Iceland's bright ideas bring booming sales

ICELAND, the high street food retailer, trumpeted the vindication of its strategy of putting "the heart before the head" yesterday when it posted a double-digit increase in sales for the second successive year.

The group said successful experiments with home deliveries, coupled with a high-profile stance on genetically modified foods, had contributed to a 12 per cent increase in "same condition" sales in the year to January - three times the level of its nearest rival, Tesco.

Shares rose 3.6 per cent to 283.5p on the back of a 27 per cent increase in profits at Iceland, which until two years ago was thought to be nearing the end of its shelf life.

Malcolm Walker, chairman and chief executive and the founder of the chain, said the jump in sales was the fruit of a series of intuitive decisions, against the grain of conventional retail wisdom.

"We invented home delivery. We were the first to offer telephone shopping in this country and we are the only provider. We banned GM products when the rest of the industry was dithering - and I still take personal credit for coining the phrase `Frankenstein food'," he said.

Once regarded as a retailer specialising in frozen food at bargain prices, Iceland struggled to compete in the early 1990s as Tesco, Sainsbury and Asda lured customers away to out-of-town superstores.

Its shares underperformed the market and the sector for five years, hitting a nadir in late 1996 when they languished at less than 80p. It was at that point that Mr Walker decided on a radical change of strategy.

The first initiative, home delivery, was introduced in 1997. It showed instant results. Iceland's four million customers could have their shopping delivered to their home, at no charge, after selecting items at a store. Home deliveries, now costing pounds 1, represent 11 per cent of Iceland's sales - and the service is growing in popularity.

Iceland has also been helped by key management changes, with the appointment of Russell Ford as trading director and Andrew Pritchard as group finance director. Bernard Leigh, the deputy chairman, will retire this year.

Mr Ford has pushed through changes to Iceland's style, eschewing price competition in favour of "pulse-racing deals", such as two chickens for the price of one. Staff have been asked to be more informal, joking with customers to separate themselves from the drab formality of the superstores.

An ethical stance on GM foods - guaranteeing no genetic modification - was worth millions in publicity value. After much hand-wringing, the superstores announced similar policies earlier this month. Iceland is also leading a campaign for "honest labelling" - avoiding practices such as including the giblets in the weight of the chicken.

Analysts yesterday welcomed the results, which came in ahead of expectations with pre-tax profit at pounds 55.1m. They point out that Iceland is trading at a 35 per cent discount to the market.

At a time when Iceland looks much more robust than its competitors, the shares are on similar forward multiples of around 14. According to Merrill Lynch, Iceland's shares look cheap.

Suggested Topics
News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
Life and Style
The new Windows 10 Start Menu
tech
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
PROMOTED VIDEO
Travel
Bruce Chatwin's novel 'On the Black Hill' was set at The Vision Farm
travelOne of the finest one-day walks you could hope for - in Britain
Sport
footballManchester City 1 Roma 1: Result leaves Premier League champions in danger of not progressing
Arts and Entertainment
Gay and OK: a scene from 'Pride'
filmsUS film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
News
i100
Life and Style
Magic roundabouts: the gyratory system that has excited enthusiasts in Swindon
motoringJust who are the Roundabout Appreciation Society?
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
booksWell it was good enough for Ancient Egyptians and Picasso...
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?