Kesko’s acquisition of the Siwa and Valintatalo supermarket chains early in 2016 effectively shrank the food retail market down to three major players - de facto duopolists Kesko and S Group, with the challenger Lidl steadily building up a minority share of the market.
However on Tuesday, Kesko announced that it was launching co-determination talks with worker representatives aimed at deciding the fate of some of the Siwa and Valintatalo outlets it had acquired.
The negotiations will affect 570 employees working at 114 stores located throughout the country. So far there has been no word about the actual number of jobs that may need to be eliminated.
Last April, Finnish competition authorities gave Kesko’s food retail subsidiary the green light to purchase the Siwa and Valintatalo chains from Suomen lähikauppa. Since then Kesko made a decision to absorb at least 400 of the neighbourhood groceries into its chain, complete with rebranding them in the Kesko image.
Insufficient demand in some small communities
The retail giant is now deciding what to do with the outlets that have not been slated for integration into its existing network.
"Unfortunately, the Suomen lähikauppa network also has stores for which we have not found a way to continue operations. Not all small communities have enough customers, even for a small store," Kesko deputy CEO Jorma Rauhala said in a statement.
The first set of restructuring talks involves 53 Siwa and Valintatalo stores employing 259 people. The second centres on 61 other outlets that the Finnish Competition and Consumer Authority had called on Kesko to give up when it approved the deal.
The authority based its caveat on what it called problems with the competition in specific locations. Kesko will try to sell some of those outlets.