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British Retailer Iceland Innovates to Take On German Competitors

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(Credit: Newscast/UIG via Getty Images ) Picture shows: An Iceland store in Central London.Picture shows: An Iceland store in Central London.
April 11
10:11 AM 2016

Following a fierce battle with German rivals, Iceland introduces a new concept. The British retailer introduced the advancement of its old style format, a food warehouse concept.

Iceland is a leading British food retailer established in 1970. The founder Malcolm Walker opened its first shop in Oswestry, Shropshire situated in the West Midland England. At that time, Iceland specialised in selling loose frozen food before fridges and freezers became a common household appliance.

In the recent months, the company has been struggling as German retail stores had taken over some of its key market in High Street all over England. Last year, the retailer reported its quarterly earning had fallen to £150.2 million ($211.9 million). Two German retailers, Aldi and Lidl, have been a serious threat to Iceland, as well as other discount retailers.

Founder and CEO Malcom Walker told Daily Mail that discount stores have increased their popularity in the middle-class shoppers looking for bargain price. He also agreed that other discount stores have also competed in discount price offering and creating price war.

Nevertheless, CEO Walker is confident that his experience has taught him well as he introduces a new food warehouse concept. His new concept targets the families who wanto to stock up frozen food with infrequent large shop. The concept combines the budget buys with luxury products.

Currently, the company has opened 12 stores with the food warehouse concept, and will open 25 more stores in this year. Malcolm Walker said, "It has a much more extended range and so far we are seeing people spending on average double compared with Iceland stores."

The two retailers, Lidl and Aldi, are known for their aggressive strategy in the retail business. According to Daily Express, the German retailers have also engaged the supermarket business against UK's biggest supermarket, Tesco. Both companies now have a combined market share of 10.4% as they also introduce premium products in their display.

Premium products have been a winning formula for Lidl and its competitor, Essen-based Aldi, to win the customers. Although the German supermarkets are famous for their discounted price, its premium products now became the major factor in winning the competition.

Consumer research group, Kantar, reported a significant increase of sales in just three months for their premium brand compared to other supermarkets. As quoted by Business Insider, Kantar said, "Premium own label sales grew by 6.6% in the past 12 weeks, well ahead of the overall grocery market. Aldi and Lidl are leading the way, growing their premium lines more than twice as quickly as the rest of their ranges."

In a fierce competition with German's budget stores, Iceland introduces its food warehouse concept. The concept is an advancement of its old format with a cash-and-carry style. Currently there are 12 stores are opened with the concept, and Iceland aimed to open 25 food warehouse within this year.

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