Supermarket chain Iceland is to re-open the online store it closed six years ago due to rising demand from customers.
Iceland pioneered online supermarket shopping as long ago as 1996, well before Tesco, Sainsbury's and other big supermarket chains, but the company closed its online store in 2006 following the traumatic break-up of Iceland's then-owner, the Big Food Group.
At the time, said co-founder and chief executive Malcolm Walker, the web operation was "slightly profitable", but the company needed to focus on the core business that had been neglected by Iceland's previous owners.
The decision to re-open the store was taken just three months ago, he added. "We had a fairly successful online business in 1996, which was the first national grocery online delivery service in the UK."
That was well before the advent of broadband and universal internet access. "Now, most of our customers have computers and it seems a logical thing to do," said Walker.
The key to Iceland's website, added Walker, will be a "Fisher-Price" level of simplicity. A pilot project is planned for early 2013 and the business will only be launched following sign-off from Walker.
Iceland's business model will be based on conventional store-based picking and packing. "The secret, of course, is that we have already got 80 per cent of the infrastructure in place. We have got the 'picking' centres, which is 800 stores; we have got 1,200 home delivery vehicles, making 170,000 deliveries a week; and there are the customers who buy in-store and have the products delivered," said Walker.
"So we've got all that already there and all we need to do is put on the front-end – the website," he added.
At the same time, the company is also rolling out store-based wireless connectivity and new handheld devices to enable staff to more easily run multiple shopfloor-based applications. This may also be used to make picking of online orders by shop staff more efficient, although it was not implemented with online in mind, said Walker.
While a user of Ocado, the pure-online supermarket service, Walker believes that Ocado's business model based on highly centralised warehouses is a dead-end. "I'm a big fan of Ocado and use it myself, but I don't see how it will ever make any money, as Webvan in the US found out [more than 10 years ago]," said Walker.
Iceland closed its online service six years ago as part of its recovery from the Big Food Group disaster, which had seen the company merged with wholesaler Booker and two other companies in 2000. Walker was subsequently ousted in a boardroom coup.
However, the Big Food Group proved to be a failure and in late 2005, it was broken up into its constituent parts, with Walker resuming the role of chief executive under the majority ownership of Icelandic retailing conglomerate Baugur. Walker took full control of Iceland, with a number of other investors, in March 2012.
The full story is told in an unusually frank – and readable – corporate history on the Iceland website.
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