In the driving seat: as the top so independents mark a solid year, MBOs are increasingly in vogue, with Iceland's Malcolm Walker setting the pace as he looks to take control.

It takes guts to stand on your own two feet among the powerful goliaths of grocery retail. Yet it seems more retailers are doing so, eschewing private equity in favour of private ownership.

The most high-profile recent example, of course, is a giant in its own right. CEO Malcolm Walker increased his stake in the frozen food retailer Iceland from 23% to 43% earlier this month following a drawn-out and very public MBO. And he's in no doubt over the benefits this new-found independence will bring in the long term.

"I am the largest shareholder and the management have board control, so the management really do control the business," says Walker. "The bank had to sell it, so somebody was going to buy it. If it was Morrisons or Asda it would have been broken up. Private equity would have run it in a completely different way and it wouldn't have been a fun place to work, or the best company in the UK to work for."

Iceland falls just short of the criteria we use to identify Britain's Top 5o independents (only companies more than 50%-owned by family or management qualify), but with its sales of [pounds sterling] 2.3bn, it would easily have qualified as Britain's biggest independent grocery retailer had Walker been able to buy an extra 7% stake. The remaining 57% is owned equally by Walker's key investors-Lord Kirkham, South African Investment Group Brait and Dubai-based Landmark Group. (Iceland's secondary and less well-known frozen food chain, Cooltrader, would also have ranked at number 29, with sales of [pounds sterling] 47.9m in the year to 26 March 2011.)

But Walker is by no means alone in seeking to break free from his shackles. In what was a solid year for the Top 50, with pre-tax profits growing 28% to [pounds sterling] 280.2m on sales up 8% to [pounds sterling] 8.7bn, two Top 50 players-Frozen Value (28) and CTN operator Rippleglen (21)-made moves to kickstart their expansion last year by completing MBOs. In March, Frozen Value, owner of the Jack Fulton and Fulton Foods fascias, bought out private equity house 3i, which had held a stake since 1997. MD Kevin Gunter and FD Karen Rees now own the company outright. "After 14 years of working with minority private equity involvement, I am delighted we have managed to take the business into l00% private ownership," Gunter said at the time. "This opens up new opportunities for it to move forward."

The duo will have been encouraged by the continuing growth of discounters in this year's Top 50, with TJ Morris (3), B&M Retail (a), Farmfoods (5) 99P Stores (io) and Poundstretcher (18%)-not to mention Iceland, of course, and private equity-owned Poundland-all performing strongly, though our no 1, Wilkinson, showed discounters aren't having it all their own way (see left).

Coming a month after Frozen Value's MBO, Rippleglen's tortuous three years of negotiations surely reflect the more challenging conditions for the beleaguered CTN market. Managing director Mike Colley took a 34% share from founder and chairman Harry Medcalf, with the remaining 66% shared out equally between FD Peter Hyett, ops director Christine Beverley, buying director Laraine Jones and property director Tony Hargreave.

Since the MBO, Colley has reor-ganised the business into three trading divisions-premium CTNs, high street discount stores and home news delivery stores to tailor stores to the right customers. "We must compete better with the discounters on the high street and are overhauling our high street division to meet the challenge," says Colley.

Being able to act as quickly and decisively as this is a key advantage in independence, says Edwin Booth, chairman of Booths (9). "Independence allows you to remain true to the founder's original vision and at the same time to react swiftly and unfettered to market conditions," he says.

Of course, there are downsides to independence, Booth concedes. "Owners do not always optimise business performance and too easily forget what turns their customers on."

Another challenge is red tape, says Paul Delves, MD of Harry Tuffin (23). "Government bureaucracy and working practice legislation can be difficult to keep up with for independents as trading is usually first priority, but we persevere," he says. "However, being your own boss and making instant decisions is a massive advantage for independents. It gives us that competitive edge, and you should never be afraid to copy what your friendly multiple's latest idea is!"

