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Retail by Email - Issue 480 - Iceland

Lots of value work at Iceland, who continue to perform admirably with their mix of Frozen and Fresh product.

Indeed, this is their time given their value outlook. Their estate is a mixed bag of high street stores that were clobbered with the pandemic alongside out of town sites too.

Their Food Warehouse stores offer larger packs to drive greater value and these are increasingly popular with customers. Especially where they share sites with B&M, or Home Bargains too.

The growth for Home Bargains and B&M is notable in Kantar figures, as customers start to shop around for lower prices. Meaning the “big four” are left with diminishing returns, especially if their store is located near discount retailers.

We have also seen both B&M and Home Bargains start to roll out a chilled and frozen offering too. Which has seen competitive work from discounters to try and combat that, as the fight for share of spend hots up.

Iceland are the leaders in Frozen Foods, with their blend of strong own label, low prices and a raft of exclusive brands too.

As the cost of living challenges hot up, it’s important to see how they’re combating the economic environment too.

A big push on loyalty with an app also available for customers, this does clash with the focus on over 60’s perhaps. But post COVID, there is a good focus on apps and the usage of mobile phones for loyalty schemes.

It also makes it easier to target customers, with timely vouchers and incentives, rather than waiting for the post and paper vouchers. Plus it reduces complexity for stores in terms of processing and those associates tasks.

The over 60’s discount is interesting and one presumes Tuesday is a quieter day, which perhaps gives more guaranteed footfall for the stores. 10% isn’t a great deal and the return, bringing customers in to the store could make this worthwhile.

Targeting a particular age bracket of customers is not without risks though. There are plenty of families who will shop in Iceland and wonder why they’re not eligible for a 10% discount too.

Ambient continues to grow and bespoke shippers for Iceland were noted here, reflecting the growing nature of their business and volumes. Notably, Cereals are a key item for families and prices have risen too.

Their ambient range is relatively sporadic in many stores, so well placed special offers are useful to grow basket size. Ensuring more money is spent with Iceland.

3 for £5 in Fresh Foods also stood out, well signposted “core” offering that is available year round. We have seen a number of moves around the market though, via inflation that have pushed these northwards.

Pizza meal deals are £12 everywhere (bar Sainsbury’s) (from £10) with Meat for the BBQ moving to 3 for £12 in M&S recently, also.

These “core” volume driving deals are important for retailers to drive volumes and keep prices lower.

But customers want these deals; being able to “set their watch by them.” is important for price stability and thus, value for money.

Two smart deals here; the shipper tie. up with Cadbury’s is most effective given the challenge of occupying the kids for the school holidays. Especially given the challenges around the cost of living.

The unit works well and is at an attractive price point too, all too often we are seeing ludicrous shippers elsewhere. With unattainable price points that make you think, are some aware of how challenging the current cost of living crisis is for customers?

The second deal is a strong deal in itself as it offers a wider range of product across Frozen Foods and on brands also.

But the addition of a water pistol really catches the eye here.

As does the 7 day deal, Lidl use tactical deals to good effect too. Utilising their Super weekend offers alongside various other short term deals.

Iceland have utilised short term deals for a while and this enables the business to be nimble, focusing on key headlines.

This ensures maximum relevance for their short term deals, such as this one.

deal when the weather is warm to drive sales and hopefully encourage customers to buy more when they’re in store, too.

Overall; the business is able to do differentiated promotions and offerings and are quite happy to do this. It means they get stand out in a crowded market and are able to make Frozen Foods (a dour category) look somewhat more interesting.

Their exclusive tie ups with Greggs, TGI Friday’s and others certainly work to provide a reason to “cross the road”.

But with overlapping competition on retail parks, alongside competitors with similar value focused beliefs.

It will remain an ever challenging, almost fickle environment for them to trade in.