Packaging Retail Self-Regulation

Iceland Returns to Plastic After Huge Drop in Sales

Iceland boss Richard Walker has admitted the group still has a ‘mountain to climb’ on its plastic-free pledge after it was forced back to the drawing board on two key trials.

The supermarket had to reintroduce plastic packaging across its bananas this summer – equating to 10 million plastic bags a year – after its paper band replacement failed to live up to hopes.

In May, Iceland also scrapped a plastic-free greengrocer trial that was running in Liverpool after just three months following a 20% plunge in sales as loose produce and alternative packaging failed to resonate with local shoppers.

But Mr Walker – managing director of the frozen food chain and son of founder and chairman Sir Malcolm Walker – has come out fighting despite the challenges in its promise last year to eliminate plastic from its own label products by 2023.

Mr Walker opened up on the problems the group has faced and said he has not given up on the ill-fated trials. It is launching its latest efforts for new plastic-free banana packaging this week, with a trial across 20 stores from July 24.

It is also planning a new plastic-free greengrocer initiative that will run across more than 30 stores later this year, which will be focused on pre-packed produce rather than loose items in response to customer feedback from the failed trial.

Mr Walker said: ‘This is all part of the process – we’ve got to keep experimenting.’ ‘It’s good to be upfront and open about the challenges.’

He added: ‘We’ve still got a mountain to climb – and we’re still all on our own. No other supermarkets are following our lead.’ The group’s initial efforts to replace plastic packaging on the bananas ended up causing up to 20% shrinkage of the fruit and they would snap off or go rotten, Mr Walker admitted.

He added the sales drop in the Liverpool greengrocer trial showed initial efforts were not sustainable. But despite the recent challenges, the group has already taken out 1,500 tonnes of plastic across the supply chain, kicking off with the replacement of black plastic ready meal trays. ‘It’s damn hard work and it’s costing us a lot of money,’ admitted Mr Walker.

He said as a private business the firm is able to focus money and effort on these initiatives, but has to be mindful of the impact on the firm. ‘We can’t do anything that will endanger the success of the business, because there’s 25,000 jobs depending on it,’ he said.

He said whatever initiatives they launch cannot push up prices and put off customers. ‘We serve five million customers a week and some only have £25 a week to spend on food – it’s very important our prices are sharp,’ he said.

The group will not say how much it is spending on its plastics-free pledge, except to say it is costing ‘millions’. Iceland is also investing heavily in its Food Warehouse brand, which just opened its 100th store in Blackpool.

The brand, which combines a cash-and-carry format and its more traditional Iceland format, is on track to grow by another 45 stores over the next 12 months.

Mr Walker said the group was ‘learning from the German discounters’ in how to make the fledgling chain a success.

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This article was published on metro.co.uk and written byRichard Hartley-Parkinson