Malcolm Walker: Business that survives by force of will and innovation

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I started Iceland 43 years ago with £30 and a borrowed idea: selling loose frozen food that was cheaper than the packaged kind.

Hardly anyone had fridges or freezers in those days and people bought just what they needed for that night’s tea.

It’s hard to think back to a world so completely different from the one we know today. Iceland now has over 800 stores and employs more than 25,000 people. But it’s still run on some very basic principles: keep things simple, focus on what matters, accept reality and try to have some fun, because if you can have fun doing what you do every day it will never feel like going to work.

We always try to put our people first and keep them happy because it’s the right thing to do and makes sound business sense. Happy staff make for happy customers and that’s what puts cash in the till.

People are amazed when we tell them that Iceland has been voted the best big company to work for and that we pay our store workers more than virtually every other retailer.

They are equally astonished that Iceland regularly tops surveys for offering the UK’s best customer service and being the country’s easiest place to shop. We also win awards every year for our innovative, quality frozen food.

We’re an informal company with a real family feel and we make decisions quickly: bureaucracy, process and procedures are not for us. We’re also never afraid to try new ideas, even when people tell us they are mad.

Some of them are, but the mad idea of free home delivery, which we launched in 1996, has been our most successful innovation ever. Today we make nearly 200,000 deliveries every week – far more than Ocado.

It’s also clearly mad to spend millions taking our managers to motivational conferences – famously at Disney World in Florida four years ago – but they pay for themselves many times over in improved motivation and morale. So next year we’re taking more than 1,000 managers to Dubai.

No one would lend me the money to start Iceland today: a frozen food store, mainly on the high street with no car parking? What on earth are you thinking of?

But it works, it’s profitable and we’re delighted to be bringing life back to town centres by opening 50 more stores in the UK this year.

There are plenty of false prophets warning that the high street is doomed, and that yet more retailers will soon be joining the famous names that have already gone 
bust.

But when this happens it is rarely the fault of greedy landlords, spiralling rates or draconian parking rules. It’s almost always down to lousy management.

Woolworth’s is a prime example. People will try to tell you that the concept was terminally outdated, yet there are many growing bargain chains successfully doing exactly what Woolies did, without the benefit of a century-old household name as their brand.

Iceland narrowly escaped the same fate as Woolworths in 2005. When I came back to the business, I found that it was top heavy with bureaucracy and obsessed with ticking the right boxes on corporate governance. Yet it had lost sight of the small matters of maintaining staff morale and motivation, and driving sales.

The Government could certainly lend retailers a hand in some areas. Business rates need urgent reform and should ideally be replaced
with a tax on sales rather than
assets.

Levying rates on empty properties is iniquitous and the planning system should be relaxed to make it easier for landlords to achieve a change of use for surplus retail assets.

Lower personal taxation that allows entrepreneurs to reap the rewards due from their efforts would also be welcome.

Those who create businesses, bring employment and pay their fair share of tax are the real heroes of our society, and it depresses me when I sense a drift back to the 1970s mentality of looking on us all as greedy “fat cats”.

I ran Iceland as a quoted company for 17 years and for most of those we could do no wrong in the City. Then, in 1996, we had one small profit dip and suddenly it was the end of the world.

Analysts swiftly concluded that Iceland simply should not exist – and the funny thing is that they were probably right. Our business survives only by sheer force of will and a constant drive to innovate that keeps us one step ahead of the best competition on the planet.

The City mindset isn’t equipped to see that, or to accept that doing the right thing for the long term may mean that profits don’t keep relentlessly increasing every single year.

This year, for only the second time while I have been in charge of Iceland, our profits will be a little lower than in the previous year because we are making major investments to develop our export business and open new stores overseas.

No one could care less, which is one reason why I’d advise anyone thinking of starting a new business today to keep it private. But do have a go. All you need is a half-decent borrowed idea and a burning desire to succeed.

Malcolm Walker, from Huddersfield, is the founder and chief executive of Iceland. His autobiography, Best Served Cold, is on sale in paperback at Iceland stores or in hardback at http://book.ifcf.org.uk/. All proceeds are being donated to Alzheimer’s Research UK.

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