Iceland launches interest-free loans as cost-of-living crisis bites
A month after Iceland Foods boss Richard Walker called on retailers to take action in alleviating the cost-of-living concerns, the frozen-food chain has announced it is rolling out a scheme to offer customers interest-free loans to help them through the cost-of-living crisis.
The small loans – of between £25 and £100 – have been launched in partnership with ethical lender Fair for You. The microloans are made available on preloaded cards, with repayments set at £10 a week.
The scheme, called Iceland Food Club, is designed so customers can cover school holiday grocery bills or smooth out gaps in their income. They will be limited to six windows through the year when expenses usually rise.
Iceland Foods managing director Richard Walker said: “More than ever, people are struggling to purchase much needed everyday items during this relentless cost of living crisis, and fresh thinking is required by business and government to find workable solutions.
“At Iceland, as part of our ‘Doing it right: right now’ we’re constantly exploring new ways to help our customers with innovative solutions that deliver real impact.
“With Fair for You, we have rolled out Iceland Food Club to offer our customers even more support, helping them manage essential spending on their own terms. To those striving to worry less about how they will afford essential goods, this ethical credit scheme delivers real help when most needed and I believe it will make a valuable contribution to breaking the cycle of food poverty in this country.”
Of the 5,000 customers who were provided with loans during a pilot phase, almost three-quarters of them said they were now less likely to fall behind on bills. Of those who had previously used food banks, 92% of customers had stopped or reduced their use, according to the retailer. During the pilot, customers paid a “minimal” amount of interest on the loans but for the nationwide rollout, Iceland has chosen to invest an undisclosed amount “in making all loans completely interest-free for the national rollout”.
Last week, Iceland – which has almost 1,000 stores in the UK – announced it had teamed up with the Rothesay Foundation to provide pensioners with a voucher worth £30, which can be used to buy food and essentials.
In July, Walker called on businesses to help shoppers amid inflation concerns. “It’s very serious as some of our customers who might have only had £25 per week to spend on food were struggling before the cost-of-living crisis, so now I really do worry how they will get through this,” Walker said.
This week’s announcement has drawn parallels with lockdown when many business leaders spearheaded initiatives to help customers. These included H&M launching a free 24-hour rental service to help young people young in the post-lockdown job market and Co-Op CEO Steve Murrells announcing that the retailer had extend its free school meal scheme.