Iceland Foods Ltd is a British supermarket chain operating in the United Kingdom and Ireland. It is not run or paid for by the government and falls into the tertiary sector. While it primarily specializes in frozen foods, Iceland also sells fresh groceries, cupboard foods, body hygiene products, and appliances like shampoos, conditioners, and cloths.
In 1970, the history of Iceland began with Malcolm Walker and another detailer who aimed to open a shop to seek their fortunes. With a capital of just EYE, they paid one month’s rent and established the first Iceland store in Sweetest, Shorebird in November 1970. During this time, refrigerators and freezers were not yet commonplace, so Iceland focused on selling loose frozen food. By 1984, Iceland had expanded by opening new stores and acquiring smaller chains, resulting in a total of 81 stores. This growth led to Iceland becoming a public company in 1984.
In 1995, Iceland was regarded as one of the most successful new companies to ever debut on the London Stock Exchange. By that year, Iceland had established 752 stores and achieved an impressive 25 years of continuous profit growth. However, Iceland’s dominance began to face challenges from stronger competitors when larger food superstores were granted permission to open on Sundays for the first time. Additionally, these competitors gradually extended their weekday opening hours. In 2001, Bill Grimier assumed the role of the new chief executive at Iceland. Shortly after his arrival, he hired a new finance director named Bill Haskins who claimed to have identified significant issues within the company.
These problems resulted in a loss of a million dollars for the business, following an exceptional item gain of 145 million euros. The shareholders of The Big Food Group accepted an offer from a group of investors, making it a private limited company again. Revenue started to steadily increase every week during the new team’s first year in charge, as customers returned to the stores. By the end of the financial year ending in March 2006, like-for-like sales were 20% higher compared to the previous year, making Iceland the Auk’s fastest-growing food retailer. In February, Iceland achieved triple success in the Sunday Times Best Companies Awards. Furthermore, in February 2013, Iceland was ranked among the Elks Top Ten organizations for Customer Satisfaction by the Institute of Customer Service. Iceland’s primary goal for its customers is to be a responsible store, focused on providing safe, healthy, and ethically sourced food. The company aims to achieve increasing profits year after year to support business expansion and development.
In 1989, Iceland purchased Became, its competitor, which was three times larger in terms of business size. By February 2004, the combined chain had 760 stores throughout the United Kingdom. In 2013, Iceland Foods Group opened 36 new Iceland stores, resulting in a net addition of 33 stores after three closures. The year ended with a total of 790 Iceland stores. Additionally, the Group owned the 57 Accelerator chain, bringing the total number of stores to 814. The opening of these new stores has also led to the creation of over 2,600 new jobs.
Scale Iceland has expanded its operations in multiple countries. In the Republic of Ireland, it operates through a franchisee called AIM Group. The franchisee, AIM Group, aims to increase the number of stores operating in Ireland to 40 by 2014. Currently, there are 8 stores in Ireland. Iceland also established a franchised store in Tripoli, the capital of Libya, in August of the previous year. This store is a joint venture between Libyan and Maltese entrepreneurs who approached Iceland’s export business, IT EX, to source products. Moreover, Iceland recently opened a new store in the Czech Republic in February of this year. Apart from these countries, Iceland has also expanded its presence in its home country and has thirteen stores in Spain, Portugal, and the Canary Islands.
Ownership of the company was held by Malcolm Walker from 1970 until 2000. After his intended retirement, Walker saw an opportunity to start another business and opened a new frozen food franchise named Accelerator. In 2001, the face of Iceland changed as a new executive, Bill Grimier, took over. Shortly after joining Iceland, Grimier and the new finance director, Bill Haskins, discovered significant problems within the business. These problems resulted in a loss of £20 million after £145 million worth of stock had been sold.
