Header photo source: Iceland.
Even as tariff tensions simmer between global powers, Iceland—the UK’s largest frozen food supermarket—has made a bold return to China, launching its inaugural offline store in the country.
Founded in 1972 and headquartered in Wales, Iceland holds a 17% market share in the UK and operates around 1,000 stores across roughly ten countries. The company generates nearly RMB 40 billion (USD 5.6 billion) in annual sales.
For its first store in the Asia Pacific region, Iceland chose to debut in China, setting up shop in the Mentougou area of Beijing. The store began trial operations on April 29 and is slated to officially open by the end of May. Unlike any of Iceland’s other locations, this store is dubbed the “Iceland Lab” and goes beyond a traditional supermarket format. Spanning 6,800 square meters, it blends retail, e-commerce, multichannel networks, dining services, and localized experiences into a hybrid commercial complex.
According to information released so far, the supermarket section of Iceland Lab will offer around 3,200 SKUs, all of which are packaged goods. The focus is on frozen foods sourced globally, ranging from precooked seafood and vegetables to popular ready meals like fries, fried chicken, fish fingers, pizzas, pasta, desserts, and ice cream. The store will also carry a limited selection of general merchandise and personal care items.
In the UK, Iceland is known for its budget-friendly pricing and is colloquially referred to as a “poor man’s paradise.” Its private-label frozen pizzas cost as little as GBP 1 (USD 1.3), and many kitchen tools like scissors go for the same price. Promotional campaigns often offer lower prices when items are bought in bundles of three or more. In China, Iceland is clearly maintaining that same positioning as discount signs pepper the store, constantly reminding shoppers just how low the prices are.
Although Iceland had not opened any physical stores in China before this, it was far from unknown. Products like chicken wings and drumsticks, sweet potato fries, pineapple cheese bites, Muller Corner yogurt, Lotus ice cream, and frozen minced garlic have long been cult favorites among Chinese students who studied in Europe. “Iceland was a lifesaver during finals,” one student told 36Kr. “When you don’t have time to cook, you just microwave it. 30 frozen nuggets for GBP 1 during promo season? That’s way cheaper than KFC or McDonald’s.”
In recent years, foreign supermarket chains have been doubling down on China, and Iceland has been aware of the local market’s complexity for quite some time. When it first entered China, the company didn’t rush to open physical outlets. Instead, it dipped its toes in via e-commerce. In 2018, Iceland launched its products on JD.com’s international shopping platform, offering its goods from its house brand as well as items in the personal care, baby, and cooking categories. By 2022, it had expanded to Taobao with an overseas flagship store, albeit with a limited selection centered on ice cream, biscuits, and Japanese sake.
The pandemic helped cultivate Chinese consumers’ habits of buying frozen goods online. A report by Nielsen found that 35% of consumers increased their purchases of frozen dough products compared to pre-pandemic levels, with frequency up by 42%. Online shopping also led to higher basket sizes and greater product diversity. Companies like Sanquan Food noted that while traditional offline sales for frozen products have plateaued or declined, e-commerce is growing steadily.
Still, Iceland’s e-commerce experiment in China fell flat. Its flagship store on JD.com has since shut down, and the Taobao storefront—though still online—has slashed its SKU count to just a few dozen items.
“For food-focused supermarkets, offline channels, despite facing massive challenges, remain the foundation,” an industry insider said. “Without a physical presence, it’s hard to build brand awareness or consumer trust.”
Iceland launched its first store just ahead of the May Day holiday to capture the seasonal foot traffic. This tactic mirrors other foreign retailers like Costco and Aldi, whose China debuts quickly became viral spots, giving their brands a strong start. To maximize its draw, Iceland has included a dining area and live streaming zone inside the flagship store.
The company is also planning to open more offline stores in Beijing, targeting districts like Chaoyang and Haidian. In the UK, Iceland has previously toyed with experiential retail. Partnering with London-based agency Taylor Herring, it transformed an entire store into an ice rink using its own cooling infrastructure, offering customers a fusion of shopping and skating.
