Iceland is cutting its overall marketing spend and says it will use the remaining budget to promote its value offer and own label ranges.
In accounts published this week (13 November), the business said it has “substantially reduced” its marketing expenditure and will focus “single-mindedly” on promoting the “great value” it offers, alongside its frozen food offering and innovation, under both its own label and “a growing range of exclusive brands”.
The full-year accounts for the 12 months to March 2023 were published just days after Iceland’s chairman Richard Walker posted on social media saying it was a “no-brainer” to not run a 2023 Christmas ad. Instead, Walker suggested Iceland would be spending money otherwise earmarked for advertising on its customers amid the cost of living crisis.
As Iceland shows, aspiration should be open to allDespite sales rising 7.2% to £3.8bn, the budget supermarket’s losses increased to £17.1m, up from £3.6m in 2022, in part because its energy costs increased by £93.3m following global price hikes.
Iceland praised its “unique” positioning as a discounter – calling itself the ‘different discounter’ – for helping it gain a competitive advantage during the current economic climate and pressures on consumers.
For its 2023 financial year, Iceland’s own label accounted for 60% of sales across frozen and chilled food. “Our appeal is further strengthened by our offer including a high proportion of Iceland own label and exclusive brand lines that customers simply cannot buy anywhere else,” it added in its financial statement.
Yesterday (16 November) the grocer doubled its £1 price lock scheme, adding an additional 500 products to the promotion.
Marketing Week columnist and Passionbrand director Helen Edwards praised Iceland’s approach to pricing in August this year. She wrote: “At the most fundamental level, the brand is aggressive on pricing. It has frozen the price of hundreds of products to £1 – a totemic move by a team that knows that one of the brand’s natural competitors is the local food bank.”
Iceland expects its EBITDA for the current financial year to increase substantially as global energy prices reduce.
“It remains our firm belief that our strategic focus, family ownership and culture, robust capital structure, strong cash generation, iconic brand, ready accessibility, value heritage, focus on frozen food and continuing leadership in product innovation provide the foundation for achieving sustainable, profitable long-term growth,” it added.