In February 2002, The Big F-DOD Group was renamed and became the Iceland-Booker business. However, the new management struggled to improve the business even after implementing a 5-year recovery plan. By 2005, sales were down 10% compared to the previous year, marking a decline in sales every year since 2001. As a result, The Big Food Group’s shareholders accepted an offer from a group of investors to take the company private. One member of this investment group was Malcolm Walker, the founder of Iceland in 1970, who returned as Iceland’s Chief Executive. Under his leadership, the business underwent a remarkable transformation, becoming one of the most successful stories in UK food retailing once again. Over the course of eight years since Malcolm’s return, Iceland’s like-for-like sales have grown by over 50%.
A vision statement outlines the future goals and achievements of a company. It is a broad statement set by a director or executive, and it provides a general overview of what the business aspires to achieve.
For company directors, it is crucial to comprehend the current status of the business and the potential options that can be pursued. This understanding enables directors to determine specific actions and establish goals and objectives. Malcolm Walker, the visionary behind Iceland Foods, envisions expanding the company’s global presence by establishing additional stores in various countries worldwide. While progress has already been made through store openings in Europe, Walker aspires to expand even further.
The owner of Iceland Foods Ltd has a key vision to become the top frozen food chain, offering great value for money on all products. The aim and objectives of the business are focused on achieving this vision. The aim of a business is its main goal, but a company can have multiple aims at once. A primary aim is to generate profit and add value in the private sector. Other tactical aims include expansion, market leadership, and brand building.
A business objective is a specific and measurable plan that a business creates to achieve a goal. These objectives should be SMART: Specific, Measurable, Achievable, Realistic, and Time-bound. Organizational objectives are divided into different levels, from top-level objectives at the head office to team and individual objectives at the front line.
These objectives are frequently placed into targets that serve as motivation for staff in meeting short-term goals. Therefore, objectives provide a step-by-step framework for all the different activities taking place in the business to achieve their aim. By assessing the success or failure of an objective, managers can make necessary adjustments to ensure progress and achievement within a specified time frame. There are various types of objectives depending on the time limit.
A short term objective is a small part in achieving the main aim. Businesses use short term objectives to help employees move gradually towards the company’s long term aim. A medium term objective is a step towards achieving an aim within a relatively short period of time, usually longer than a short term objective. It is typically used by a company as an additional step from the previous short term objective.
Examples of Iceland’s short term objectives: These include the improvement of employee skills and attitudes towards customers and work, as well as the resolution of production equipment and product quality issues. Iceland food implements short-term solutions such as employee training courses, equipment servicing, and quality fixes to address these concerns.
Examples of Iceland’s medium term objectives: If the short-term problems are resolved through training courses for employees, Iceland has a medium-term objective of continuing to schedule training programs.
If Iceland is facing quality problems with specific products, their response in the medium-term would be to assess and enhance the company’s quality control program. To address equipment malfunction in the short-term, the machine would be repaired, while a medium-term solution would involve establishing a repair service contract to ensure prompt replacement of broken machinery. Iceland’s policies and procedures for medium-term planning primarily aim to prevent the recurrence of short-term issues, thus contributing to the achievement of Iceland’s goals. Currently, one of Iceland’s objectives is to make necessary preparations for a nationwide expansion of online shopping.
Iceland is currently conducting a trial at a few selected stores in the North West, North East, London, and the South West. The trial has yielded positive results thus far. The goal is to expand the trial to more Iceland stores across the UK in the next few months. Iceland is the first food retailer in the UK to offer customers the choice of paying for online orders using PayPal, credit card, or debit card. Additionally, Iceland plans to integrate its bonus loyalty card into its new e-commerce platform starting next year.
In essence, the upcoming card will be a TABLE that allows for customized promotions to be created for customers based on their previous in-store shopping experiences. Currently, the bonus cards solely provide discounts in the form of percentages and money off vouchers. However, the enhanced functionality of the bonus card will enable Iceland to gain insights into how their customers shop both in-store and online. To remain competitive against its rivals, Iceland’s main objective is to continuously increase its market share year after year. All major grocery retailers share the common goal of driving up sales by investing in improved frozen food quality and better display freezers for their products.
