From the shopfloor to a knighthood, the AlixPartners Outstanding Contribution to Retail winner Sir Malcolm Walker has never lost his entrepreneurial spirit and desire to tell it like it is, as Luke Tugby discovers.

November 18, 1970. Ted Heath, the Prime Minister who led the UK into the European Economic Community, was just months into his premiership.

Matthews’ Southern Comfort were top of the UK charts with a cover of Joni Mitchell’s ‘Woodstock’.

And Brazil’s footballers were basking in the glory of becoming the first nation to win a third World Cup that summer.

For retail, though, it’s a date that is carved into industry folklore for different reasons.

On that day almost half a century ago, a 24-year-old deputy store manager from Woolworths joined forces with a colleague, Peter Hinchcliffe, to launch his own shop.

The entrepreneurial duo secured a location in the Shropshire market town of Oswestry for £60 a month.

That store? Iceland Frozen Foods.

That man? Sir Malcolm Walker, this year’s winner of the AlixPartners Outstanding Contribution to Retail Award.

A “complete academic failure” – he obtained only a couple of GCSEs – Walker’s entrepreneurial talents began to blossom at a young age.

“When I was at school I used to be into a few sidelines, like organising dances, growing potatoes – different things to try and make some money,” he remembers. “The careers teacher asked me, ‘what are you good at?’ And I said ‘I like organising things’. She said,‘in that case, you should go into retail.’

“It was probably the last thing I would ever have thought of but, unusually, I took her advice.”

The rest is history.

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Walker was a “complete academic failure” at school, but his entrepreneurial talents blossomed from a young age

 

Shopfloor start 

Having been rejected by Marks & Spencer and Littlewoods after failing their arithmetic tests, Walker joined Woolworths – then the sixth-largest business in the UK.

“They took anybody,” he jokes.

Walker spent seven years in the stockroom and on the shopfloor at various branches, but bluntly admits: “I hated it. I was no good at it. What it did teach me, though, was resourcefulness.”

It was a trait put to the test when his Woolworths paymasters found out about his and Hinchcliffe’s side-project in January 1974 and unceremoniously sacked the pair.

“That was it,” Walker says. “We had no choice but to make it work.”

And they did just that.

Having escaped a brush with corporate death – the ill-fated launch of a fully automated cold store in 1982 “nearly put us out of businesses”, Walker recalls – Iceland grew at pace.

“We used to describe it as riding a rocket,” he smiles. 

In 1984, the business floated on the London Stock Exchange.

“The regulatory markets tightened up and it meant you can’t be quite as cavalier as you used to be. That style doesn’t suit us”

Sir Malcolm Walker

The IPO gave Iceland the firepower to acquire its rival in the South, Bejam, snapping up its 500 stores.

Despite enabling it to grow rapidly through that takeover, Walker laments going public as the biggest regret of his career. 

“I wish we hadn’t done it,” he says, candidly. “Once you’re a public company, the mentality is totally different. We had a great relationship with the shareholders and the City for quite a few years and we all thought, ‘this is great.’

“Then, of course, sentiment changes. The regulatory markets tightened up and it meant you can’t be quite as cavalier as you used to be. That style doesn’t suit us.”

It certainly doesn’t suit Walker, who has built a reputation as one of retail’s most straight-talking bosses.

Living up to that persona, he reminisces about the other takeover he masterminded – that of cash-and-carry titan Booker, back in 2001. “At that point, I’d done 30 years. I’d had enough and I wanted to retire,” he says, leaning forward for a swig of tea.

“The fact I thought it was my exit was only part of the reason for buying Booker. I genuinely thought it was a great opportunity.”

Walker found Booker chairman John Napier awkward to deal with, describing him as “up himself and conceited and pompous”. For Walker, the deal made obvious sense for Booker, but he felt Napier made negotiations unnecessarily difficult. 

“The idea was for Stuart Rose to run the whole operation. We did the deal and it was immediately obvious he had no bloody interest at all. Sure enough, he told me he was leaving in November, having done the deal in May.”

