WHERE
The Kontti Recycling Department Stores of the Finnish Red Cross sell only goods donated to the Red Cross, such as clothes, furniture and household items. The decision to establish the chain in its present form was made in autumn 2000 and the operations were started in 2001. In 2006, there were Kontti stores in eight towns throughout Finland and two more stores were to be set up by the end of year 2007. The chain administration is located in Jyväskylä, central Finland.
The concept of the Kontti recycling department store chain has been proven successful in the Finnish Red Cross
Each store is led by a Kontti manager responsible for its financial result. The store managers report to Director of the Kontti Chain who in turn reports to the Secretary General of the Finnish Red Cross and the Kontti Board.
The Kontti chain employs on average 600 long-term unemployed persons on a part-time basis and 25 permanent staff, in addition to a varying number of trainees and volunteers. The total volume of operations is expected to be approximately 3,500,000 € in 2007.
The Kontti chain was a partner in the EQUAL Development Partnership Response.
WHY
The reason for establishing a chain of recycling department stores was the need to raise funds to Finnish Red Cross humanitarian work and disaster relief. In certain FRC districts up to 50% of the funding is generated by the local Kontti store.
Helping those in a vulnerable position both in Finland and abroad is the basic mission of the Red Cross. In Finland the number of unemployed persons stands at 200,000, of whom 28% are long-term unemployed and about 14% are persons with disabilities. Their possibilities to find work as a wage/salary earner have remained poor since the recession of the 1990s, despite the improvement in economy. Kontti helps the vulnerable through fund raising, but also by offering the long-term unemployed people motivating jobs with personal support and guidance.
HOW
THE STRATEGY AND OPERATING MODEL OF THE KONTTI CHAIN
Objective of operations and use of profits
The purpose of the Kontti operations is to raise funds to FRC humanitarian aid. Profits from Kontti department stores contribute to FRC programmes in the local Red Cross district (50%), to FRC Disaster Relief Fund (25%) and to developing the Kontti chain (25%).
Strategy
The Board of the Kontti chain makes the decisions on the chain’s strategic objectives. The basic mission of the Kontti chain is, in line with the Red Cross mission, to “improve the lives of the vulnerable by humanitarian support”. The vulnerable are people who for different reasons have fallen into positions were they need help.
According to the mission, the Kontti chain sells donated goods to raise funds and produce clothing aid to local and worldwide relief, employs people who have had difficulties to find work on the open labour market and thus supports them to have better opportunities in the future, helps strengthen the employees’ individual capabilities and life situation, and offers people opportunities to help and participate through donations, volunteering and purchase of goods.
The two main lines of the Kontti chain’s strategy are, on the one hand, to create a profitable foundation for the operations as a whole and, on the other hand, to offer quality employment services taking into account social responsibility.
The values of the Kontti chain are the same as the fundamental principles of the Red Cross: Humanity, Impartiality, Neutrality, Independence, Voluntary service, Unity, and Universality. The values of the Finnish Red Cross are based on being a close, reliable, brave and visible provider of relief. These are values that are also adhered to in the Kontti chain.
Business concept
The shared concept of the Kontti stores puts the mission into practice: goods for sale are acquired through donations and sales provide profits. Kontti stores accept donations of used items in good condition, including: clothes, household goods, textiles, kitchenware, childcare items, toys, sports goods, decorative items, books, and furniture.
The Kontti chain concept defines the common business idea. Since the chain is part of the Finnish Red Cross, many operating models are consistent with those of the FRC. The chain concept defines how certain basic functions of the stores are realised, including:
- acquisition of donations and logistics
- handling of donations
- product groups for sale
- pricing and display of goods
- store environment (layout and other department store solutions, use of Kontti symbols)
- customer service
- cashier functions
- human resources policy and training in accordance with the FRC policies of human resources and employment
- marketing and communication in accordance with the FRC communication strategy
- reporting, financial accounting and budgeting in accordance with the Board instructions
- international clothing aid in accordance with the FRC’s instructions on international relief and in co-operation with the FRC international relief team
The operating model is based on one uniform chain concept. In each store work management is responsible for ensuring that the unit conforms to the shared concept. Compliance to the concept is supervised by the chain administration and peer audits of the stores.
Setting up of a new Kontti shop is always the responsibility of the chain management. The chain concept provides instructions about establishment of a new store (location, size, and investments related to establishment).
Examples of Kontti chain concept practice
The Kontti stores operate in 750–2000 m2 premises in good commercial locations. The building houses both the goods handling department and the shop. The stores often rent additional warehouse space sized about 200 m2.
The donated goods are sorted, serviced, priced and sold at the Kontti store. People can take donations to a Kontti drop-off box or to the Kontti shop. When needed, larger items like furniture or several bags of smaller items are collected free of charge from the donator’s home.
The donations received at Kontti are sold at the shop or given to people in need. In Finland donations can be passed on, for example, to families who have lost their home to fire. Some of the donated clothing is distributed through the FRC Logistics Centre to disaster areas worldwide.
The Kontti shops resemble department stores in that the goods for sale have been organised into different departments according to the product groups to serve the customers better. The groups of products are:
- women’s clothers
- men’s clothes
- children’s clothers
- clothes for young people
- shoes
- childcare items
- textiles
- kitchenware and decorative items
- sports goods
- books
- furniture
- household appliances
Kontti is a diverse workplace employing people who have been jobless for a long time, immigrants and people with disabilities. The employment contracts are for a fixed term and usually last a year. Kontti is a workplace of opportunities where people are provided support, training and enhanced capabilities for working life. The basis of the employment contracts is the state pay subsidy system by which the employment office can grant a subsidy for the salary costs to the employer recruiting an unemployed jobseeker. The objective of the system is to improve the labour market position of the jobseekers and to promote their access to the open labour market. Kontti also offers possibilities for volunteering.
In all Kontti shops, information about FRC’s voluntary activities is available. This is a form of co-operation between Kontti and the local FRC district and branches, which offer voluntary activities.
Experiences
- The excellent reputation of the Red Cross in Finland is the cornerstone of operations.
- Skills in the field of commerce are essential for the persons in charge, experience from the relief organisation is not enough.
- Service from advisors/consultants is recommended in the establishment phase as for any other commercial business.
- Clear organisation of responsibilities and authorisation structure are needed, including comparable structure of responsilities in each unit.
- It is important to define the strategy from the very beginning.
- The basic mission has to be clear for the entire staff, and any deviations to areas not serving the mission should be cut back.
Improvement process
The Kontti chain is improving its operations by establishing new units and launching new product groups for sale. The chain applies EFQM-based self-assessment in order to continuously improve its performance. It has also recently adopted the practice of social accounting to demonstrate its key society results.
Transferability
- It is essential that the host organisation has a good reputation in order to receive donations from the public and to be able to get good staff. In addition, the investment capital for establishment of operations is required from the host organisation.
- A state system of pay subsidy is needed for hiring of long-term unemployed jobseekers.
- Recruitments should be made bearing in mind the required skills in commerce and sales.
For more information: Finnish Red Cross, Kontti Recycling Department Store Chain, Kirrinpolku 4, FI-40270 Palokka, Finland, maija.haaranen(at)redcross.fi