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Thu 29 May 2008 04:00 AM

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The viking who went shopping

After nearly 30 years at global furniture giant IKEA, Anders Moberg felt he wanted a new challenge.

After a career of nearly 30 years at global furniture giant IKEA, Anders Moberg, the recently appointed CEO of the Majid Al Futtaim Group, felt he wanted the challenge of something new.But he didn't realise how difficult it would be to part ways with the old. Sara Hamdan meets the man who turned a small Swedish furniture shop into a global brand.

Anders Moberg grew up in the same southern Swedish town as Ingvar Kamprad, the founder of IKEA. He remembers seeing the then-unknown Kamprad driving to his furniture shop every morning on the way to work.

Later Moberg would get a job in the post room of the company where he was to spend the next 30 years, becoming the president of IKEA at the age of 35 and helping Sweden's most famous company become the world's largest home furnishing retailer.

As I had a very close relationship with the founder of IKEA, I told him three years ahead of time that I was going to quit.

"I started out with IKEA in a temporary position before even starting university. I was playing handball in my area and my team didn't want me to leave.

So they suggested I take a temporary job in the area. I was fed up with school, so I started working with IKEA," says Moberg, adding playfully, "Why not?"

Today Moberg leads Majid Al Futtaim Group, the Dubai-based mall developer that is pushing out into new regional markets including Iran and Syria alongside Carrefour, the world's largest retailer, as the company's anchor tenant.

The goal for the burgeoning retail group, which operates Dubai's famous indoor ski slope, is to have 30 shopping malls throughout the Middle East by 2015.

Moberg recalls that it wasn't easy leaving IKEA in 1999, where he enjoyed an extremely close relationship with founder Kamprad.

"As I had such a very close relationship with the founder of IKEA, I told him three years ahead of time that I was going to quit in three years, and kept repeating it until it was time to go," recalls Moberg.

"Finally, I had to write him a letter saying that I meant what I said. It was difficult; he has three sons and I'm like the fourth in a way."

Almost a decade after his painful departure, Moberg reminisces about his early days at IKEA from his office at Majid Al Futtaim, perched high above the bustling shops of the Dubai City Centre mall.

After a few years of training in stores throughout Scandinavia while studying at the local university, Moberg had worked his way up the ranks of IKEA fast enough to convince Kamprad that he was ready for the next big step.

"In 1974, when IKEA's expansion started outside of Scandinavia, I was sent on a mission to grow the company in Europe," Moberg tells Arabian Business.The Majid Al Futtaim Group's CEO spent five or six years opening stores in Switzerland, Austria and France before he was faced with a tough decision - to remain enjoying the joie de vivre of his life in France, or accept the job as president and drive IKEA's international expansion.

"When Ingvar first asked me, I was not ready to take the job and I thought ‘I can't do this, but how can I say no in a polite way?" says Moberg. "But after reflecting on it, I thought that if I said no, I couldn't stay in the company because I just wouldn't feel right about it. So I said yes."

Though Kamprad's three other sons were working as managers in IKEA at the time, the founder wanted none other than Moberg, who shared his long-term vision for IKEA, to head the company he had built from scratch.

Our market sphere covers Egypt to Pakistan, including Iran, which altogether is a reach of 450 million consumers.

Together with Kamprad, Moberg worked to change the market perception of low-cost furniture, introducing it as the practical choice for practical decision makers.

"Well-designed furniture was very much for the rich back then, and the whole idea behind IKEA was how to make good products available to many people," explains Moberg.

"Every step of the supply chain has to be very well thought out in order to deliver a low-cost product to the consumers."

At age 35, Moberg took over as president when its sales were running at about US$1bn. When he left 14 years later, IKEA's turnover had topped the US$10bn mark.

After leaving IKEA, Moberg took up a number of roles at Home Depot, a US-based furniture retailer and Royal Ahold, a Dutch supermarket chain, before moving to Dubai to head operations for the Majid Al Futtaim Group in July 2007.

As CEO of the group today, Moberg has had to tap into his experience in food retail when managing the company's retail arm, which has exclusive dealings with Carrefour, the French hypermarket chain.

Carrefour has proven to be central to the retail group's business model, and each of the large-scale malls that has been developed or is currently in the pipeline in the region has included a Carrefour supermarket.

Carrefour already operates in Qatar, Oman, Egypt and Saudi Arabia, and has ten outlets in the UAE alone. As the developer continues its aggressive expansion plans, Moberg reveals that Iran is one of the company's most important new target markets.

