Issue 491 - Value in Iceland
30 August 2023
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Retail by Email - Issue 491 - IcelandIceland have trundled along well post COVID with their value for money focus; despite their obvious challenges.
Those challenges are plentiful. A proportion of the estate being legacy (High St), Frozen Foods are never “sexy” and discounters very much on their turf too…. Despite that, they continue to trade nicely and even though their Kantar figures hardly show world beating growth, they’re holding their own.
They’ve been in the press recently, with a focus on formula milk and the absurd nature of the legalities here. IE there can be no offers on first stage milk because the govt likes to promote breast feeding.
Which is fine, but not really rooted in the reality of life. Therefore customers are punished with high prices and no hope of a discount on the Milk they need for their newborn. Iceland have cut some prices and did so last year too, they’re in the press now drumming up support (and PR) for their campaign.
Let’s see what they’re up to in store, besides their latest crusade.
Solid work above; their core strapline is easy to understand for customers. A plethora of products are featured on a 3 for £3 deal which drives volumes.
Meal deals, both on own label and the wider branded partnerships they have work well. Cutting through to customers who are looking for inspiration for their meals.
Driving volume is no mean feat in a depressed market with sales growth (meaningful growth, that is) difficult to achieve beyond headline inflation rates.
Volume growth by definition, is even harder in this climate.
Lower prices around the store are also identifiable; what is notable is the similar signage that highlights volume driving deals alongside price cuts too.
Shrinkage is a key element for retailers; it’s being blamed for everything, perhaps unfairly so.
Shrink is a core part of retailing and always has been, the extent to which it’s been blamed for every shortcoming isn’t quite right….. There’s always more than just theft in play. Internal process is a huge part of things too.
For Iceland; utilising this cabinet to protect their high value Spirits makes sense. It stops theft, but also harms sales. The challenge for retailers to balance up the two, especially in stores where theft can be higher.
How do you keep your sales line moving whilst stopping shrinkage?
Not sure anyone has the answer there, locking things away solves shrinkage, however, it also slows sales.
Over 60s benefit at Iceland with a further 10% discount, this has been in place for some time now. Part of their wider offering and drives additional trade on a Tuesday one presumes, without giving up much margin.
Finally - another key volume driving deal here. 7 items for £10 is great value, it can present problems for the stores that are not on retail parks. IE the customer has to travel to the store via public transport.
However, the ability to trade a relatively standard category like Frozen and bring some interest to proceedings. Strong private label work, alongside innovation and solid deals is something Iceland should be proud of.
Their ability to stay the course in a very competitive market is to be admired. Especially as they often share space / sites with Home Bargains, B&M et al who are moving in to a Frozen offering themselves.
Not to mention Aldi and Lidl, who are continually pushing their Frozen offering too…..
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From the Grocery Insight newsletter archive, first sent to subscribers on 30 August 2023. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.