Zuppa di Pesce, 28-day matured steaks, asparagus spears, and a £35 bottle of champagne to wash it down. This may not sound like your typical shopping basket from Iceland, but the UK’s homegrown cut-price chain is experiencing a revival in sales after taking a tip from Germany’s Aldi and Lidl by offering luxury foods that broaden its appeal.
After about two years “in the wilderness”, in the words of founder Malcolm Walker, during which sales and profits dipped, Iceland is celebrating its 47th year in business with a surprise revival.
Iceland has just been named as the UK’s best online supermarket by 7,000 shoppers polled by consumer group Which? for the second year running. They also rated its stores ahead of much larger chains Sainsbury’s, Tesco and Asda.
The chain increased sales by 8.6% in the three months to the end of January, taking its market share to 2.3%, the highest level since 2001, according to market analysts Kantar Worldpanel.
Walker says sales at established stores are rising again after investment in better quality products and some smart advertising campaigns, which are finally helping to shrug off Iceland’s links to Kerry Katona and doner kebab pizzas.
“Many companies, if they see a drop in profits, cut costs. We did the opposite and spent money,” says Walker.
![prawns](http://web.archive.org./web/20170219032148im_/https://i.guim.co.uk/img/media/96d721b550d95c6d4cd3a90bd58162ce4da23e84/0_192_5760_3456/master/5760.jpg?w=300&q=55&auto=format&usm=12&fit=max&s=63e086f5cb536ea3fdaad24e94f862ac)
Backing from Brait, the investment vehicle of acquisitive South African entrepreneur Christo Wiese, which upped its stake in Iceland to 57% from about 20% in late 2015, has helped support the revival.
Walker says he brought in new management across all areas of the business, including former Morrisons and Waitrose head chef Neil Nugent who he set up as head of product development with a £3m development kitchen. “It was a bit of a Portakabin before,” says Walker.
Ideas have also been imported from The Food Warehouse, a sister chain run by Walker’s son Richard, which is also providing another avenue of growth. It currently has 34 stores, which are larger than Iceland shops and sit on retail parks rather than high streets. There are plans for between 25 and 30 more over the next few years.
![A Lavazza coffee machine at Iceland?](http://web.archive.org./web/20170219032148im_/https://i.guim.co.uk/img/media/bdd2c54e3c14aa0af5ce3e2e9f540b67f5fa9afc/0_204_5976_3584/master/5976.jpg?w=300&q=55&auto=format&usm=12&fit=max&s=317da370550a32e16ae9b8f3fed22427)
In Iceland, you can still buy shepherds pie, a cheesy bean and sausage stew or McCain oven chips for £1. But there are also frozen scallops, whole Dover Sole and tuna steaks, as well as Slimming World ready meals, Pizza Express ice-cream and pizzas, and frozen berries for juicing. The chain now has 50 luxury food lines compared with a handful a year ago.
The change in menu is tempting in more shoppers while existing customers are spending more. What’s more, nearly 19% of the chain’s punters now hail from the middle class AB demographic, according to Kantar Worldpanel, compared with 16.1% in 2015. Shoppers are buying more fresh and chilled foods, as well as frozen fish and ready meals.
Bryan Roberts, a retail analyst at TCC Global, says Iceland has found a way to fight back against stiff competition by Aldi, Lidl and the bigger supermarkets, which had all expanded their ranges of frozen foods.
“Historically Iceland has failed to communicate its benefits, using uninspiring celebrities. Arguably they were just preaching to the converted. But its recent advertising has been more aspirational and has demonstrated its often unacknowledged breadth of range in fresh and ambient as well as frozen foods,” Roberts says.
![Wagyu burgers and ostrich fillets at Iceland](http://web.archive.org./web/20170219032148im_/https://i.guim.co.uk/img/media/91486d0ab7ef24e84cc3a2016b5145f878801ab1/0_192_5499_3298/master/5499.jpg?w=300&q=55&auto=format&usm=12&fit=max&s=7334f0b6bd34b13b5aeccd34694c8310)
Walker also admits Iceland’s website was “a bit Fisher-Price”, or basic, when it first launched three years ago, but online sales are now increasing by as much as 50% year on year. That’s partly thanks to low delivery charges, but those polled by Which? also praised the quality of its fresh products and its friendly, helpful drivers.
The next stage of Iceland’s development can be found in Clapham, a well-to-do suburb of south London, where Iceland has been experimenting with a hipsterish store designed to attract shoppers from the Little Waitrose next door.
There are smart vertical freezers with sloped doors which show off products more effectively, double the amount of fresh fruit and veg moved to the front of the store and a much bigger wine and beer section. With lots of colourful pictures of food on walls and pillars, it feels more like a small supermarket than a typical Iceland, which can often seem bleak and dated.
![wine bottles displayed](http://web.archive.org./web/20170219032148im_/https://i.guim.co.uk/img/media/88770e6bd33ede2fd74948c21310533059c990fb/0_204_5976_3584/master/5976.jpg?w=300&q=55&auto=format&usm=12&fit=max&s=74dd2e04e44cf2ee5c3f5cde443153a6)
Regular shoppers filling their baskets on Friday morning say they find it much easier to move around and spot what they want. One says she’s not yet been tempted by the octopus or clams but adds: “Ooh, it’s not too posh for me.”
Sales have doubled since the Clapham store’s refit in October, while only about 10% of the range is different to a regular Iceland, mostly imported from Food Warehouse.
The group is now planning six more makeovers similar to Clapham elsewhere in London, including stores in Fulham, Worcester Park, Streatham and East Finchley, and will be roadtesting most of the elements at a refit of its Chester store, close to Iceland’s head office, from next week.
About 50 more of Iceland’s 882 UK stores are already lined up for a makeover within the next year if the first six perform well. Walker says: “The middle classes wouldn’t have been seen dead in [the Clapham store] before but they’ve said ‘this looks quite smart’ and when they go in they’re blown away by the products and prices.”
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