The company aims to capitalize on shoppers’ desire to reduce waste and save money. In 2012, Iceland had a 1.9% market share in the overall grocery market, which increased to 2.1% in 2013. In contrast, Farmyards currently has a 0.6% market share. Malcolm Walker, the owner of Iceland, stated to Retail Week: “We are the pioneers and leaders in frozen food, so naturally others imitate us.” Iceland Food was the company responsible for popularizing discounted products. Consequently, other supermarkets have followed Iceland’s lead by offering low prices to ensure consumers perceive their purchases as good value for money.
Both Farmyards and Iceland, two frozen food retailers, have been performing well. Farmyards, which has 300 stores, saw sales to Emma increase by 4% and its pre-tax profit jump to EYE. Mm between 2011 and 2013, as reported by Companies House. However, Iceland, with 814 stores, is still surpassing Farmyards’ performance. Iceland’s pre-tax profit is E mm, making it the leader among its main competitors even though they strive to offer cheaper products that provide good value for money.
Iceland is making progress towards Malcolm Walker’s goal of expanding internationally. In 2012, Paul Foley was appointed as the international business director to help grow Iceland’s presence overseas. The company is exploring various routes to market, including exports, franchising, acquisitions, and new store openings. They are currently considering opportunities in Eastern Europe and the Middle East, and have even started exporting to South Africa. This expansion is aimed at establishing a stronger presence overseas. Iceland has already opened a new store in the Czech Republic this year and has stores in the Canary Islands, Spain, and Portugal. Building contacts is an important part of expanding the business. In March, Walker led a £1 billion management buyout with support from Lord Karma, Braid (a South African investor), and Landmark Group (based in Dubai).Iceland Foods Ltd relies on customer feedback to gauge their success in various aspects of their company including products, service, bonus card scheme, and the in-store environment. To accomplish this, Iceland sought assistance from Interspecies.
This company has established an online forum known as Ice-chat. Over 4,000 of Iceland’s customers actively participate in this forum, offering continuous feedback on the company’s products and campaigns. The advantages of this feedback forum are twofold. Firstly, it aids in shaping Iceland’s future planning by providing instant customer feedback. Secondly, by having live and up-to-date feeds, it reduces the risks associated with introducing new ideas and products. This is because the company can ask customers whether they would like a product or campaign before bringing it to the market.
Since 2008, Interspecies has been working together with Iceland. Ice-chat is more than just a customer forum; it also allows customers to participate in blobs, online polls, and surveys created by the company. In addition, customers can engage in what Interspecies refers to as “collaborative image annotation tasks.” These tasks involve providing detailed descriptions and feedback on Iceland’s packaging, store, and advertising based on templates and images shared on ice-chat.
Iceland emphasized the importance of understanding the “why” behind their customers’ actions. Through their research partnership with interspecies, they aim to uncover this crucial information. Without knowing the “why,” all the company has is a meaningless “so what.” This partnership enables Iceland to progress and determine the next steps. As a result of ice-chat’s suggested actions obtained from interspecies, Iceland has greatly benefited in making decisions regarding bonus card schemes, packaging, and advertising.
The assumption is made about Iceland Food’s method of measuring success through customer feedback. The company’s objectives are considered SMART, although some objectives may only partially meet the SMART criteria. For instance, one key objective is to continuously increase market share, which is specific and measurable.
The measurement method for this objective is to observe Iceland’s market share changes compared to previous years and analyze it as a percentage. This objective is attainable because Iceland currently holds only 2.1% of the market share, so it won’t be difficult to increase it. However, they need to be more specific about the desired percentage increase in market share each year. Despite this, it makes the objective more achievable and realistic.
This is because even if they only achieve a 0.1% increase each year, they are still reaching their goal and adhering to a realistic target, considering they currently only hold a 2.1% market share. While this objective is time-limited, it aims to achieve an annual increase in market share. Another objective that Iceland currently focuses on is the preparation for a nationwide transition to online shopping.
