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Iceland to fuel competition with Aldi and Lidl


Iceland has pledged to take on rival discounters Aldi and Lidl head first by expanding its Food Warehouse format.

The group already has 12 Food Warehouse shops in out-of-town retail parks and now plans to open 25 a year, The Mail on Sunday reported.

Iceland has been struggling of late, having recorded falling earnings last year to £150.2m.

Founder Malcolm Walker said the Food Warehouse concept was a cross between a cash-and-carry and the established Iceland format, aimed at families who want to stock up on frozen food with infrequent, large shops, and offers luxury ranges alongside budget buys. 

"It is more about bulk products," he told The Mail on Sunday. "It has a much more extended range and so far we are seeing people spending on average double compared with Iceland stores."

Walker also admitted that previous marketing strategies had not helped the group’s image. Using reality TV star Kerry Katona was "brand damaging" for example, and after ending its tie-up with singer Peter Andre last year he said it would no longer use celebrities to sell its wares and instead focus on the products.

A third of products are frozen, a third chilled and a third grocery but Walker acknowledged that the suparmetk chain needs to work harder in order to alter perceptions about the quality of its food.

"Frozen is better for you than many of the so-called fresh products that we see in many shops," he said. "It is most difficult to become respectable. It can take a generation. We have got to get rid of the prejudice."

"Aldi and Lidl haven’t gone upmarket. They have just managed to get rid of people’s prejudice.

"After 45 years in business we have to keep evolving. Aldi and Lidl have of course taken business away from rivals, but they have also pushed down prices.

"But it is not just Aldi and Lidl. Now retailers B&M Bargains, Poundland, Poundworld – they all sell food and have all hit the sector."

Published on Monday 11 April by Veebs Sabharwal

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