Another "poor people's supermarket" has come to China.

Text | Peng Qian

Editor | Qiao Qian

Despite the ongoing tariff turmoil, Iceland, a British supermarket that relies on the global supply chain, has chosen to return to China at this time and opened its first offline store.

Iceland is the largest frozen food supermarket in the UK. Headquartered in Wales, UK, it was established in 1972 and now holds a 17% market share in the UK. It has opened stores in about 10 countries, including the UK, with the number of stores reaching 1,000 and annual sales approaching 40 billion yuan.

This time, Iceland has selected China for its first Asia - Pacific store, which is located in the Jingxi Zhigu Park in Mentougou District, Beijing. It started trial operation on April 29 and will officially open to consumers at the end of May. Different from all its other stores around the world, Iceland's first store in China covers an area of 6,800 square meters. It is not just a supermarket shopping venue but a comprehensive commercial complex that includes retail, e - commerce, MCN, catering services, and local services. Therefore, it is named Iceland lab.

According to the information currently disclosed by the official, the supermarket area of Iceland's first store in China will display 3,200 SKUs, all of which are packaged products, mainly frozen foods from around the world, including semi - finished frozen seafood and frozen vegetables, as well as ready meals such as fries, fried chicken, fish fingers, pizza, pasta, desserts, and ice cream. In addition to food, there will also be a small number of daily necessities and personal care brands.

Some popular products to be displayed in Iceland's first store in China. The picture is from the official source.

Iceland, which is known for its high - quality and low - priced products, is called the "paradise for the poor" in the UK. The "blockbuster" frozen pizzas of its private label are sold at only about 1 pound each, and kitchen utensils such as scissors also basically cost only 1 pound. Even during promotional periods, it will launch activities like "10 pounds for any 3 items" and "8 pounds for 3 items." And in China, Iceland has also clearly emphasized through official channels: "It will maintain its long - standing positioning and not be a two - faced brand." As a result, various discount information can be found everywhere in the Chinese stores, constantly reminding you of how cheap the products are.

Although Iceland has never opened a physical store in China before, it is not unknown in China. Popular single products such as chicken legs and wings, sweet potato fries, pineapple cheese, Muller Corner yogurt, Lotus ice cream, and frozen minced garlic have always been the favorites of European international students. "Iceland is a lifesaver during the final exams. When there is no time to cook, just heat it up in the microwave. It's really cost - effective to get 30 frozen chicken nuggets for 1 pound during the discount period, much cheaper than KFC and McDonald's," a British international student told 36Kr.

In recent years, many foreign - funded supermarkets have accelerated their layout in China, and Iceland realized the particularity of the Chinese market early on.

When it first entered the Chinese market, it didn't rush to open offline stores but tried to break into the market through e - commerce. In 2018, Iceland settled in JD Global Purchase and launched its private label products, as well as categories such as personal care, mother and baby products, and cooking and baking on the JD Overseas Flagship Store. In 2022, Iceland also settled in Taobao and opened an overseas flagship store, but with fewer categories, mainly selling ice cream, biscuits, Japanese sake, and other products.

After the pandemic, Chinese consumers have gradually developed the habit of buying frozen foods online. According to a report by Nielsen, 35% of Chinese consumers have increased their purchase rate of frozen pastries compared with before the pandemic, with the actual purchase frequency increasing by 42%. At the same time, the average order value of online consumption is higher, and the product categories are becoming increasingly rich. Companies such as Sanquan, which specialize in frozen foods, have also said that the sales of frozen products in traditional supermarket channels have grown slowly, and some categories have declined, but the online growth rate is obvious.

However, Iceland's previous e - commerce attempts in China were not very successful. The JD Overseas Flagship Store of Iceland has now been closed. Although the Taobao Overseas Flagship Store is still open, it has significantly reduced the number of SKUs and now only has a dozen products.

A person in the supermarket industry believes that: "For food supermarkets, although the offline channel is facing great challenges nowadays, it is the foundation. Only opening online stores without offline ones will not build brand awareness or make consumers have a perception of the brand."

Iceland's choice to start trial operation before the May Day holiday can indeed attract a wave of customers in a short period. For reference, the first stores of many foreign - funded supermarkets in China, such as Costco and Aldi, have become popular check - in spots, helping the brands make a good start in China. To attract as many customers as possible, Iceland has also set up a dining area and a live - streaming area in its first store.

The first store in Beijing under preparation. The picture is from the official source.

Next, Iceland will also open offline stores in Chaoyang, Haidian and other districts in Beijing, combining more scenarios to make the stores more visitable. It has also made some attempts in the UK before. Iceland once cooperated with the Taylor Herring public relations and creative agency in London. Using its refrigeration facilities, it transformed the entire supermarket into an ice - skating rink, hoping that consumers could enjoy the double pleasure of skating and shopping.

At the press conference held in April, Iceland also said that a key channel and scenario for its development would be live - streaming e - commerce. The base of the first store, Iceland lab, is expected to introduce more than 100 brands for regular cooperation, supporting more than a hundred live - streaming sessions every day. There is also a dedicated area in Iceland's first store for MCN to produce food - related live - streaming and short - video content, which can be promptly synchronized to platforms such as Douyin and Xiaohongshu.

