S Group

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S Group
Cooperative
IndustryRetail, Horeca
Founded1904; 115 years ago (1904)
Headquarters
Helsinki
,
Finland
Key people
Arto Hiltunen (Chairman of the board)
ProductsGroceries, hardware, consumer durables, services.
Revenue€10.544 billion (2007, including subsidiaries)
€7.813 billion (2007, excluding subsidiaries)[1]
€58 million (2007, excluding subsidiaries)[1]
Number of employees
35,899 (2007)[1]
Websitewww.s-kanava.fi
S Group headquarters in Vallila, Helsinki.

The S Group (Finnish: S-ryhmä, Swedish: S-gruppen) is a Finnish retailing cooperative organisation with its head office in Helsinki.[2] Founded in 1904, it consists of 22 regional cooperatives operating all around Finland in the markets for groceries, consumer durables, service station, hotel and restaurant services, agricultural supplies, and car sales. The full formal name of the nationwide cooperative organisation is Suomen Osuuskauppojen Keskuskunta (The Central Finnish Cooperative Society) abbreviated as SOK. It is engaged in close competition with Kesko, with which it shares an oligopolistic position in many of the markets it operates in.

The group has businesses in Finland, Estonia, and Russia. The S Group also had businesses in Latvia and Lithuania, but announced withdrawal from these markets in May 2017.[3]

The organisation's member (loyalty) card is called S-Etukortti.

Ownership[edit]

A client can invest a small sum on the local co-operative and become a client-owner. (The exact sum is decided by the local co-operative board and varies significantly depending on local conditions.) A client-owner gets a membership card, S-Etukortti, which functions as a debit or credit card and gives access to special client-owner bargains. For the sums spent in S Group stores, Bonus is paid back to the client into the account at S-Bank. The Bonus percentage varies from 1% to 5% depending on the sum spent. S-Bank pays an interest that is competitive with interests paid by general banks into savings accounts. S-Etukortti is not a regular "loyalty card" as it represents actual monetary investment and the return is formally profit, not discount.

Corporate[edit]

35 members of parliament in 2012 were representatives in the S Group or Tradeka (Siwa) corporate governance.[4]

Local co-operatives[edit]

The S Group consists of 22 regional co-operative enterprises and 13 local co-operative enterprises. In total, these had 1.7 million individual members in 2007, a number that has grown from 1.2 million in 2003. The revenue from members was 6.8 billion and 263 million of Bonus was paid.[5]

SOK-organization’s crisis in the 1980s[edit]

In the 1970s SOK and its owner co-ops fell into economic difficulties. Especially unprofitable were the large co-ops such as Helsingin Osuuskauppa, Turun Osuuskauppa in Turku, and the Kauppakunta Tuotanto in Tampere. There were, however, also other struggling co-ops around Finland. SOK-wholesale was unable to compete with peers due to overly heavy organization. This led to less favorable trade terms for the co-ops. Furthermore, SOK distributed over half of its annual discounts to unprofitable co-ops in the south in order to help them avoid bankruptcy, which resulted in weakening the operating conditions of the profitable ones.

The Directors Association of the South Ostrobothnian co-ops recognized the situation and took action to improve it. Lapuan Osuuskauppa’s Managing Director Aartsi Lunden was elected to be the Association’s Chairman and he began to push the co-ops’ urgent need to return to profitability. Particularly active were Lappajärvi’s co-op Managing Director Raimo Mäntylä and its Board Chairman Martti Kujala. At first, the Association members strove to gain influence through the Director of the Vaasa district, Kalevi Liukkonen, but without results. Subsequently, Eero Hakala, SOK’s governing Council Representative, was asked to promote reform, but he did not see the gravity of the issue and declined. The directors’ association conferred over the sole option of saving SOK and took the issue to the SOK co-op representative meeting, held yearly in Helsinki. The Directors Association of the South Ostrobothnian co-ops drafted the address to be given by Martti Kujala. After that the floor was to belong to the Alahärmä and Lapua co-op’s representatives. At the last moment Raimo Mäntylä and Martti Kujala added to the address a motion, that SOK’s financial statements would be accepted only under the following conditions:

1. The assembly approves the auditors’ report. Reform must be continued and sped up.

2. SOK must become competitive by 1984 and the progress must be felt already by 1983.

3. The governing council must consider and implement all necessary measures –even painful ones, so that competitiveness would be restored to SOK and it would again be able support all of the member co-ops.

This motion was presented in the National Theater, where the meeting was held on the 3rd of June 1982. The meeting accepted the motion with an overwhelming majority. Only eight (8) co-ops were opposed. The result made it clear that the co-ops had realized the need for an urgent change and that South Ostrobothnia’s co-ops initiative was sufficient to get the matter underway.

