Struggles in Norway – good in the home market
Five years ago, the English frozen food concept Iceland entered the Norwegian grocery market through a franchise agreement. Since 2018, Iceland Norway has suffered a total loss of over NOK 40 million for the Norwegian investors. The chain had at most six stores in Norway, but four were closed earlier this year, according to Dagens Næringsliv. Brexit is part of the problem.
On the Norwegian team there was a bunch of very experienced businesspeople and experts on grocery retailing. The idea was to get a small share of the Norwegian grocery market with new, exciting, and convenient products from the frozen products specialist.
It turned out to be more difficult than expected, not least because of Brexit. Now Iceland is relocating its export business to Ireland which will ease export to EU and EEA.
The leader for the operation in Norway, Geir Olav Opheim has top-management experience from both Coop and Nortura and is considered highly skilled. However, this has not significantly helped in achieving success for Iceland in Norway, even though Opheim also brought with him a bunch of very experienced grocery people, such as Geir Myklebust and Ståle Werner Nielsen.
Better elsewhere
In the UK and elsewhere in the world, things are better for Iceland.
The Frozen-food specialist was founded by entrepreneur Sir Malcolm Walker in 1970 with a single store in Oswestry, Shropshire, England.
The retailer later grew and was floated in 1984. A landmark moment came in 1989 when Iceland bought rival Bejam, strengthening its presence in the south of England, and making it a nationwide player.
In 2000 came another big deal – the acquisition of cash and carry giant Booker – owned by Tesco – adding a wholesale business to complement the retail chain, writes Grocery Gazette.
However, the same year the business hit turbulence and Walker was ousted. The business was renamed the Big Food Group, but problems persisted and, in 2005, Walker and his team returned as Iceland was taken private. Walker later led a management buyout in 2012.
Innovators
Iceland has been a frequent retail innovator. It lays claim to the launch of the UK's first grocery home shopping service and has been a prominent campaigner for the reduction of plastic use, a drive led by Richard Walker.
Total turnover in Iceland Ltd. last fiscal year was £3.55bn with circa 900 stores in GB and exports to 65 countries world-wide. The bottom line is sound.
Lower prices more helpful than Christmas TV campaigns
Iceland has chosen not to release a Christmas TV campaign and will instead invest in supporting customers during the cost-of-living crisis.
In a statement to Grocery Gazette, executive chairperson Richard Walker says:
"As a business we were faced with a decision. Do we spend millions creating and sharing a TV advert or do we invest the money supporting our customers during the cost-of-living crisis? This is a no brainer for us. I am grateful that as a family-run company, we can make the decisions we believe are right for our business and our customers.”
Better in business than politics
Iceland executive chair as of today, Richard Walker, who was expected to become a Conservative member of parliament, has quit the party, labelling it "out of touch".
Walker was one of the most prominent business supporters of the party for years but now he means the party has shown "inability to deliver" and "drifted out of touch with business, the economy and with the everyday needs of British people."(The Times).
Tougher competition in Norway than many pretend to believe
It turns out that it is not so easy to compete with Norwegian chains. Giants such as German Lidl and Swedish ICA have given up and pulled out of Norway with heavy losses. We do not know the exact figures, but we are talking billions.
The French-owned frozen food chain Picard tried to launch in Norway in 2019. Knut Faremo, entrepreneur, and retailer was behind the two Norwegian Picard stores in central Oslo. After losing 10 million NOK the owners gave up and declared the company, Migaya Retail Norway, bankrupt earlier this year.
Politicians, journalists, and others have many times claimed that the competition in Norway is too weak. The many failed foreign attempts to take a nibble of the Norwegian market (maybe) proves the opposite?
Sources: NHH, Lidl, ICA, DN, Times, Grocery Gazette.