Using live - streaming to sell frozen products is indeed a trend, and many leading frozen food brands are trying it. For example, Sanquan Foods has achieved growth through this method. It has carried out multiple rounds of cooperative promotions with well - known live - streaming teams on Douyin and Kuaishou. Since 2023, it has cooperated with well - known live - streaming teams on Douyin and Kuaishou for multiple rounds of promotions. In 2024, the direct - sales e - commerce business of Sanquan Foods increased by 58% year - on - year, and a large part of this growth was driven by live - streaming.

Price is another key factor. Similar to Costco and Sam's Club, Iceland can offer frozen products far below the market price in Europe, mainly due to its mature control of the supply chain. In terms of supply, Iceland usually selects only a small number of suppliers for each SKU, strictly controlling the price and product specifications. Limited by the number of SKUs, Iceland follows the logic of blockbuster products, selling the most popular frozen products. Consumers have a stable and large - scale demand for these products. In addition, Iceland also has a certain proportion of private labels such as Iceland luxury, which can enhance the product variety and also strengthen its bargaining power.

However, since Iceland's previous online stores in China were all overseas flagship stores, and the products were all imported, it has lost its aura and cost - effectiveness advantage as the "poor people's supermarket" in the UK in China. The prices of many products even seem quite high. For example, a box of Ben&Jerry's cream ice cream costs nearly 90 yuan in China, while it only costs 20 - 30 yuan in the UK. A person in the cross - border e - commerce industry told 36Kr: "The costs of global transportation, taxes, and operating costs have led to a large price difference between Iceland's products in China and in other countries."

In addition to price, Iceland's global supply chain may also conflict with local tastes. Iceland strongly emphasizes its highlight of "high - quality global frozen foods." Based on this, it can provide high - quality products with obvious differentiation in the highly competitive supermarket field. However, most of Iceland's products are designed according to Western tastes, such as pizza, desserts, and fried foods. The mainstream Chinese consumers prefer frozen products such as dumplings, wontons, zongzi, and pastries. After entering China, Iceland still needs to make more local adaptations according to the needs of the local supply chain and market tastes. Otherwise, it may only appeal to niche groups such as international students and foreigners in China.

This all poses a great test to Iceland's ability to localize its supply chain, but it seems to have made some preparations, such as choosing a local partner familiar with the local market - Shoulv Huike.

According to the information from the press conference, Shoulv Huike, a subsidiary of Shoulv Group, will serve as Iceland's exclusive agent in the Chinese mainland, responsible for the brand's operation in the Chinese mainland. It will integrate the products of Shoulv Group, Chinese time - honored brands, geographical indication products, and emerging domestic brands to establish a "global high - quality food ingredients" supply chain. In terms of food, Shoulv Group has 16 time - honored brands such as Quanjude and Donglaishun. It will also cooperate with origin places such as Chifeng in Inner Mongolia and Ningbo in Zhejiang to develop meat products and frozen seafood. Iceland will still introduce characteristic products from multiple countries such as Japan, Spain, Italy, Australia, and New Zealand to China, but due to the impact of tariffs, it has not chosen products from high - risk countries like the United States this time.

A good example to learn from is Aldi, which has a similar overseas positioning. When Aldi first entered China, it took a wrong turn for a short time. It positioned itself as a mid - to high - end premium supermarket + community canteen, aiming to be a "paradise for the middle class." However, with the advent of the era of affordable prices, Aldi quickly adjusted its direction and returned to the path of an "affordable supermarket." Now, Aldi has achieved 80% local supply chain in Shanghai. Coupled with the launch of a high - proportion of private labels, it ensures the high cost - effectiveness of its products.

However, the biggest question surrounding Iceland's development in China is still how high the acceptance of frozen products is among Chinese consumers who generally prefer fresh food.

Frozen products and ready - to - eat meals have long had the stereotype of being "unfresh and unhealthy" in the minds of Chinese people. Food safety topics such as "technology and hardcore tricks" in ready - made chicken soup and takeaway ready - to - eat meals have frequently exploded on social networks.

This cognitive bias is the fortress that Iceland needs to overcome, which is why Iceland emphasizes its concept of naturalness and health, and claims that no artificial colors, artificial flavors, unnecessary preservatives, and monosodium glutamate will be added to its private label products.

In fact, what Chinese consumers resist is not frozen products and ready - to - eat meals themselves, but unhealthy and unfresh ingredients. It is not that difficult for them to accept well - made frozen products. Such products have always been the advantageous categories of foreign - funded supermarkets. For example, foreign - funded supermarkets such as Sam's Club offer a higher proportion of frozen products than domestic supermarkets. They take advantage of the global supply chain to purchase aquatic products, especially scarce, novel, and exotic seafood.

Some changes are also taking place in the Chinese market. After the pandemic, the demand for frozen products and ready - to - eat meals has increased significantly. According to data from iiMedia Research, the scale of the Chinese frozen product market will reach about 213 billion yuan in 2025, a year - on - year increase of about 10%. In terms of the consumer group, women aged 31 - 40 with medium to high incomes are more willing to buy. This is a consumer group with stable income, strong purchasing power, and a certain taste for life.

However, there is still no well - established frozen food supermarket in China. Many supermarkets regard it as a necessary product area, but the proportion is not high. Whether this differentiated positioning can succeed is both an opportunity and a challenge for Iceland.