Delves isn't alone in taking inspiration from the sector's giants. "All things considered, we were pleased with trading, but we found ourselves giving away more to achieve it," admits Andrew Faulks, a partner at Stans Superstore (50). "We put our fuel offer on for an late the Top 50. "We put our fuel offer on for an extra eight weeks last year, giving away 7p per litre when customers spent [pounds sterling] 50 in the main store."

The brutal conditions on Britain's forecourts (see above) were perhaps the most extreme of any of the six retail sectors represented in our Top 50. But with the exception of discounters, none of the sectors were exactly buoyant. And overall store numbers climbed by just 2%, compared with 11% in 2010, as many operators chose to regroup.

One example is Welsh supermarket chain CK's Supermarkets (34). "We sold one store and two stores ceased trading due to the increasing difficulty in servicing the outlying stores it was continually proving a logistic nightmare to keep the stores fully stocked," says MD Christopher Kiley. "Since the store reduction we've been able to maintain or slightly increase our turnover for the full year."

RETAILER                              STORES       STAFF    TURNOVER

Type of Operation,                2011   Y-O    2011  Y-O      2011
Ownership, Franchise                     -Y%          -Y%

TOTAL                             5,326    2  89,197    8  8,706,219

1   Wilkinson discounter, 100%,     366    9  23,063   -1  1,559,384
    none *

2   Martin McColl c-store/CTN,    1,263   -1  12,013   -1    804,800
    80%/20%, None *

3   TJ Morrs discounter?100%,       248   14   6,912   43    721,359
    none *

4   B&M Retail discounter,100%,     193  -29   8,864   38    712,572
    none *

5   Farmfoods discounter            320    2   2,989    7    578,758
    (frozen), 100%, none *

6   Blakemore Retail c-store,       329    0   5,958    1    451,000
    100% Spar1

7   Poundstretcher discounter,      369   10   5,046    8    308,173
    76%/24%, none *

8   Euro Garaees forecout, 100%,     85    1     730   40   285, 224
    none *

9   Booths supermarket, 95%/5%,      27    0   3,093    1    270,000
    none

10  99p?Stores discounter,          175   29   3,900   31    267,000
    69%/31%, none

