Posh isn’t a word that immediately springs to mind when you think of Iceland. Indeed, eight years ago, the frozen food chain’s advertising consisted of Kerry Katona and Coleen Nolan singing about beef and peppercorn kebabs.
But earlier this year, Iceland chief executive Malcolm Walker told the Observer he was keen to establish the chain as a quality offering. His strategy was simple: use upmarket lines to fight off competition from the discounters. “Stupid, middle-class people think chilled is better. I am trying to remove the prejudice against frozen food,” he said in trademark straight-talking style.
The brand’s first new-look store in Clapham Common, unveiled on Tuesday, seems to embody this thinking. Although Iceland’s merchandising and format development director Neil Hayes insists there was “no attempt to make it upmarket”, the refit certainly suggests otherwise.
In addition to the black-and-white colour scheme of the freezers, and the wooden wine rack section, it is no coincidence that the most prominent fixtures of the store - a Lavazza coffee machine dispensing flat whites and fresh leaf tea; an (admittedly small) food-to-go offering and a fruit and vegetable section boasting market-level freshness - are fresh and chilled-focused.
As Hayes says, the refit was partly about addressing misconceptions of the brand. “It’s surprising how many people didn’t realise we sold great-quality fruit & veg. We’re clearly the experts in frozen but they didn’t realise we have such a good fresh offering,” he explains.
The turnaround has made its mark among customers, who note it is much more than the lower-key refit Iceland is carrying out across other branches. “When we’ve done refits in our stores in the past we would speak to customers, they would say it looks fantastic and clean and bright. They recognised something had happened,” says Hayes. “In Clapham, we’ve had a very different response - they’re not just saying it’s clean and bright, but it feels like a more modern Iceland.”
And, however much Iceland may protest, this modern look comes with an undeniably more middle-class feel. The first items you come across at the freezer section are the Pizza Express range of premium pizzas, pastas and desserts, which - priced at £5 for two chocolate fudge cake gelatos - are reasonable but hardly aimed at those on the breadline. And the extensive wine rack could be just as easily found in the Waitrose next door.
‘City sophisticates’
The refit could be an attempt to tap into the Clapham Common demographic. The chain stresses the new-look store is simply an “experiment” at this stage, and the chances of a wider rollout will depend on results.
On the opening day, the new-look branch certainly seemed to be a success with the Clapham clientele, who were visiting in their droves around 3pm (and not just for the opening offer of free coffee).
This may be partly down to their demographic, as market intelligence company CACI explains. The area of Clapham Common is predominantly made up of a cash-rich, time-poor millennial demographic it refers to as ‘city sophisticates’ - contrasting sharply with Iceland’s core client base, which overindexes on ‘financially stretched’ and ‘urban adversity’ segments. As a result, the store only has a 1.8% market share in the area, according to CACI.
David Gray, senior analyst at Planet Retail, believes Iceland may only roll out the new format in more upmarket districts. This would fall in line with the emerging trend across Europe to tailor offerings to different demographics, he believes.
“If you look at France, you have Carrefour Gourmet, an upmarket version of the supermarket that is opening in more affluent locations,” he says. “It would make sense for Iceland to try to push a more upmarket format in those areas but at the same time they are rolling out Food Warehouse stores in more downmarket areas.”
But Shore Capital’s Clive Black believes the revamp could roll out more widely. Instead of a bid to be more upmarket, he sees it as a bid to be more relevant. He points to Iceland’s recent declines in like-for-like sales - 2.7% in 2015-16 and 4.4% the year previously - as a sign that it needs to do something different.
Black acknowledges there may be an element of wanting to attract a more middle-class shopper. After all, Iceland’s luxury ranges (which include entire freezers of high-end ice creams and desserts) are likely to make the most margin. But this isn’t just about poaching the Waitrose loyalists - it’s about becoming relevant to the increasing sophistication across all demographics.
He uses the Clapham Common branch’s extensive wine range as an example. “We used to get quite excited about German wine. Today that isn’t the case and retailers have to respond to that,” he says. “This is more about Iceland trying to tap into the success of Aldi and Lidl in that area, who have done really well by offering higher-end wines.”
The need to modernise
Black points out the new-look store is capitalising on changing shopping habits across the UK population - the £22bn food-to-go market (Allegra), for one. “Iceland is undoubtedly moving in the right direction,” he says. “It’s tapping into growth in the retail industry and whether that’s making Iceland more upmarket or more relevant I will leave up to you to decide.”
Whatever the motivation behind the Clapham Common format, it comes at a crucial turning point for Iceland in its desire to move with the times. Iceland’s Hayes admits that, although the current store format is “very successful”, it has been more or less the same for a decade.
The new branch could prove a blueprint for future revamps, or other stores may simply replicate successful elements. Either way, images of Kerry Katona and downmarket frozen food look increasingly consigned to the past.
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