25 May 2000
Iceland bid opens door to e-commerce

By FWi staff

SUPERMARKET chain Iceland has signalled its intention to be a major e-commerce player by agreeing a 373.5 million takeover bid for Booker grocery wholesaler.

Iceland hopes its new group will combine Icelands home shopping with Booker warehouses to take advantage of e-commerce opportunities, reports BBC Online.

Chains seeking to develop home shopping have faced the dilemma of using existing stores, which are not ideally suited, or putting cash up front for purpose-built centres.

Iceland will own 61.1% of the new group, which will have combined annual sales of 5.5bn.

It is reported that the deal, which will cost 20m to implement, will generate cost savings of not less than 50m in the first year.

Iceland chairman and chief executive Malcolm Walker said the merger would “bring together two complementary businesses”. “We share a common commitment to meeting the changing needs of our customers, and in particular to playing leading roles in the development of e-commerce.

Bookers year-end results, which showed a rise in pre-tax profit before exceptionals to 35.4m.

This compares with profits of 3.6m in the previous 15 months.

Iceland – which is re-naming all its outlets as Iceland.co.uk – was the first food store to offer a national home shopping service on the internet.

In recent years the chain has hit the headlines with a series of bold policies which have struck a chord with public opinion.

In 1998 Iceland was the first UK retailer to guarantee that all its own-label foods would be free from genetically modified (GM) ingredients

In February this year it announced that by the end of September all its animal products will come from livestock reared on non-genetically modified diets.

The following month it pledged to stock hundreds of lines of organic foods for no more than the price of non-organic produce.

In May Iceland was censured by the Advertising Standards Authority for an “alarmist” and “misleading” anti-GM food campaign.