China has the potential to become Iceland’s “biggest export partnership”, the supermarket’s head of international and partnerships Justin Addison has claimed, after the frozen grocer opened its first store in south Asia.
The new ‘AI-lab’ store – which opened in Beijing last week – is the first of a new regional partnership with government-owned e-commerce and retail company BTGWe-Link.
The ‘AI-Lab’ has been designed to cater to Chinese shopping habits, which is predominantly driven through TV and e-commerce. It leans heavily on retail experience, pushing products with digital screens and interactive demonstrations.
Iceland expected 30% of sales to come through the physical store, with 70% of sales to come through delivery, Addison said.
Iceland has currently introduced around 50 of its products, including ice cream, ready meals and pizza, to China. However, there was “potential” to increase the total to around 200 “in the next couple of months”, Addison told The Grocer.
“The potential is huge – it could be 500-plus products,” Addison said. “This could very quickly become our biggest partnership.”
Iceland was “seriously considering” finding a manufacturing partner in China in order to deal with the legislative challenges of exporting poultry into the country. China is yet to lift the ban on exporting UK products first implemented in 2017.
After Beijing, it is likely BTG would look to expand to the other large cities as it rolled out more Iceland stores. With a population of 1.4 billion, and demand for frozen food three times that of the UK, China presented a major opportunity for Iceland, Addison said.
It’s the latest in a growing number of international export partnerships, as part of a major push by the supermarket to expand globally.
The retailer rebranded its international partnerships business last year following a year of “record growth” for its international revenues. It saw the launch new partnerships in the Nordics and Channel Islands, as well as a string of convenience partnerships in the UK.
Iceland is in discussions with a number of new partners in regions including Turkey, South Korea, Australia and the Middle East. “We’ve got huge plans in the UK and globally,” Addison said.
It includes a mixture both new franchise partnerships as well as supply agreements, Addison said. The joint venture it launched with Skel in the Nordics is also gaining momentum, with Iceland set to launch new partnerships with major Scandinavian retailers.
Addison – who took over the management of Iceland’s international arm three years ago – said a change of strategy had enabled the retailer to grow its presence. It now approaches retail partners directly, rather than relying on an intermediary distributor to make connections and supply products as it had previously done.
“We’re more confident in our infrastructure and expertise to support and supply any business now globally,” Addison said.
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