Kesko is a Finnish conglomerate engaged in grocery trade, building and  technical trade, and automotive. Kesko collaborates closely with retailers and other partners to manage nearly 1,800 stores – also known as K-stores – found across Finland, Sweden, Norway, Denmark, Estonia, Latvia, Lithuania, and Poland. When it comes to grocery, where it operates 1,200 stores it prides itself on offering quality food products, premier brands, and fresh produce, including fish, assorted meats and vegetables. Kesko‘s mission is to make the shopping experience an enjoyable one.  

As one of Finland’s largest retailers and a key player in Northern Europe, Kesko has achieved a pivotal milestone in its e-commerce strategy by establishing its premier microfulfilment centre (MFC) at the Ruoholahti Shopping Centre in Helsinki. This innovative facility underscores Kesko’s unwavering commitment to strategically addresses the challenges posed by dramatic shifts in consumer demand. It is positioned five meters (16 feet) below sea level, directly under the store’s basement and is one of the first of its kind in Europe.

Kesko’s advanced MFC is a marvel of automation developed and implemented by Dematic and features an AutoStore system.

The store itself spans 2,500 square metres, including a dedicated 1,000 square metres for chilled items, with an innovative focus on e-commerce logistics. The store efficiently manages a vast inventory of approximately 30,000 products and facilitates seamless picking across diverse sections, including back-store and rapid manual picking areas.

The MFC spans 500 square metres with ambient and chilled areas:

The decision to embrace automation was driven by the necessity to increase capacity, particularly in the face of surging volumes following the pandemic. Kesko sought improved profitability in e-commerce and found the Dematic solution featuring the AutoStore storage and fulfilment system to be the most flexible and scalable solution available. It was the perfect fit given space limitations and the many pillars that were difficult to work around. This is one of the reasons that the AutoStore system was the right choice for the store’s basement, which proved to be the prime location to optimise delivery to consumers in the city centre location as well as to consumers in the surrounding towns.

When the project got underway in 2021, Kesko knew it had found the ideal partner in Dematic. Recalls Hytoenen, “The MFC concept was rather new at the time, but we needed a vendor with proven expertise in MFC projects and deep insights into the nuances of the grocery e-commerce landscape. Dematic had a sales team that understood our business requirements and offered us a turn-key solution, and they assured us they could accomplish our needs”.

By 2022, the construction reached completion with the installation of the AutoStore system over a three-month period. Rigorous testing paved the way for production ramp-up in July 2022, achieving full operational status by January 2023. The MFC at Kesko’s site boasts innovative features, including a chilled AutoStore. The system’s three simultaneous ports in decant stations enhance operational efficiency, ensuring a continuous workflow. The innovation has allowed Kesko to triple its daily volumes.

Dematic Software efficiently manages inventory in the automation and fast pick areas, ensuring accurate and timely order fulfilment. The streamlined processes and shorter lead times contribute to a smaller environmental impact, which helps Kesko with its commitments to sustainability and delivering quality products to consumers. Dematic Software ensures that Kesko can efficiently cater to the complex needs of e-commerce in the grocery market.

The MFC places fruits and vegetables in the fast-picking area, minimising contact and preserving their quality. Operators pick these perishables from display-ready cardboard boxes, which ensures even greater freshness.

Kesko’s MFC focuses primarily on online orders - Click & Collect – as well as home delivery services. Notably, it can efficiently manage business orders, which can be up to 10 times larger than average consumer orders. Kesko’s commitment to quick order processing is evident with an impressive 6-hour lead time from order placement to delivery or pickup, which significantly contributes to customer satisfaction. Orders are carefully segmented by temperature zones and further divided into three pick areas: automation, fast pick zone and in-store pick zone, which optimises the overall picking process.

“Currently, the MFC at Kesko is running at extremely high reliability averaging only a single fault for every 47,000 bin presentations,” notes Stijn Desmet, a product manager at Dematic.

The MFC concept enhances operations and broadens employee roles, providing flexibility in their daily tasks. New employees achieve high pick rates even on their first day.

“I think the biggest challenge we faced on this project was the complex e-commerce environment for grocery. The Kesko team we worked with was extremely smart and was very cooperative throughout, so we had very few issues,” notes Desmet, who was also the project manager at the Kesko site. Adds Neal Rowe, a sales manager at Dematic, “This was Finland’s first micro fulfilment centre so talking a partnership approach with Kesko was critical to project success. Our long-standing knowledge in the grocery industry and their commitment to stay truly focused on their customers resulted in an excellent collaboration.”