Kesko's Online Grocery Transformation: Doubling Delivery, Enhancing Shopping, and Adapting to Demand with AutoStore

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Kesko is one of Finland’s leading retailers, operating in the construction and technical, automotive, and grocery sectors, where they hold a 36.9% market share. With over 1,800 brick-and-mortar locations in Finland, Sweden, Norway, Estonia, Latvia, Lithuania, and Poland, the company was uniquely well-positioned to monitor the impacts of the COVID-19 pandemic on the grocery trade.

Until recently, Kesko has met online grocery orders through the use of in-store pickers. But with a significant increase in demand brought on by the pandemic, the company began exploring automated warehouse systems to nurture this newly important aspect of their business and to maintain their place in the market.

They decided to choose one store in the Helsinki area as the testing ground for their efforts. The plan was to install a new, fully automated micro-fulfillment center (MFC) at Kesko’s new K-Citymarket location in the Ruoholahti shopping center.

The challenge

To remain competitive while providing a consistent level of service, planners at Kesko sought an automated warehouse solution that would enhance the customer’s experience through larger order volumes and a wider assortment of goods for purchase. The new system would also have to be flexible enough to adapt to sudden changes in demand or their supply chain, while also shortening delivery times for online orders.

Behind the scenes, Kesko was also looking for a solution that would improve inventory management, increase reliability in the supply chain, increase throughput, and ideally, lead to increased employee satisfaction. While in-person order fulfillment had been sufficient to satisfy demand prior to the pandemic, it had started impacting Kesko’s in-store experience as shoppers had to navigate around large numbers of picking staff, decreasing its attractiveness to in-person and online customers alike.

Furthermore, explains Program Manager Jussi Hytönen, “one of the main targets for going into automation was capacity. After COVID-19 hit, our [order] volumes just skyrocketed, so we were running out of capacity.” Increasing capacity would also allow the company to meet customer demand, ensuring the continued profitability of their e-grocery operations.

After comparing more than 10 different solutions, the AutoStore system stood out as the only solution capable of meeting Kesko’s expectations and requirements.

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The benefits of the AutoStore system

Combining its depth of experience in the grocery trade and e-commerce with the enhanced efficiency and reliability of the AutoStore system, Kesko’s warehouse automation project proved to be a definite success. It led to significantly better throughput and overall reliability, and helped streamline staff, who only needed 30 minutes of training to operate the system. It also reduced the amount of in-store pickers by 80%, which led to improved customer experience for in-store customers. The increased speed of order fulfillment reduced Kesko's same-day delivery time down to 6 hours - improving customer experience for online shoppers.

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The AutoStore automated micro-fulfillment center (MFC) also provides the flexibility to adapt to sudden changes in demand and effectively manage inventory, while improving Kesko's knowledge base needed to increase automation on future projects.

Through the AutoStore system, Kesko was able to:

• Double daily delivery capacity compared to the previous manual system
• Reduce the number of in-store pickers from as many as 50 to just 10
• Reduce same-day delivery time to 6 hours
• Improve the site’s overall efficiency and throughput
• Accommodate both consumer and B2B orders
• Offer bigger volumes for online orders
• Shorten training times for new staff down to only 30 minutes
• Lower environmental impact
  

How the system works

The automated warehouse system implemented for Kesko’s Ruoholahti MFC consists of two AutoStore storage systems: one for ambient products and another for chilled goods.

The ambient grid occupies about 360 m² (approximately 3,900 ft²), with 30 AutoStore Robots, 8,305 inventory Bins, 3 RelayPort workstations, and two ConveyorPort workstations for decanting. The chilled grid measures approximately 140 m² (1,500 ft²) and features 15 Robots, 2,442 inventory Bins, 2 RelayPort workstations for picking, and one ConveyorPort workstation for decanting.

The solution supports fully automated picking as well as the new MFC’s fast picking area, limited in-store, in-person picking, and a dispatch area.

The solution provided by AutoStore was installed and commissioned over the course of Q1 2022. After a short period for adjustment and training, the system achieved full production levels by February of 2023, and Kesko hasn’t looked back since. As Pekka Tala, Development Director at Kesko, says, “This project is a pioneering one for Finnish online grocery fulfillment… [allowing] us to scale as we grow [and] providing us greater flexibility for fulfilling online orders. It will also enhance the shopping experience for our in-store customers.”

Project Specifications‍

Installation type: Brownfield (Exisiting site)‍
‍WMS: Matflo
Partner: Dematic‍

‍Ambient Grid

Robots: 30 Robots
Ports (workstations): 3 RelayPorts, 2 ConveyorPorts
Bins: 8,305‍

Chilled Grid

Robots: 15 Robots
Ports (workstations): 2 RelayPorts, 1 ConveyorPort
Bins: 2,442

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