Changing perceptions of Iceland

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Argentinian, wild-caught red shrimp, Canadian lobster tails, scallops wrapped in bacon, venison burgers – it sounds like a barbecue made in heaven. Particularly if it’s washed down with a bottle of Nicolas Feuillatte Champagne Brut – a snip at £18.99. It sounds exotic, but this is increasingly standard fare in the aisles at Iceland, as the frozen-food retailer continues its steady migration from the ‘cheap and cheerful’ image popularised by advertising featuring Kerry Katona – and the long-standing ‘Mum’s gone to Iceland’ tagline – toward a more ‘upmarket’ positioning. 

Iceland’s challenge is that those in the know are real fans of the brand, but – for most people – old habits (and attitudes) die hard. A raft of research is informing a brand and communications strategy relaunch, planned for later this year, which will position Iceland as ‘more relevant’ in people’s lives.

When former Asda and Sainsbury’s marketer Mel Matson arrived as marketing director in March 2017, Iceland was on a roll. The business was enjoying a rebound in sales, profits and reputation after what its founder, Sir Malcolm Walker, described as two years “in the wilderness”. Market share had risen to a 16-year high of 2.3%, sales were up 8.6% over three months, and it had been voted best online supermarket by Which? for the second year running. The revival was the result of significant investment in better-quality products, store makeovers and a keen focus on the benefits of frozen food – encapsulated in its ‘The Power of Frozen’ messaging. 

Iceland also upped its innovation game, and hiring Neil Nugent, former Waitrose and Morrisons head chef, as head of product development in 2016, was an inspired move. Nugent promptly commissioned a £3m state-of-the-art kitchen and embarked on a mission “to make good food affordable to everyone”. 

Matson wanted to find out what was driving the increase in sales and quality perceptions, so that the business could build on it. “My first port of call – as usual when I’m trying to understand the market – was Kantar,” she says. 

While there was a rise in more affluent shoppers, Kantar’s research also showed that most of the growth came from new, younger customers. Nugent points out that “younger shoppers don’t carry the baggage about Iceland that older ones do – particularly those who shop at the new stores, such as Clapham and Islington in London, which have had incredible face-lifts.” 

While Iceland has clearly broadened its appeal, Matson refutes the ‘upmarket’ tag: “We’re just attracting more savvy shoppers. In fact, I would say that our bull’s-eye customer is ‘someone who’s got more sense than money’.”

Matson and her agencies have defined this core target consumer through further research designed to discover what Iceland customers value about the brand. “People who shop with us absolutely understand that we stand for great value at a brilliant price. But the challenge from the research is that people who don’t shop with us don’t understand that – they just see us as ‘low price’. We need to help more people understand that what we offer is really good.”

Iceland’s offering is not just about ‘The Power of Frozen’; it hits all kinds of increasingly important buttons for consumers, including quality, waste, convenience, value, provenance, and health and nutrition. Products are captured in peak condition as soon as they are picked, caught or made, and freezing locks in nutrients (and flavour) that are typically lower in supposedly ‘fresh’ goods that have spent days in the supply chain. 

One of Iceland’s communication strands in recent months has focused on the fact that much fresh supermarket fish has either spent days in transit or been frozen at sea and defrosted before being marketed. Freezing removes the need for the artificial preservatives and other additives used to prolong the shelf life of fresh products. Frozen food is also intrinsically cheaper to produce than fresh because everything can be frozen when it’s most abundant, and production runs are long and efficient. 

“We can sell a stone-baked, wood-fired pizza that’s been fermented properly, and has good mozzarella and other ingredients on top, for £1.50,” says Nugent. “That represents incredible value, particularly as we get it from this amazing place in the Dolomites – and we can do it because we buy it by the truck [they get five trucks a week] rather than the case.”

Iceland has taken corporate responsibility seriously since long before it was fashionable. In January, it became the first major supermarket to commit to eliminating plastic packaging for all its own-brand products within five years and, in May, pioneered the adoption of the world’s first plastic-free Trust Mark on packaging. 