11  Snax 24 forecourt,100%,          77   -5     187  -24    223,262
    none *

12  Berr Bros & Rudd                  4    0     213  -39    215,772
    winemerchant,100%, none *

13  MRH Retail forecourt,           318    6     120    2    192,200
    62%/38%, Spar/BP Connect

14  Park Garage Grou forecourt,      90    0     663    3    172.269
    100% none *

15  Heron Foods discounter          180    0   1,474    0    148,181
    (frozen), 100%, none *

16  Brobot Petroleum forecourt,      20    0     296    4    145,112
    100%, londis

17  Henderson Retail                 78   13   1,850   16    137,800
    c-store/forecourt,100% Spar

18  Poundworld discounter, 100%,    110   33   2,372   47    132,918
    none

19  Petrogas UK forecourt, 100%,     17   31     155   19    125,000
    none

20  Alfred Jones                     76    1     964   -3    108,325
    c-store/forecourt,100%,Spar *

21  Rippleglen CTN, 100%,none       133  -11     603   -9     95,000

22  HKS Retail forecourt, 100%,      25    9     183    6     75,028
    Mace/Costcutter *

23  Harry Tuffin superrnarket,       10    0     497   20     68,229
    100%, Nisa *

24  R&M Swaine off-licence,100%,     71   -7     361   58     64,086
    none *

25  Hotel Chocolat chocotatier,      60   25     800   14     59,500
    100%, none

26  Gillett's c-store,100%,Spar      57    0     462    1     55,977

27  Sewell Retail forecourt,         12    0     184   -1     52,635
    100%, londis *

28  Frozen Value                     88    0     839    1     50,508
    discounter(frozen), 100%,
    None *

29  G101 Off Sales                   43    0     410   10     45,174
    off-licence/c-store, 100%,
    Nisa *

30  Roys variety store, 100%,         7    0     486   -4     44,238
    Nisa *

31  Chartman                          9    0     140    1     44,000
    supermarket/forecourt, 100%,
    Spar

32  MPK Garages forecourt, 100%,     43    8      44   13     41,643
    Londis *

33  Lawrence Hunt & Co c-store,      29    7     525    1     38,000
    100%, Spar

34  Crs supermarket/c-store,         20   -5     450   -5     34,000
    100%, none

35  Spring Petroteum fprecour1,      18  -18     180    3     32,839
    100%, Spar/Nisa/Mace

36  Symonds forecourt,100%,           7    0      92   14     29,533
    Budgens/Londis *

37  GT News CTN/c-store, 100%,       52    0     430   -6     28,127
    Spar *

38  Jempsons supermarke/cafes,        4    0     280   -1     27,200
    100%,  ?Nisa/Budgens2

39  Wineflair off-licence, 100%,     35   -3     208   -4     25,065
    none *

40  Sunstar Grou?c-store, 100%,      21   24     110    0     25,020
    Costcutter

41  Maynews CTN, 100%, none          22   16      19    0     24,100

42  Tout supermarket/forecourt,       4    0     126   -7     23,259
    100%, Budgens *

43  Filco supermarket, 100%,         10    0     310   -1     22,800
    none

44  Warner's                          5    0     179  -20     22,768
    supermarket/forecourt, 100%,
    Budgens

45  Jeroboams wine merchant,          9  -10      59  -13     22,064
    100%, none *

46  Cook frozen food, 88%/12%,       49   26     425    5     22,030
    none

47  Winemark off-licence, 100%,      77    5     285   -6     22,018
    none *

48  Tanners Wines off-ticeice,        5    0      99    3     18,376
    100%, none *

49  J & J Wilson c-store, 100%,      55    0     205   21     17,007
    Costcutter *

50  Stans supermarket/forecourt,      1    0     144   -3     16,487
    100%, none

RETAILER                              PRE-TAXPROFITS

Type of Operation,               Y-O           Y-O
Ownership, Franchise              -Y    2011    -Y    2011   Year
                                                             end

TOTAL                               8  280,260   24   3.2

1   Wilkinson discounter, 100%,     0   60,824   -6   3.9   28/01/11
    none *

2   Martin McColl c-store/CTN,      4    4,300  -12   0.5   27/11/11
    80%/20%, None *

3   TJ Morrs discounter?100%,      22   59,453   24   8.2   30/06/11
    none *

4   B&M Retail discounter,100%,    32   51,702   47   7.3   31/12/11
    none *

5   Farmfoods discounter           20   17,029   30   2.9   31/12/10
    (frozen), 100%, none *

6   Blakemore Retail c-store,       4    5,100   21   1.1   30/04/11
    100% Spar1

7   Poundstretcher discounter,     -6    1,443  N/A   0.5   02/04/11
    76%/24%, none *

8   Euro Garaees forecout, 100%,   18    5,022  -10   1.8   31/07/10
    none *

9   Booths supermarket, 95%/5%,     0    8,200    7     3   02/04/11
    none

10  99p?Stores discounter,         16    7,500   19   2.8   31/01/12
    69%/31%, none

