Almost everything Kesko does has a digital dimension.
Daniel Läubli: Kesko is seen as a leader in online grocery, digitalization, and AI. Why does Kesko lead on so many innovation topics?
Jorma Rauhala: Kesko’s leadership in these areas is driven by our strategy. Across all businesses, we aim for sales growth, a superior customer experience, and efficiency improvements—leveraging AI and digital services as key enablers. Almost everything Kesko does has a digital dimension.
Data and AI tools help us create value for our customers, our independent retailers (“K-retailers”), and our partners. For example, our modular, cloud-based data platform supports business decision-making with high-quality data and deep insights from a wide range of sources. Another important aspect of our data strategy is our commitment to transparency about investments in data and technology. Since 2021, we have published a data balance sheet as part of our annual report.
Alexandre Kleis: The data balance sheet is a unique way to highlight the prominence of data at Kesko. Can you share some key figures from the balance sheet with us?
Jorma Rauhala: Certainly. In 2023, we had 1.8 million daily customer encounters across channels, 3.3 million members in our loyalty program, 4.5 million visits in digital channels per week, and nearly 800,000 instances of customer feedback. The data balance sheet demonstrates not only our ongoing investment in data as a critical business asset but also our commitment to responsible, secure, and compliant data management. We take great care to use data responsibly, and our customers recognize this. For example, only 0.4 percent of the members of our loyalty program have limited the level at which their purchasing data can be reviewed—a clear sign of trust.
Daniel Läubli: What topics will shape the grocery industry in the next five years? And how does AI fit into your target picture?
Jorma Rauhala: Despite slowing food inflation, price remains a key factor in purchasing decisions. Promotional campaigns continue to play a crucial role in driving sales. At the same time, convenience gains importance. In addition, demographic changes have an impact on grocery demand. Sustainability regulation will drive industry-wide change. And AI will become increasingly relevant in engaging consumers and enhancing sales.
At Kesko, we are betting on data and AI to drive growth and efficiency. Enhancing the customer experience with AI-driven personalization is one of the most important applications. Specifically, we leverage AI to provide users of our loyalty app with personalized recommendations and to optimize search functionalities on e-commerce platforms. AI-powered analysis of customer feedback helps transform data into actionable improvements, ensuring that business decisions are directly aligned with customer needs. Kesko integrates multiple data sources—from long-term consumer trend studies to real-time sentiment analysis—to identify both emerging trends and long-term behavioral shifts.
In addition, AI provides a wealth of opportunities to empower our independent retailers with resources for better decision-making as part of our data-driven independent retailer business model. Through our retailer portal, AI-powered tools provide retailers with insights to tailor their product selection, pricing, and promotions to local customer needs, balancing chainwide efficiency with store-level customization. And advanced forecasting models provide daily sales forecasts for each store. These allow retailers to react swiftly to demand fluctuations and optimize stock levels, improving profitability and reducing food waste. AI-powered automation also enhances logistics efficiency by integrating food retail and foodservice deliveries, reducing transportation costs and emissions. In effect, AI makes Kesko more profitable and more sustainable at the same time.
Alexandre Kleis: What were the key success factors of your AI journey so far?
Jorma Rauhala: Strategic alignment was the most important success factor, and it remains so. We make sure that our AI initiatives are closely tied to our overall business strategies, priorities, and processes. AI in and of itself is not the answer but a key success factor when implemented as part of a clear business strategy.
Another success factor is our focus on building competencies, both internally and through recruitment. We invest in the development of user skills and governance models, both to manage risk and to improve value realization. For example, our AI Competence Center supports application owners and business developers in leveraging analytics and AI. We also actively recruit new data and technology experts to stay ahead and strengthen our data and AI capabilities.
Finally, it is crucial to use data and AI in a human-oriented way. Kesko is committed to the ethical use of AI. We have established principles to guide the responsible and strategic use of AI, ensuring fairness, transparency, and compliance with data privacy laws and regulations. Kesko has published its AI principles since 2018.
Daniel Läubli: How do you see the influence of AI evolving over the next years for the grocery industry? How will Kesko go about AI in the future?
Jorma Rauhala: AI is increasingly seen as crucial for ensuring future competitiveness, and it impacts functions such as supply chain management, logistics, merchandising, marketing, store operations, customer service, IT, and technology. At Kesko, our AI strategy is tightly aligned with our business strategy. We emphasize the importance of customized development of AI solutions for competitive advantage while also leveraging off-the-shelf solutions for continuous improvements. However, AI adoption is often inhibited or delayed by budget constraints, technical infrastructure challenges, and talent scarcity.
Alexandre Kleis: What is your perspective on generative AI?
Jorma Rauhala: We are actively exploring gen AI to understand its potential. One of the key challenges is to keep pace with the fast development of the technology. Another challenge is to create viable business cases that allow us to offset the high cost of AI development and deployment. Currently, it takes about six months to finalize a pilot effort and another three months to roll it out at scale. However, we aim to shorten this path by upgrading the solutions and the platform setup we use.
We are convinced that gen AI is a key driver of competitive advantage for retailers. This is why we recently brought together more than 80 experts, from all divisions and functions, for Kesko gen AI days to discuss the future of AI. We also set up a gen AI upskilling program for our staff. The aim of this program is to drive a cultural change in attitudes toward AI, encourage gen AI adoption, and empower our employees to develop their AI skills with Kesko’s support. The program includes tailored training modules on prompting, use cases, gen AI tool adoption, security, AI risks, and regulation. To advance and accelerate our AI transformation, we have established a cross-functional, change-agent network of 80 agents.