In April, it was the first major supermarket to announce it would stop using palm oil, which is causing deforestation in Southeast Asia. It was also the first UK supermarket to remove artificial colours, flavourings and non-essential preservatives from its own-brand products, in 1986 – a full 19 years before Marks and Spencer. It removed monosodium glutamate (MSG) the same year, was the first national food retailer in the world to ban genetically modified ingredients from its own-brand products in 1998, and removed artificial trans fats in 2006.

What’s more, Iceland has been doing free home delivery of in-store purchases for 20 years.

While Iceland didn’t make as much of these ‘firsts’ as it might have done, shoppers are certainly taking notice now. 

“When we announced our plastics commitments at the beginning of the year, the ‘buzz’ associated with the brand – using a YouGov tracker and our own social listening [through AI-powered consumer insights company, Crimson Hexagon] – was much more positive than the supermarket average,” says Matson. “There was a correlation with sales growth as well. We realised that we can use these things to generate sales.”

One strand of research that will inform the new brand and communications strategy is a big, multi-methodology study – which includes ethnographic research – to determine how shoppers behave generally and the implications for Iceland. The business’ media agency, the7stars – which has an in-house research team – led the study. 

Another strand is based on a deeper dive into the Kantar data. “This has reinforced the fact that Iceland, for many, is a secondary top-up shop,” says Matson. “But what’s interesting is that people who are ‘brought in’ to the brand use it in quite a different way. I’m a case in point. Since I began working for Iceland, and realised all its hidden secrets, I now shop in Iceland first and – if there are things I can’t get there – I’ll top up elsewhere. Another insight from the research is that trial needs to be a big part of what we do.”

Matson says some of the more affluent new customers were attracted by specific new products, such as Chateaubriand for £10 – “that really demonstrated the ‘power of frozen’; brilliant quality at brilliant prices on products they wouldn’t have expected from Iceland”. 

Iceland scores high on taste, as well as range and quality. Blind taste tests by Cambridge Market Research show that not only do people “really like” Iceland food but, “in the majority of cases”, they actually prefer it to competitors’, says Matson. 

Luxury products typically represent 8-10% of the 1,200 or so own-label lines that Iceland sells (this rises to around 15% at Christmas), boosted by the brand’s recent foray into grocery. 

Nugent points out that the increasingly commoditised nature of brands – “they now play a core, value role” – is allowing luxury own-brands to move into the space they once occupied. This is an opportunity for Iceland as it seeks to increase its relevance to shoppers. 

“Frozen is our big point of difference and will remain so,” Nugent says, citing a new Mumbai Street Food range as an example. “But we want to hook people in with that and then surprise them with other things. For instance, we do some great cheeses now, so then you need nice cheese biscuits and chutneys. We also do some lovely bread, so we need some good jam and marmalade.”

With all these benefits to shout about, how can Iceland convey the message without overwhelming people? “The research has shown there’s a lot under the bonnet, but it really all wraps up into a quality offering, or a ‘no-compromise value’ offering,” Matson says. “We will have to talk about things systematically to land the point – and the7stars did another piece of research to help us understand the media consumption of our audience. We will talk to specific segments, but we believe there are lots of reasons why everyone should shop at Iceland – and the more this happens, the more our customer profile will move towards the mainstream.”

It is already talking to customers in a different tone of voice. “The tracking is showing the Iceland personality being described in different terms – such as ‘confident’, ‘playful’ and ‘doing the right thing’,” Matson says. “There are lots of things we should be offering customers, but we have to do it with a smile on our face. Humour also helps us to stand out from the crowd when we don’t have big media budgets.”

Christmas was a case in point. “We held our campaign back until December and contrasted the emotionally fuelled traditional seasonal retail advertising with a series of short humorous ads that packed a personality punch. It was the first time we had stepped away from the ‘families’ creative to use a tone of voice that really reflects the character at the heart of the business.”

And it worked: “It drove a significant increase in awareness, cut-through and consideration.” 