11  Snax 24 forecourt,100%,         0    1,062  109   0.5   30/09/11
    none *

12  Berr Bros & Rudd              -26   28,375  367  13.2   31/03/11
    winemerchant,100%, none *

13  MRH Retail forecourt,          50      N/A  N/A   N/A   26/09/11
    62%/38%, Spar/BP Connect

14  Park Garage Grou forecourt,    10      474    4   0.3   30/06/11
    100% none *

15  Heron Foods discounter          5    7,053   -9   4.8   25/12/10
    (frozen), 100%, none *

16  Brobot Petroleum forecourt,    14    1,040    7   0.7   31/03/11
    100%, londis

17  Henderson Retail                9    1,900  -17   1.4   31/12/11
    c-store/forecourt,100% Spar

18  Poundworld discounter, 100%,   42    5,232  342   3.9   31/10/11
    none

19  Petrogas UK forecourt, 100%,   32      N/A  N/A   N/A   31/12/11
    none

20  Alfred Jones                    1    1,430  -12   1.3   02/05/10
    c-store/forecourt,100%,Spar *

21  Rippleglen CTN, 100%,none      -8      266    4   0.3   31/07/11

22  HKS Retail forecourt, 100%,     2      450  313   0.6   31/05/10
    Mace/Costcutter *

23  Harry Tuffin superrnarket,     15      617  -26   0.9   31/01/11
    100%, Nisa *

24  R&M Swaine off-licence,100%,   28      577  -26   0.9   30/06/10
    none *

25  Hotel Chocolat chocotatier,    12    2,600   30   4.3   30/06/11
    100%, none

26  Gillett's c-store,100%,Spar     4      N/A  N/A   N/A   31/10/11

27  Sewell Retail forecourt,        7      578   22   1.1   31/12/10
    100%, londis *

28  Frozen Value                   -1    1,419  -27   2.8   31/01/11
    discounter(frozen), 100%,
    None *

29  G101 Off Sales                 -2      216  -66   0.5   31/05/11
    off-licence/c-store, 100%,
    Nisa *

30  Roys variety store, 100%,      -2    1,474  -11   3.3   29/01/11
    Nisa *

31  Chartman                        5      N/A  N/A   N/A   31/10/11
    supermarket/forecourt, 100%,
    Spar

32  MPK Garages forecourt, 100%,    5      -22  N/A   N/A   28/02/11
    Londis *

33  Lawrence Hunt & Co c-store,     6      679  -29   1.8   17/05/11
    100%, Spar

34  Crs supermarket/c-store,       13      N/A  N/A   N/A  30/104/11
    100%, none

35  Spring Petroteum fprecour1,     4      236  -52   0.7   31/03/11
    100%, Spar/Nisa/Mace

36  Symonds forecourt,100%,        23       92  -43   0.3   31/03/11
    Budgens/Londis *

37  GT News CTN/c-store, 100%,      1      379   23   1.3   30/06/11
    Spar *

38  Jempsons supermarke/cafes,      1      N/A  N/A   N/A   31/12/11
    100%,  ?Nisa/Budgens2

39  Wineflair off-licence, 100%,    0      638  -30   2.5   31/03/11
    none *

40  Sunstar Grou?c-store, 100%,     4      N/A  N/A   N/A   31/12/11
    Costcutter

41  Maynews CTN, 100%, none         6      N/A  N/A   N/A   30/06/11

42  Tout supermarket/forecourt,     2      113  N/A   0.6   30/03/11
    100%, Budgens *

43  Filco supermarket, 100%,        0      462  -23     2   31/03/11
    none

44  Warner's                        2      N/A  N/A   N/A   30/09/11
    supermarket/forecourt, 100%,
    Budgens

45  Jeroboams wine merchant,       22      495   26   2.2   31/03/11
    100%, none *

46  Cook frozen food, 88%/12%,     16      659   64     3   31/03/11
    none

47  Winemark off-licence, 100%,    -6      709  -45   3.2   31/12/10
    none *

48  Tanners Wines off-ticeice,      6      229   25   1.2   31/05/11
    100%, none *

49  J & J Wilson c-store, 100%,     8      211   37   1.2   31/01/11
    Costcutter *

50  Stans supermarket/forecourt,    3      N/A  N/A   N/A   31/12/11
    100%, none

Source: The Grocer Notes: All accounts have been submitted by
the retailers to The Grocer. However, in cases where the
retailer did not want to co-operate, The Grocer has sourced
the most redent accounts available from Companies House
*. In these cases, their turnover figure includes fuel.
1 Blakemore Retail is the new merged business of Tates
Ltd and Wayne's Foods Ltd. Profits excludes exceptional
items and freehold property gains. (2) Jempson's turnover
has been estimated by the company. To qualify for inclusion
in The Grocer's Top 50 independent retailers rankings, all
companies need to be at least 50% owned by the management
or family. Major co-operatives and the John Lewis Partnership
were excluded altogether for this reason.