One of Iceland’s objectives is not as SMART as the others, but it is still reasonable and specific. The objective is to determine how many locations in the United Kingdom Iceland offers online services for. Iceland has already started offering this service and the initial results have been positive.
Therefore, it seems more feasible and attainable for Iceland to have a nationwide roll of this online service. However, the SMART aspect of this objective is lacking as the company has not set a timeline for its achievement. Although Iceland has expressed a desire to expand this online service to select stores in the UK in the near future, they have not specified when they aim to fully implement this service nationwide. Trends that impact businesses.
Social – The increasing life expectancy of people could significantly affect Iceland Food as a business, both positively and negatively. If people live longer, there will be a greater demand for state pensions, while the workforce diminishes and fewer people pay income taxes. Consequently, the government will need to implement higher tax rates to compensate for the decreasing workforce. This situation implies that individuals will have less disposable income in their personal finances due to the increased tax burdens.
The increase in taxation could potentially result in a decline in the economy as it would limit firms like Iceland’s ability to invest. This would make it more challenging for Iceland to meet its goals and objectives. If customers have less disposable income due to higher taxes, their spending power will decrease, leading to a reduction in the company’s sales revenue. However, an extended lifespan for the current population could also bring advantages for Iceland.
With the increasing life expectancy of the population, the death rate is decreasing and the population is growing. As a result, there will be a larger customer base to serve. Moreover, loyal customers will be shopping at Iceland for a longer duration as they live longer. As the number of customers in Iceland stores increases, more stock will need to be obtained to meet consumer demand. This will lead to an increase in the company’s retained income.
Additionally, if individuals possess fewer financial resources to allocate, it could potentially enhance Iceland’s customer productivity as a result of the company’s exceptional cost-effectiveness. In the event that people can no longer afford the prices at their previous supermarket, they will inevitably seek out an alternative option, which is where Iceland comes into play. Given that a majority of their prices fall within the range of El to E, it significantly increases accessibility for all individuals to shop at Iceland due to its commendable value for money. Moreover, the prevalence of more single parents in society significantly affects businesses like Iceland.
In 1971, the percentage of households run by a lone parent was only eight percent. However, by 2012, this figure had increased to 22 percent, indicating a gradual rise in single-parent households. Apart from the challenge of having only one stable income in the household, there are additional issues to anticipate in the near future. Lone parents are projected to experience a decrease of approximately 8.5 percent in their annual salary by 2015, equivalent to losing a month’s worth of income every year due to modifications in the tax system.
The decrease in consumer demand for normal goods can cause problems for most businesses, creating a ripple effect. However, unlike other businesses, a company like Iceland may benefit from an increase in productivity due to an influx of single parents, even if their customers have lower disposable incomes. To elaborate, let’s consider normal and inferior goods using steak as an example. As people have less disposable income, they will purchase less of this desired food item.
Therefore, many people consider boxed ready meals to be inferior goods. Some individuals choose to buy boxed ready meals simply because they prefer the product, while others purchase them as a more affordable alternative to foods they prefer, like steak. When consumers have less disposable income, they tend to increase their expenditure on substitute goods such as ready meals instead of higher quality goods. Hence, this example highlights how Iceland is affected by the growing number of single parents, which may not be as detrimental as initially assumed. The company’s ability to offer good value for money attracts lower income consumers to their stores.
If people can no longer afford to pay for normal goods such as fresh meat, they will have to look for a cheaper alternative. The prices of these alternatives are in the range of El to E, making them affordable for everyone to shop. The higher pass rates of the younger society in social and A-level exams affect the economy and businesses’ hiring practices. In the most recent exams, only 26.3% of entries received A or A* grades, which is a slight decrease from the previous year’s figure of 26.6%.
However, the UK pass rate has increased to 98.1076 and has been consistently rising for the past three decades. This rise in pass rates can be attributed to companies raising their expectations in Iceland. With more people attaining the necessary qualifications for a specific job, competition among applicants increases. As a result, Iceland takes advantage of this trend and raises the standards required for that particular job role.