Research has clarified thinking in an organisation that prides itself on gut instinct and a close relationship with customers. “Delving into the research enables us to tell a story about how people are or aren’t using us – and what they know and don’t know about us – and that gives us a richness that we can flip into a communications strategy, says Matson. “Our own, and the YouGov, tracker act as temperature checks, so we can adjust as we go along.”

Some have sought to paint ‘good food’ as the preserve of the affluent, but “demographics don’t come into it,” says Nugent. “It’s attitude, not wealth, that determines what people eat. Look at how many cooking programmes there are on TV – and they’re inspiring people to eat better and try different things.” 

He’s doing his bit to ‘democratise’ good food: two wagyu burgers at Iceland cost £3 – roughly half the price of elsewhere. “I want everyone to be able to try a wagyu burger – or a venison burger or vegan burger.” It seems to be working. Vegan burgers have been one of the surprise hits of recent months – along with frozen avocado. 

So could frozen food be coming in from the cold? The signs are good. In February, Kantar Worldpanel reported Iceland’s 23rd period of consecutive growth, a run dating back to May 2016. While market share was steady at 2.3%, sales were up 1.6% year on year. “I think frozen food is going to be quite trendy again,” says Nugent. “I feel it might be our turn.” 

Frozen v fresh

Last year, Iceland commissioned the Food Centre at Manchester Metropolitan University (MMU) to conduct an independent study into the costs, waste and taste of fresh meals compared with the equivalent frozen meals, over a two-week period. 

MMU selected 20 families, who were asked to eat one week of meals chosen from recipes provided by Iceland and made from fresh ingredients (not ready meals). In the second week, they had to cook the same meals using frozen ingredients. 

The families completed diaries to record information on breakfast, lunch and dinner every day.

The study found that they reported wasting less in the frozen week – on average, nearly half ( 47.8%) than in the fresh week. 

The families also found frozen to be better value than fresh (on average 29.9% better) and, overall, spent £752.43 less during the frozen week than during the fresh week – an average cost saving of £37.62 per family. 

When it came to taste, fresh scored better than frozen by just seven points ( 150.7 versus 144 ), but families generally found the taste of frozen as good as fresh and said they would buy more frozen in the future – particularly now they understood the benefits.

The freezer as the hero

The multi-methodology study into shopper behaviour, conducted by the7stars, included ethnographic research, online forums and quantitative analysis. Helen Rose, head of insight and analytics at the agency, said: “We wanted to step back from ‘frozen’ – and, to a certain extent, from Iceland’s role within that – and look instead at what ingrained behaviours shoppers were exhibiting.”

The agency selected nine ‘typical’ shoppers from Leeds, Cardiff and London. It went into their homes and accompanied them on shopping trips to observe what they did. “That gave us insight into why they do what they do,” says Rose. 

As a result of the study, the7stars grouped participants into four profiles based on their behaviour and attitude to shopping: habitualists (the most dominant group, with the most ingrained habits); revisionists; discoverers; and purposefuls. The research found neither regional nor demographic differences. 

The big-picture study confirmed that Iceland has a challenge to change ingrained shopping behaviours and attitudes. The follow-up, online qualitative forums, designed to drill down into the role of frozen and Iceland in the grocery shop, revealed some more interesting insights – including the difference between male and female attitudes to the fridge and freezer. 

“The fridge was very much the ‘leading lady’ of the household, whereas the freezer was more the ‘male’ food cupboard,” says Rose. “When we got them to write a letter to their fridge or freezer, however, the freezer actually came out as the women’s ‘unsung hero’ – a ‘life saver’ that they hadn’t fully appreciated.”   

The qualitative research focused on three groups: current, lapsed and non-Iceland shoppers. One of the key insights was that, while most people understand the values of quality and convenience from frozen food, negative perceptions persist about Iceland’s role in the category. 

The challenge now, says Rose, is to embed these benefits in Iceland’s brand values, so that people make more positive associations. 

The findings of the study were validated by quantitative research, based on a 2,000-strong nationally representative sample.

This article was first published in Issue 22 of Impact.