Iceland Foods claims a new 500,000 sq ft distribution centre will be a “game-changer” for the supermarket’s expansion plans.
The new Omega Park site in Warrington, which opened in partnership with GXO in February, will supply 350 Iceland stores across the north west of England, the Scottish borders and Wales.
Iceland has invested £100m into the site, which when it’s fully onboard will employ more than 750 people. It replaced an existing distribution centre in the town, with the majority of staff transferring across.
Iceland intends to invest more into its supply chain, as it chases a long-term aim of doubling its network of Food Warehouse stores.
It includes a new facility for its manufacturing business, Inspired Global Cuisine, in Chadderton, Oldham, which is set to open later this year. The site will make ready meals for its own stores as well as Iceland’s growing network of international partners, The Grocer understands.
“We’re always looking at ways to make our business stronger, more efficient, and better for our customers,” Iceland CEO Tarsem Dhaliwal said after the official opening of Omega earlier this week. “Investing in our supply chain is a huge part of that, and this new state-of-the-art warehouse is a game-changer.
“It gives us the capacity to grow, improve service, and futureproof our operations for years to come. Warrington means a lot to me personally, as the place where I grew up, and it gives me particular pleasure to have been able to make such a major investment here.”
The Omega site has the capacity to supply up to 500 Iceland stores once it is fully up and running. Iceland’s initial lease runs for 20 years.
The supermarket is “back on” with its store expansion plan, having paused its store opens while it battled a £100m surge in energy costs following the outbreak of the Ukraine war, Dhaliwal told The Grocer during a recent Big Interview.
The supermarket plans to open around 20 new stores this year, “most” of which will be Food Warehouse stores, which are more profitable.
“It gives an equivalent of 1.7x an Iceland shop because they are bigger shops, it means bigger sales,” Dhaliwal said.
“People say ‘yeah you’ve opened 20 new stores’ but in reality, compared to the old Iceland shops, it’s probably closer to 35 because of the sales they make.”
Some of the new Food Warehouse stores would be in locations close to existing Iceland stores, he said.
“We are fully conscious that cannibalisation has an impact,” Dhaliwal said. “But overall, once we open any new Food Warehouse or an Iceland in a location that we already exist, our sales from that overall area actually increase, even taking into account cannibalisation.”
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