Iceland Foods CEO Tarsem Dhaliwal on keeping the business in the family

Iceland Foods is the quintessential family business, with founder Malcolm Walker still very much a father figure, while son Richard, now executive chairman, is its public face. And since returning to private ownership after a disastrous foray, as the Big Food Group, on the Stock Market, it’s guarded its independence jealously.

But Tarsem Dhaliwal is also family. An adopted son – figuratively at least – Iceland’s CEO and 50% owner joined as a trainee accountant in 1985, intending to qualify and “then buggering off” after a year. And he’s worked side by side with the Walkers ever since, rising up the greasy pole, exiting alongside Walker when Big Food Group dumped the duo, and returning with Walker to win back control 20 years ago, culminating in the pair taking full ownership of the frozen foods retailer five years ago.

Dhaliwal prefers to “fly below the radar” and is happy for Richard, who heads up marketing, to hog the PR limelight. “He does it exceptionally well. He has a personality and intellect that relates to the media and, more importantly, to our customer base.”

But the ebullient and straight-talking Dhaliwal is very much in charge of the day to day: with Malcolm Walker having largely stepped back (though the pair still speak “three or four times a day”). And while Richard will eventually take over the running of the business, it will be alongside Dhaliwal’s son Paul, who was recently promoted to chief commercial officer.

“Our family’s business is together, and together we want to keep this growing, keep it growing at a pace that’s manageable,” Dhaliwal says. “Our track record hasn’t been the best. It’s been up and down, We don’t want this big jerk of profits and then falling back down on our arse again.”

So what’s gone wrong? How has Dhaliwal helped put it right? And what’s on the road map?

After extricating itself from its Icelandic owners in the depths of the financial meltdown of 2008, Iceland faced another existential crisis in 2022 following Russia’s full-scale invasion of Ukraine. There were very real concerns the business could collapse after its energy costs ballooned by £100m “overnight”.

After Moody’s downgraded Iceland’s credit rating, its bond price dropped “like a stone”. Three separate supplier insurance providers pulled their cover as a result.

“F***ing nightmare,” Dhaliwal says. But “we did some radical things, we had to cut costs,” Dhaliwal says. Including its marketing budget, foregoing a Christmas ad in 2023, increasing prices and pausing new store openings for 12 months. All capital investment was also cut, other than refitting stores with more energy-efficient freezers, which saved £4m a year.

After resuming store openings and marketing efforts, Iceland reversed a £16.2m loss in 2023, posting pre-tax profits of £15.6m in the year to 29 March 2024 on sales of £4bn. And over the summer of 2024, volume growth rose 7.9%, according to unpublished Kantar figures. The growth has evened out since, and Iceland remains heavily indebted, but Dhaliwal insists it has never been as “efficient and lean”, thanks to the £100m cost savings. And while there is uncertainty all around, he is determined to “drive on the road you can see”.

Growth categories

Amid a renewed supermarket price war, Dhaliwal concedes customer perceptions that Iceland only sells frozen food will make it difficult to meaningfully grow its market share beyond the 2.3%-2.5% it has bobbed around for the past decade mark.

“We’re a third shop to many customers now,” he says. But Iceland will focus on winning share in the individual categories it excels in, such as “value-added poultry” (breaded chicken) and pizza – where it holds 35% and 15% of the market respectively – while cutting its losses in areas like cheese, where “we can’t compete”.

It will also step up efforts to improve quality perceptions. This includes the rollout of new health labels and investment in product innovation through its premium Luxury lines and exclusive product partnerships.

Supply agreements with The Range, now spanning 85 concessions, will grow. It has also rebranded its international export business ahead of a major push into the Nordics in 2025. That will come alongside 20 new store openings a year, the majority larger format Food Warehouse stores, which delivers around 1.7 times more sales than a standard Iceland shop.

“Doing the same, doing it better, doing it quicker – being more responsive to our customers,” he says, summing up the strategy. Taking Iceland’s online offer to the next level is also critical – particularly its burgeoning Amazon supply partnership. It’s currently only live in five stores, after difficulties integrating delivery slots alongside its own delivery orders. Relying on Amazon couriers to collect orders also made it harder for store managers to ensure they adhered to cold chain rules.

“We threatened to pull out. It was just not worth it,” Dhaliwal says. After some “big conversations” a new partnership trial launched at its Food Warehouse in Newcastle Kingston Park. Orders are placed by Amazon then picked and delivered by Iceland staff.

“We want incremental sales, but what we don’t want to do is just get customers to migrate to Prime. We’ll only do it if we can have autonomy for the whole supply chain,” he says. But once the model is tweaked it should be in a position to roll the service out further from September says Dhaliwall. And there’s “bags of room for growth”.

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Iceland is “behind the curve” of rivals in some areas of tech, Dhaliwal concedes. It’s just started a 12-month programme to onboard its first CRM system, as outreach to its three million customers is still organised using spreadsheets.

“We know we can do better – more personalisation in emails and app notifications. AI will take care of all that very quickly. There are lots of opportunities.”

Once complete, Iceland will also be able to make more of its Bonus card, although Dhaliwal is quick to rule out loyalty pricing after a short-lived trial in 2021 “didn’t work”. Instead, the focus will be on making the card more “interesting and relevant for customers”. He is tight-lipped on specifics but suggests this could involve discounts at a range of affiliate partners like Nando’s, akin to Sainsbury’s Nectar 360 model.

Getting more from the Bonus card will also support the rollout of a new retail media arm, with plans to add 5,000 screens to its stores by the end of the year. “We won’t prostitute ourselves, but there’s income to be had, and we want to be part of it,” he says.

Above all, Dhaliwal is playing a long-term game. “People think we’re a bunch of cowboys, that we just let everybody do what they want. The reality is: we can’t do that. We have 1,000 shops, 26,000 colleagues. It’s a family business. We’re not gearing up to sell tomorrow, next week or whenever. We want sustainable, long-term growth.”