UK food retailer Iceland claims its business has “stabilized” following a period of turmoil. Having achieved its first goal of stabilization, Iceland is now seeking to overhaul store operations and formats. CEO Bill Grimsey admits that in the past Iceland’s “alignment to customers had perhaps gone a bit astray.”

For the turnaround to be a real success, Iceland now needs to stay closely in touch with the preferences of its target consumers. Mum’s not been going to Iceland for some time, or so it seems: the UK retailer has suffered badly in recent times. CEO Bill Grimsey has been all too aware of this and following major changes he announced last Thursday that the business had now “stabilized”.

Mr Grimsey stated that these improvements had been achieved through better customer service, greater product availability and use of tactical promotions. It’s admittedly difficult to see whether or not the figures back this view up, due to changes in accounting procedures. Revenues have stabilized though, following a 3.6% decline in Q1.

The next wave of changes for Iceland will involve updating retail formats, with the development of four or five new ‘consumer-centric’ formats, 80 new stores and numerous refits. Iceland will also extend its eCommerce operations, with an upgraded online presence, more fresh foods in the product offering, and the creation of picking centers. These changes are on trial, however – initially for 18 months.

Fundamental to the new strategy continuing to work will be “alignment to customers”. However, many in the industry are skeptical of there being a real turnaround. With market conditions likely to worsen the real test may be still to come.

Following the failure of its all-organic food strategy, Iceland knows how much it needs to improve its judgment of consumer concerns. Its initial focus on price and promotional offers has been seemingly successful, but other operators can all compete on the basis of price.

To get real success Iceland will need to offer something different and make its new stores compelling to consumers. For that to be possible, it will really need to know its customers very well indeed.

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