By attracting more job applicants, the increased number of people applying for a job will benefit Iceland by allowing them to select top quality staff. This, in turn, will contribute to the efficient running of the shop and the ability to provide higher quality services for customers. Furthermore, advancements in technology and the internet have brought significant changes over the years. The growing number of internet users has facilitated global communication, making it easier for businesses to promote their goods and services to consumers. As of 2013, 36 million people in Great Britain, which accounts for 73% of the population, use the Internet on a daily basis, representing an increase of 20 million compared to 2006.
With millions of people using social media sites daily, it becomes effortless for stores like Iceland to promote sales and new promotions and reach a vast market. While Iceland Foods has not yet achieved the status of a global corporation, it is possible to customize promotions and sales to specific regions, locations, or countries. Additionally, with social media networks being used by people of different age groups, it is an effective method to attract new customers to the store by advertising the products Iceland offers to a large audience simultaneously.
Online shopping is experiencing significant growth due to advancements in computer technology. The graph on the right illustrates how online shopping has contributed to a substantial increase in overall grocery revenue in the UK from 2012 to 2013. The revenue has experienced an impressive rise of 18.7%, which now accounts for 5.1% of total grocery sales in the UK. This can be attributed to the increasing popularity of internet use for shopping, with 72% of UK adults utilizing the internet for this purpose. Iceland has recognized this trend and has decided to incorporate an online shopping feature on their website to cater to their customers.
Iceland believes that by offering online shopping, they can increase their sales revenue since most consumers now use the internet for shopping. This allows their loyal customers an alternate way to shop apart from in-store, while also attracting new customers who typically shop online. The online shopping roll has been performing exceptionally well and continues to grow, bringing in new customers and boosting sales revenue. With the ongoing success of their online shopping services, Iceland is expanding its reach within the ASK region.
As the number of online shoppers grows, Iceland is well-positioned to take advantage of this trend by advertising a greater variety of products and deals on their website. While their website used to primarily serve as a platform for promoting their physical store, it now offers additional benefits to their customers, such as discounts for online shopping. Inflation, which stands at a high rate of 2.8% in the UK, has serious implications for both consumers and businesses, affecting the economy in various ways.
The inflation rates will impact the behavior of employees, thereby affecting companies like Iceland Foods Ltd. As inflation leads to price hikes, there is a resulting need for higher salaries. This has a ripple effect as employees demand increased pay, causing firms to raise their prices to cover costs. If firms fail to do so, their profit margins will decrease. Consequently, higher prices lead to employees anticipating further inflation and demanding another pay raise in subsequent years, perpetuating the cycle of inflation.
The issue here is that the increase in inflation does not always align with the percentage increase in wages. According to the Office for National Statistics, “total pay experienced a yearly growth of only 0.7% from June to August. Excluding bonuses, pay growth was slightly stronger at 0.8% – the lowest figure since 2001 when comparTABLE records began. In August, inflation stood at 2.7%.” In relation to Iceland, if prices are on the rise and wages are not keeping up with consumers’ salaries, they will have less disposable income. Consequently, this implies that they will have less money to spend in stores.
The reduction in consumer spending leads to decreased sales productivity and lower net profit for the company. This influences the pace of Iceland’s global expansion plans as they will have less funds to invest back into the business. There are various consumer laws, including the Consumer Protection Act and the Trades Description Act, that have an impact on businesses.
“In line with the patriotic policy of safeguarding consumers from deceptive sales and advertising practices, a product or advertisement is considered misleading if it does not meet the required level of professional diligence. Essentially, this refers to instances where it hampers the consumer’s ability to make an informed decision, leading them to make choices they would not have otherwise made. In the case of Iceland, the implementation of consumer laws like The Consumer Protection Act and the Trades Description Act could impact the way they promote their new bonus card scheme. The concept behind Iceland’s approach is to personalize bonus card rewards based on individual preferences.”