Best laid plans

The defections of Rose and his Booker protégé Charles Wilson to Arcadia left Walker in a quandary,  with his plan to become non-executive chairman and hand over the baton in tatters.

“One or two people rang me, someone in this room rang me,” Walker recalls, glaring at his trusted communications lieutenant of many years Keith Hann, sitting a safe distance away. “They said: ‘I’ve got the man for you. Have you thought about Bill Grimsey?’”

With former Wickes boss Grimsey hastily hand-picked by Walker to take the reins, he adopted a more hands-off role.

Walker eventually exited the business under a cloud amid a probe from the Serious Fraud Office, relating to his sale of four million Iceland shares, but he was cleared of any wrongdoing.

With Rose and Wilson’s combined knowledge of Booker no longer an asset to the enlarged Big Food Group, the business faltered under Grimsey’s leadership –  a period Walker refers to as “the dark ages”. 

Sir-Malcolm-Walker-montage

But Walker maintains that the Booker deal was good for both parties – and insists it will prove successful for Booker’s latest suitor, Tesco.

“It will work, but it’s the same principle. It’s not going to help the retail operation, it’s about back-office cost savings isn’t it?” Walker muses. 

“I think Iceland and Booker would have been the largest seller of Coca-Cola in Europe. So certainly Tesco, by a million miles, will be. However much they pretend they aren’t going to be strangling suppliers, of course they are. I think they might get a better deal from Coca-Cola, put it that way.”

Retail visionary 

Tesco’s £3.7bn splurge on Booker suggests Walker was maybe ahead of his time in engineering a near-identical deal all those years ago.

Indeed, despite his glittering career, the 72-year-old perhaps doesn’t get enough credit for being the visionary he is: an entrepreneurial brain, someone who truly understands the consumer, and a retailer who habitually identifies market trends ahead of the grocery pack.

Iceland was the first food retailer to pilot deliveries in 1996, driving customers’ shopping to their homes after they paid for it in-store.

It blazed a trail in online retail, launching a home shopping operation – using stores as ‘pick centres’ – back in 1999.

Iceland introduced a ‘round pound’ pricing architecture, a model that was adopted by the big four some years later.

“We genuinely want other retailers – all of them – to join in. If every retailer says ‘we’re going plastic-free’, the world will change”

Sir Malcolm Walker

It stamped out genetically modified products – goods Walker called “Frankenstein foods”.

And, earlier this year, Iceland pledged to eliminate plastic packaging on all own-label products. That initiative is being driven by Walker’s son, Richard, boss of The Food Warehouse chain Iceland launched in 2015.

“In the last six months or so, these sorts of environmental issues have become massively important to consumers. That generation sees things very differently,” Walker explains. “Richard’s an environmentalist. We sail, he’s a surfer and you see that pollution in the water. It’s something he wanted to do, but balancing environmental challenges and doing the right thing with making money can sometimes be difficult. 

“Anyway, we are going to have a go. We’ve had massive PR out of it, but we genuinely want other retailers – all of them – to join in. If every retailer says ‘we’re going plastic-free’, the world will change.”

So what’s next in Walker’s ever-expanding repertoire of strategic foresight and PR masterstrokes?

“We’ve got one, a big one,” he nods, wearing a mischievous grin. “But I can’t tell you yet.”

Inventive approach 

Whatever it is, one thing is for sure: Walker is far from done innovating and reinventing. 

The truth is, he can’t afford to be. When he returned to the business he founded in 2005 following its takeover by Icelandic investor Baugur, he had to act quickly and decisively to revive its fortunes.

While he insists that was achieved by going “back to basics”, Walker had to be more inventive when market dynamics underwent a seismic shift seven years later.

“The world changed, almost overnight,” Walker says, all but grimacing as he relives testing times for his beloved business.

