IKEA, the world's largest home furnishings company, is set to open its largest regional store in Abu Dhabi, as the Swedish company expands its Middle East footprint. Aldar Properties said yesterday it had signed an agreement with the Al-Futtaim Group to build the store on Yas Island, the leisure destination being developed in the emirate.
The opening of IKEA on the island is another boost to Aldar's US$40 billion (Dh146.92bn) development, which will host the Formula One Grand Prix for the first time in November. The Abu Dhabi developer said the island was chosen for the store because of its location within the new growth area of the emirate, and its accessibility, close to a new road network. IKEA, famed for its low-price, self-assembly furniture, has an existing store in Abu Dhabi at the Marina Mall, in addition to a store in Dubai's Festival City, currently the largest in the region, which opened in 2005.
The retailer's expansion of its presence in the UAE capital is part of a switch in its global focus from saturated markets such as the US and Europe to emerging markets that include the Middle East, China and Russia. Despite the financial crisis, IKEA said in May it was planning to push ahead with plans to expand into Oman and Qatar, in addition to opening more stores in Saudi Arabia. Omar al Futtaim, the chief executive of the Al-Futtaim Group, which represents IKEA in the UAE, said: "It has been an Al-Futtaim group tradition to provide our customers with the best brands and services, and the new IKEA store, which will be the biggest in the Middle East, endorses that commitment."
The store will form part of Yas Island's retail centre, based around Yas Mall, which will accommodate a mix of retailers. Customers will be able to reach IKEA via the new 10-lane Shahama-Saadiyat highway, which passes through Yas Island. Ahmed Ali al Sayegh, the chairman of Aldar Properties, said: "The presence of this major international retail brand fits perfectly with our vision for Yas Island as an unrivalled shopping and entertainment destination."
The company's expansion into the Gulf has been driven by Mikael Ohlsson, the group chief executive of IKEA, who succeeded the man who was chief executive for the past 10 years, Anders Dahlvig, at the start of this month. IKEA's famously frugal founder, Ingvar Kamprad, started the company in 1943 in the Swedish village of Agunnaryd when he was just 17. Since then, the group has expanded into a global retail presence that encourages its customers to "chuck out their chintz" and replace it with the retailer's low-cost, flat pack furniture, which customers typically assemble themselves.
Today it employs 128,000 workers in 24 territories around the world and generates annual sales of more than ?21.1 billion (Dh113.74bn). But the company has also been hurt by the global crisis, with Mr Kamprad admitting in July that it may have to cut more staff because of weaker consumer demand. IKEA would have to cut more staff, mainly within manufacturing and logistics, Mr Kamprand was quoted as saying in a Swedish newspaper.
Mr Kamprand now acts as an adviser to the retailer. IKEA started its UAE operations in Dubai in 1991 in Zabeel Road, before moving to Deira City Centre in 1995. In Saudi Arabia it operates in Riyadh, Jeddah and Dammam. Yas Island will host the Formula One Grand Prix from October 30. The development also includes Ferrari World, a Warner Brothers theme park and a links golf course. Seven hotels are opening in time for the Formula One race.
tarnold@thenational.ae