After only two months, the SOK CEO Viljo Luukka was replaced by Juhani Pesonen. SOK’s leadership admitted that the organization’s situation was grave and required profound reorganization. At the same time, the co-ops were informed that the country will be left with about forty so-called regional co-ops which they would all need to join.

During its darkest years in the early 1980s SOK co-ops’ consumer market share had fallen below 16%. In 2002 SOK’s exiting CEO Jere Lahti told in the organization’s ÄSSÄ magazine that in 1982 SOK was close to bankruptcy.

The reform in SOK and co-ops was implemented with a heavy hand. Many co-ops were pressured into merging with regional co-ops. Of the 183 co-ops in 1982, only half remained two years later. The independent co-ops that remained outside of the regional co-ops were pressured to merge through means in violation of the SOK’s charter – unfavorable financing terms and trade terms, and diminished marketing support. This was experienced also by the very company that triggered the reform, Lappajärven Osuuskauppa, which remained as the last independent local co-op in the Finnish speaking areas until 2017, when management errors finally felled it. SOK’s economic condition, however, was restored and S-group’s (the successor of SOK) current market share (as of 2017) is 45.9%.

Supermarkets[edit]

The S Group operates four distinct chains of supermarkets:

  • Sale – a chain of small grocery stores, mainly located in the countryside, small towns and suburbs with an emphasis on service rather than selection. Sale stores often only provide everyday groceries. There are about 240 Sale stores in Finland.
  • Alepa – this is the equivalent for Sale in the Greater Helsinki region – there are about 110 Alepa stores in Helsinki and the neighbouring cities.
  • S-market – larger supermarkets with a better selection of goods for sale, and often providing additional services. This is the largest of the S Group's supermarket chains, with nearly 400 stores around Finland.
  • Prisma – a hypermarket chain with about 90 stores around Finland, Estonia, and Russia in major cities. Formerly, the chain also operated in Latvia and Lithuania.

The largest sales revenues are from S-market's (49%) and from Prisma's 39%.[5]

The S Group's supermarkets retail the general private brands Rainbow and Kotimaista for products made in Finland, and the no-frills X-tra range in partnership with Coop Trading — a Nordic purchasing organisation for co-operatives. Non-food products are marketed under the House name.

The S Group has grown significantly in Finland in recent years, growing both organically and by acquisition.

Modernist architecture[edit]

SOK mill in Toppila, Oulu (1929).
Architect Erkki Huttunen (1901–1956).

SOK has a key position in the history of Finnish architecture due to its policy in the late 1920s and 1930s of designing cutting-edge Modernist architecture, epitomized by a Functionalist aesthetic of white buildings.[6] The key architect designing for SOK in the initial years was Erkki Huttunen (1901–1956), who designed various types of buildings for the company: from grain silos and mills to local village shops. Among his best-known works for SOK are the Toppila mill (1929, pictured right), the SOK Offices and Warehouse (1937-38) in Oulu, the SOK Offices and Warehouse (1931) in Rauma, and the Aitta Cooperative Shop (1933) in Sauvo. Today, many of these buildings are protected by law.[7]

Other fields[edit]

The S Group also operates the Sokos chain of department stores, ABC service stations, the hotel chain Sokos Hotels, several brands of restaurants such as Rosso, Sevilla and Amarillo, the Agrimarket chain, which sells agricultural and DIY supplies, and a number of car dealerships for Peugeot.

S-Bank[edit]

The S Group operates Finland's first so-called supermarket bank, the S-Bank (S-Pankki Oy).

References[edit]

  1. ^ a b c S-ryhmä ja SOK-yhtymä 2007 - Kansi
  2. ^ "Contact information." S Group. Retrieved on 28 September 2012. "Fleminginkatu 34"
  3. ^ (in Lithuanian) ""Prisma" traukiasi iš Lietuvos". 15min.lt. Retrieved 3 May 2017.
  4. ^ "S-puolue" ja "Siwa-puolue" aktiivisina Arkadianmäellä yle 26.11.2012
  5. ^ a b http://www.digipaper.fi/sok-yhtyma/13324/
  6. ^ Nikula, Riitta, Architecture and Landscape - The Building of Finland. Helsinki: Otava, 1993.
  7. ^ Jokinen, Teppo (1992). Erkki Huttunen liikelaitosten ja yhteisöjen arkkitehtina 1928–1939. Jyväskylä Studies in the Arts, 41. Jyväskylä: Jyväskylän yliopisto.

External links[edit]

Media related to S-ryhmä at Wikimedia Commons

  • S-Kanava – The company portal
  • S-Kanava – The company portal (in Finnish)
  • S-Kanava – The company portal (in Swedish)