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Iceland’s refurbished Clapham store

“You had Aldi and Lidl opening stores like they were going out of fashion, retail price deflation, the internet taking sales away from out-of-town supermarkets, the rise of the convenience store and Home Bargains and B&M starting to sell food. It was a perfect storm.

“The impact of all that meant price was no longer a weapon – everyone was cheap all of the time. We struggled for a year or two in knowing what to do.”

But rather than cutting costs, Walker went on the offensive.

Iceland launched its Power of Frozen campaign, designed to change consumer perceptions of frozen food.

It ploughed investment into store refits, refurbishing around 50 shops to date, including its Clapham branch, which Walker asserts “looks better than Waitrose next door”.

And it resurrected its transactional online platform, which raked in £100m in sales during the year ending March 27, 2015, two years after it was reintroduced.

Unsatisfied, Walker asked himself: “What is the next generation of Iceland?”

His answer was the “gourmet” Food Warehouse chain, something he concedes the business should have launched “years ago”.

“I’d always resisted trying to go upmarket,” he explains. “You’ve got to know your market, you’ve got to know your customer and, over 35 to 40 years, we’ve had a very clear place in the market.

“But the reality is, we’re not going upmarket – our customers are changing their aspirations. Quality and innovation is becoming more and more important.”

Changing aspirations

Embracing that consumer mindset, Walker shelled out £2.5m on Iceland’s development kitchen, a buzzing hive of food innovation led by former Waitrose head chef Neil Nugent.

With the company, as Walker sharply puts it, “on the brink of bankruptcy” when he returned to the fold over a decade ago, his blueprint has put Iceland back on the front foot.

Adjusted EBITDA climbed 6.3% to £160m in the year to March 24, 2017, when like-for-like sales advanced 2%. And, according to Kantar, Iceland enjoyed its 23rd consecutive month of sales growth in January 2018 – a run dating back to May 2016.

Iceland kitchen

Walker is proud of all he has achieved at Iceland. But the vehemence in his voice dials up a notch when conversation turns to everything he has given back to his staff, his country and to charity throughout his career.

“People say you can’t ever do well in business without being a complete bastard. That’s not true,” Walker passionately protests. “I think I’m a nice guy and I think most of the staff would probably say that. 

“But business generally gets an unfair reputation. If you’re a footballer, it’s okay to earn half a million pounds a week, no problem – and it’s only a bloody game. If a businessman did that, you’d be pilloried. I can’t get my mind around that.

“I’ve made a lot of people very rich. In 10 years, we’ve paid £1.2bn in tax. That will help build a lot of hospitals and schools.

“Businessmen should be seen as heroes, not villains. But we’re not. We get a bad press. Of course there are bad businessmen, but they seem to taint the rest.”

Walker’s reputation hasn’t been tarred. In 1995, he was made a CBE and last year he received a knighthood for services to retailing, entrepreneurship and charity. 

Charity work

The latter is particularly close to Walker’s heart – his wife of 40 years, Rhianydd, suffers from Alzheimer’s and he has donated millions in the ongoing quest to find a cure for the disease. 

Iceland gave £1m per year for three years to fund University College London (UCL) Professor Nick Fox’s research – and Walker led the charge in helping UCL plug a £100m funding gap for a state-of-the-art research centre, using proceeds from the plastic bag levy.

“I’m not thinking about legacy because I’m not going anywhere”

Sir Malcolm Walker

He then convinced fellow grocers Asda, Morrisons and Waitrose to support the campaign, while Poundland and WHSmith have also signed up to the UCL Dementia Retail Partnership.

Iceland alone has raised £10m in just two and a half years, and the remaining members of the partnership have contributed the same between them.

The £20m total triggered funding from other sources, allowing the UCL project to go ahead.

“They say without us it wouldn’t have happened. That is a great feeling,” Walker says.

So what does one of retail’s true legends see as his real legacy – his business, or his charity work?

Walker shrugs his shoulders. “I’m not thinking about legacy because I’m not going anywhere.”

Expect more exploits from Walker in the future. 

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For a list of all the award winners in full, click here.