Iceland re-brands its stores for the Web to put a spin on sales

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Iceland, the supermarket group, is throwing itself into the digital age with a radical decision to rebrand its shops with its internet name.

Iceland's 760 high-street stores will be re-branded The new fascia will replace the old red and white logo designed by Sir Terence Conran in 1985. The redesign will cost £8m, take 18 months and be used on the group's vans, advertising and carrier bags. However, the publicly quoted company will still be called Iceland on the Stock Exchange.

Iceland's chairman, Malcolm Walker, said the move would help establish Iceland's online grocery shopping operation as a leader in the sector. "The new name says we are in the 21st century. Its our website address and everyone in Britain will now know it."

Mr Walker said he had been considering a rebranding exercise for some time, though the internet idea was only first suggested last month. Initial research had shown it was popular with customers, he said. "Even the most boring of our advisers thinks it's a great idea," he added.

City analysts said the move would help support Iceland's internet shopping business, which has seen orders double to 5,000 a week following an advertising campaign. However, one analyst said the name change could cause confusion. "Some people might pop in and expect to be able to order a cappuccino and half an hour on the internet. They might think it's an internet café with a Reykjavik theme."

Mr Walker said the internet ordering service was attracting additional customers who did not usually shop at the stores. He also said the average online order was £62 compared with just £8 in the shops. Iceland was the first to roll out a national home delivery service which is free.

In a separate initiative Iceland announced plans to launch a full range of organic foods at the same price as non-organic products. The company said it would launch "hundreds of products" from October.

"We believe that all consumers should have access to high-quality, wholesome, natural food, regardless of the size of their wallets," Mr Walker said.

The initiatives came as Iceland reported an 18.5 per cent increase in full-year profits to £65.3m. Underlying sales rose by 9 per cent during the year though this has dipped to 6 per cent since January.

The company confirmed that it has decided not to bid for the Bhs stores which are part of the Storehouse group. Iceland already has an agreement with Storehouse to open food sections in 100 branches of Bhs by the end of next year. Iceland has been concerned that the Bhs stores could be bought by an "unsuitable" owner. Mr Walker said an ideal partner would be Matalan but the fast-growing out-of-towns discounter is unlikely to be interested in buying high-street locations.

Iceland shares ended down 9p yesterday, at 275.5p.