"We are going into Iran this year with the launch of Carrefour, and have just bought land for a hotel there," he says. "Our market sphere covers Egypt to Pakistan, including Iran, which altogether is a reach of 450 million consumers."

The retail chief also explains that although the Majid Al Futtaim Group has no malls in Iran yet, any potential development would include Carrefour as an anchor to attract customers as the first hypermarket in the nation.Already on his fifth cup of coffee before noon, Moberg admits that there's a lot on his plate as the developer executes plans to have 30 shopping malls throughout the Middle East by 2015.

The Majid Al Futtaim Group is already one of the pioneers in the development of mega-malls in the Gulf, having achieved success in the regional retail industry first with Deira City Centre in Dubai, then with the Mall of the Emirates.

The vast Mall of the Emirates, complete with an indoor ski slope and five-star Kempinski Hotel, has cemented the emirate's position as a global shopping destination.

We have a lot of luxury consumption on top which will change over time as the mid-market grows considerably in the future.

Its developments elsewhere in the region also come with novel twists aimed at differentiating them from the competition.

"There will be a water park in the Bahrain City Centre development," says Moberg. "To distinguish yourself from competitors you need to come up with something a little bit crazy to attract people."

Bahrain City Centre will open its doors in the autumn of this year. A new project is also being developed in Muscat and large-scale renovation projects are underway for City Centre malls in Sharjah and Alexandria.

Moberg says the company is looking into further developments in Dubai and Abu Dhabi, and remains confident that the Gulf's retail market is still under-served.

"If you look at the different market segments, we have a lot of luxury consumption on top which will change over time as the mid-market grows considerably in the future," says Moberg, explaining that Mall of the Emirates is like a five-star product, whereas the current malls in Sharjah and Ajman are what he describes as "three-star properties".

"The distribution of wealth tells us that we need to cater to the growing middle class in the Middle East."

The whirlwind of new developments and expansion plans does not mean the company is immune to the effects of inflation in the region. Moberg explains that escalating prices are a major concern in terms of consumer spending habits as well as construction plans for renovations and new projects.

"With inflation and shortages of certain commodities now, we can see when customers start to cut down on certain products," says Moberg.

"There are all sorts of risks associated with inflation that is going up as quickly as it is in this region; it hits many people who have come here from India and Pakistan who still compare the money they get against their home currency, and find that the value is becoming less and less."Moberg believes that all regional projects in the pipeline are affected by high construction costs.

"You have a shortage of labour and a shortage of raw materials, all of which drives prices up.

That is the challenge of the market we are living in now, but it's something you see often in emerging markets. It's a challenge we need to manage."

Moberg is no stranger to such economic woes.

He faced a number of difficult economic periods during his IKEA days - most notably the firm's expansion plans into the US in the 1990s which were hampered by a slowdown in consumer spending.

While his IKEA days are now in the distant past, Moberg says he has never forgotten the importance of listening to people - a skill he developed as a young protégé of Ingvar Kamprad.

He remembers spending seven hours on a train with the IKEA founder during a trek across Europe, when he witnessed Kamprad interview fellow passengers on their furniture preferences.

"I couldn't get him to stop!" smiles Moberg as he recalls the journey. The customer it seems, is always right.

Ingvar Kamprad the IKEA KingIngvar Kamprad, the quirky founder of furniture retail giant IKEA, is the world's seventh richest man according to this year's Forbes billionaire list with an estimated net worth of US$31bn.

Hailing from Smaland, a southern province of Sweden, Kamprad's business skills were displayed at a young age when he started buying matchboxes in bulk from Stockholm and then selling them in smaller bundles at lower prices in his town for a sizeable profit.

After matches, he moved on to selling pens and pencils, fish, seeds and decorations for Christmas trees. At 17, Kamprad took the money his father awarded him for succeeding in his studies and began plans for his first IKEA store and what would grow to become a furniture empire.

Now 82 and residing in Switzerland, the chairman of IKEA is best known for his frugality and prefers to fly economy class, stay in two-star hotels and drive his 15-year old Volvo around town.

This is a value he often showcases as an example to his IKEA employees during some of his frequent visits to IKEA stores for a cheap meal. Kamprad is also chairman of a Dutch charitable foundation named after him, Stichting INGKA Foundation, which is one of the wealthiest charities in the world.

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