At an April press event, Iceland revealed that live commerce would be a core focus. The new Iceland Lab store aims to onboard over 100 long-term partner brands and support more than 100 live streams per day. The store includes designated areas for food-focused live streams and short video content production, which will be pushed to platforms like Douyin and Xiaohongshu.
The move makes sense. Live streaming has become a proven growth engine for frozen food brands. Sanquan, for instance, has collaborated extensively with top live streaming teams on Douyin and Kuaishou since 2023. As a result, its direct e-commerce business grew 58% year-on-year (YoY) in 2024, largely fueled by live streams.
Price remains another differentiator. Like Costco and Sam’s Club, Iceland manages to offer frozen products well below market price by tightly controlling its supply chain. The company typically sources each SKU from a limited number of suppliers and imposes strict control over pricing and specifications. This lean strategy emphasizes volume sales of high-demand, popular products. Iceland also boosts its bargaining power with a range of private labels.
However, Iceland’s past positioning as a budget-friendly supermarket hasn’t translated well in China. Because its online stores have only offered imported goods, many of its prices seemed steep. For example, a tub of Ben & Jerry’s ice cream sells for nearly RMB 90 (USD 12.6) in China, compared to just RMB 20–30 (USD 2.8–4.2) in the UK. “Global shipping fees, taxes, and operational costs all contribute to the price gap,” a cross-border e-commerce insider told 36Kr.
Beyond price, Iceland’s global supply chain also clashes with local tastes. While the company emphasizes that its frozen products are premium and sourced internationally, most of its items are Western-style, such as pizzas, desserts, and fried snacks. Chinese consumers, on the other hand, favor dumplings, sticky rice dumplings, and stuffed buns. Unless Iceland adapts its offerings to local tastes and supply chains, it risks becoming a niche option catering primarily to expats and international students.
That said, Iceland appears to be preparing for local adaptation. It has partnered with BTG-WeLink, a unit of Beijing Tourism Group (BTG), to manage its China operations. BTG-WeLink will build a supply chain by integrating BTG’s assets—including heritage Chinese brands like Quanjude and Donglaishun—and working with origin hubs like Chifeng, Inner Mongolia, and Ningbo, Zhejiang to develop locally suited meat and seafood products. Iceland will also continue importing goods from Japan, Spain, Italy, Australia, and New Zealand, but has excluded high-risk markets like the US due to tariffs.
A model worth watching is Aldi. Initially positioned as a boutique supermarket with community dining, Aldi pivoted toward affordability as China’s price-sensitive retail climate emerged. Today, it sources 80% of its products locally in Shanghai and emphasizes private-label items to maintain cost-efficiency and value.
Still, Iceland must wonder, can frozen food win over Chinese consumers who have traditionally preferred fresh options?
Frozen and precooked meals often carry a stigma in China, seen as less fresh or healthy. To combat this perception, Iceland is doubling down on its health claims, pledging that its private-label items contain no artificial coloring, flavoring, preservatives, or MSG. The real challenge isn’t the format, but convincing consumers that frozen doesn’t mean inferior.
Foreign supermarkets like Sam’s Club have already proven that there’s room to succeed in serving frozen goods in China, particularly when global supply chains bring in rare and novel seafood. The pandemic has further shifted consumer habits. According to iiMedia Research, China’s frozen food market is projected to reach RMB 213 billion (USD 30 billion) by 2025, up roughly 10% YoY. Women aged 31–40 with stable incomes and refined tastes are driving much of that growth.
Yet, China still lacks a dominant frozen food supermarket chain. Most retailers relegate frozen items to side aisles rather than making them a core offering. For Iceland, this focus could either carve out a unique competitive niche, or become a limiting factor. The opportunity is as real as the challenge.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Peng Qian for 36Kr.