and so on. So unfortunately, no references from other retailers.

Okay. And if you choose to expand abroad with the Tokmanni stores, do you foresee sort of a cautious expansion where you try a few stores in a new country? Or would you expect to do some M&A? Or would you go out with a big sort of store rollout plan? What's your -- what will be your approach, do you think?

Nicklas, we will evaluate this a little bit later, but there are a lot of different alternatives. Interestingly enough, there are a lot of different alternatives. You don't need to look at it from a traditional point of view that Tokmanni store will be next to where you live.

That will be fantastic. Okay.

That's sure, by the way.

The last question, and I probably missed your answer. There were some corporate customers. How big that business is today? I heard you said, I think, 30,000 customers. But in terms of sales, how big is it? And where do these guys buy from today, those who might switch to you in the future?

Well, first of all, yes. As mentioned, it's approximately a little bit over 3% or roughly 3% of total sales. And I'm sure, the -- these customers, they actually -- they do buy from all over. They're usually a little bit -- maybe a bit smaller entrepreneurs, so they are like -- as mentioned, construction companies buying -- starting buying coffee and coffee machines and things like this. But I guess it's -- the point is that this kind of corporate clients, they don't have strong enough service at the moment, and that's exactly where Tokmanni is going to be developing this business. We will start offering this kind of clients much better service with, of course, with our low price.

So are we talking mainly delivered wholesale here? Or do you expect them to actually come to the stores and pick up what they bought? Or will you deliver to them mostly?

For sure, we do believe that, for example, this kind of click-and-collect service would be very good for several or one of them.

Okay. Perfect.

And as there are no further questions, I'll hand it back to the speakers.

Okay. And do we have any more questions on chat? Okay. And we exceeded our time already with 8 minutes. So thank you very much for joining Tokmanni Capital Markets Day, and I definitely hope that it was useful and informative for you. Thank you.

Thank you.

Thank you.