As so often over recent years, a number of former Top 50 players have disappeared-not least sixth-generation Scottish c-store operator David Sands, which was acquired by The Co-operative Group in January. David Sands had been on The Grocer's Top 50 since the rankings were first published in 2002. Back then, it ranked at number 47, with just 14 stores and a turnover of [pounds sterling] 14.5m. By last year, it had risen to number 29, with 29 stores and a turnover of [pounds sterling] 40m.

In fact just 21 companies remain from the first Top 50. Of the 29 that have fallen by the wayside, 24 were bought out by larger rivals, three fell into administration and two are now too small to qualify. As well as David Sands, Wayne's Foods and Tates now come under the name of Blakemore Retail (6) following the merger of AF Blakemore and Capper & Co. Mills Group has meanwhile been subsumed into Tesco's One Stop chain. And off-licence chain Oddbins fell into administration in April, its assets bought by a number of players, including EFB Retail, which is building the business again from scratch.

As for future departures, fixed-price discounter 99p Stores (10) has been at the centre of sale rumours for some time. The business is currently majority owned and run by the Lalani family, which has built it up to a 175-store business with a turnover of [pounds sterling] 267m in just over 10 years. 99p Stores refuses to comment on the speculation. And rumours continue to circulate concerning interest from The Co-op Group, as well as Morrisons' stated intent to grow its fledgling c-store estate from just three stores to over 70 by the end of next year.

For many in the Top 50, however, independence is at the heart of what they are. "We are committed to long term, independent ownership," says Edward Perry, MD of frozen food retailer Cook (46). "For us, independence is not a tactical or strategic decision, it's a state of mind. It's just the way we are and the way we are going to stay. It gives us the freedom to do what we think is best for our customers and we reckon it's a lot more fun like that as well."

Iceland's Walker echoes these sentiments. "None of the investors, including the management, are remotely considering an exit, we just want to continue to run and grow the business. We are not going to do anything revolutionary we will just keep doing more of the same, keep sales growing and keep profits growing."

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RELATED ARTICLE: cut-price kings

Discounters dominate the Top 50. The seven on our list account for half of the Top 50's turnover and two-thirds of its profits. In fact, take the discounters out of the equation and the Top 50's profit margins halve to a slim 1.6%. They're not having it all their own way though. Wilkinson's (1) profits, for example, may be bigger than the turnover of the bottom 25 companies on the list, but they fell 6% last year. Profits were also down at Heron Foods (15), Poundstretcher (a newcomer at 7, thanks to its move into grocery), and Frozen Value (28). The latter two also posted a fall in sales.

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RELATED ARTICLE: forecourt frenzy

In November, Snax 24 (11) became the UK's biggest indie forecourt operator when Rontec Investments acquired Total UK's 800-outlet retail estate.

With only 77 stores before the deal, this is clearly a big deal for the Berkhamsted-based retailer, even though Snax 24 will actually add only 238 sites to its estate (it sold the rest to Shell UK and DCC).

But with oil prices at a record high, fuel volumes down, shoppers filling up less regularly, and deals on fuel being used to drive footfall to multiple stores, this is no place for the feint-hearted.

And with Murco still on the market 18 months after its US owner Murphy Oil put it up for sale, it seems few are prepared to make big plays. Experts predict buyers will look to cherry-pick the best of Murco's sites, rather than the whole estate.

One likely buyer is Top 50 newcomer Petrogas UK (19), which trades under the Applegreen banner and is already well established in Ireland.

"Our plan for 2012 is to grow to 30 sites here in the UK," says UK head of finance Peter O'Connor. It had 17 stores in 2011 and in January this year acquired a further seven forecourts in the south of England from Shell.

Expansion is also planned at MRH Retail. "We have a number of stores with untapped potential and I'm looking forward to expanding sales yet further as we continue to develop our network," says MRH Retail merchandising analyst Jens Bredahl.

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