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We look at the latest news from Iceland, including its expansion and sustainability plans.

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Iceland has released its results for the 52 weeks ending 29 March 2019. We look at these in more detail and the retailer's plans for the future.

Rise in sales but decline in profit

Sales increased by 4.5% to £3.08bn in the 52 week period. This was driven by new store openings as like-for-like sales were broadly flat. This year has however been challenging for the retailer. With the introduction of the National Living Wage and the rise in fuel prices Iceland's profits have fallen. The retailer saw a loss of £13m in earnings on a comparable 52 week basis.

During this time the retailer opened a net 43 stores, 38 of which were in The Food Warehouse format, bringing its total to 90. It has also been testing new formats. This has included developing its strategic alliance with The Range, adding its food offer to nine stores, and opening a new express store in Moraira, Costa Blanca. This will be part of the British-run Overseas Supermercados.

Long term view

As the habits of shoppers are continually changing Iceland is taking a long-term view to invest in the future, by focusing on five main areas; 

  1. Expanding its store footprint
  2. Refurbishing existing stores to enhance their appeal
  3. Growing the online business
  4. Rolling out lines that are exclusive to Iceland
  5. Developing the supply chain to support the growth of the retail estate

Sustainability focus

Sustainability will continue to be a top priority for Iceland. This reporting period saw success with the retailer's Rang-Tan animation, which it claims became the most viewed Christmas commercial of all time.

Iceland also progressed with its plastic removal initiatives, saving 1,500 tonnes of plastics in 2018. Iceland has said;

"These actions are helping set Iceland apart as a business that is truly different, and are increasing public awareness and enhancing respect for our brand and our values. Although our motivation in acting on plastics and palm oil is not primarily commercial, we believe that the positions we have taken can only enhance our appeal to consumers, and hence our sales, in the longer time."

Outlook for 2019/20

The retailer is looking to open 30 more The Food Warehouse stores by the end of 2019. It also plans to add four more shop-in-shops to The Range in 2020.

Store refurbishments will continue in the style first seen in the Clapham store in 2016. This includes improving store navigation, presentation, checkout experience and staff facilities. For subscribers, see more detail in our Clapham store visit report Clapham store visit report.

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Iceland has reported successful results from its trial delivering discounts to shoppers through The Mobile Wallet Company.

How it works

The Mobile Wallet Company is a UK start-up that uses digital wallet technology to deliver retailers' discounts to shoppers. Iceland is the first national retailer to work with The Mobile Wallet Company.

Shoppers scan QR codes from print advertisements to their mobile wallets. This translates into savings that can be redeemed in store.

Source: The Mobile Wallet Company

Why it works

By using The Mobile Wallet Company Iceland is better able to track redemption rate and see which offers are resonating with shoppers. The aim is to attract new shoppers into store and make accessing offers more convenient.

According to publishing company Prolific North this trial has driven £500,000 worth of sales, and increased basket size by 5% compared with paper vouchers. The Mobile Wallet Company reported 20,000 device installations.

Iceland has said print still plays a very important role in its discounting. The retailer rarely uses TV marketing therefore advertising needs to be local to connect with shoppers. However it will test other elements of the mobile wallet technology in its marketing campaigns in the future.

Want to know more?

  • Iceland is continually looking for ways to innovate. Most recent developments include packaging-free fruit and vegetables, launching a new wholesale service and a nationwide roll-out of its shop-in-shop concessions in The Range
  • Mobile payments and wallets are a key focus for retailers in the US. Kroger has recently launched Kroger Pay, following on from Walmart, Target and CVS Pharmacy launching their own solutions

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We look at the latest developments from Iceland. This includes a preview of its Christmas results and the latest initiatives it is launching in plastic and wholesale. 

Disappointing Christmas sales

A report prepared for bondholders has been leaked to the Financial Times revealing Iceland saw its like-for-like sales fall by 1% in the six weeks leading up to January 4th. Total sales were +3.5% due to new store openings.

Discounters led the field over the Christmas trading period with Aldi at +10% growth (w/c 17th December) and Lidl at +8% (6 weeks to 30 December). This was driven by new store openings. Other retailers struggled with M&S at -1.2% and Sainsbury's at -0.4%. All retailers were challenged by the downturn in high street footfall. We consider this in more detail with our Christmas trading and new year outlook presentation for subscribers.

One of the key challenges we have identified for 2019 is meeting shoppers rising expectations. How retailers are impacting the environment is becoming increasingly important to shoppers. As Iceland has made huge head-way in this area managing director Richard Walker has said the results are not only disappointing, but also surprising.

Particularly given the interest the retailer generated by its controversial Christmas advert. The advert which promoted Iceland removing palm oil from its private label products failed to secure advertising regulatory approval and launched on YouTube instead. Since then it has had nearly six million views and generated huge publicity for the retailer. These messages may resonate further after the Christmas period as the green agenda is generally more important to shoppers at times of the year other than Christmas.

Packaging-free fruit and vegetables

We have seen Iceland continue its drive to be a responsible retailer through various initiatives, with 'healthier' layouts being tested and rewarding shoppers for recycling. As part of its commitment to becoming entirely plastic free by 2023 its latest initiative is launching packaging-free fruit and vegetables.

The retailer is trialling the concept in The Food Warehouse in Liverpool first. 35 items will be sold loosely and 27 in plastic-free packaging. This will include compostable punnets, paper bags and cellulose nets. These products will be sold at lower prices than those in plastic packaging.

Subscribers can find out more about what retailers are doing to reduce plastic usage in our UK action on plastic report.

Launching a new wholesale service

A trial of 'Iceland Trade', a new wholesale service for independent retailers and caterers has launched, according to trade publication RN.

The trial is UK-wide. Customers can order anything from Iceland's range, with free delivery for orders over £35. There is a maximum order of 12 cases of a product. Deliveries will come from Iceland stores or warehouses depending on volume.

Anthony Howard, Iceland's Business Development Manager has said;

"We are trying to bridge the gap between wholesaler and retailer."

The retailer has not stated its plans for how it sees the service developing in the future. Wholesale is a growing area of interest for retailers to tap into growth markets. We have recently seen Tesco's acquisition of Booker has given it access to the food service market and franchise convenience.

The Range nationwide roll-out

After its initial trial of three shop-in-shop concessions within The Range Iceland looks like it will be rolling this out nationwide, according to The Grocer. Its success so far has led to it having the potential to be rolled out to The Ranges 160 stores.

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