We don’t question ourselves enough. What are we doing? Why?

Anders Moberg started working for IKEA, in its mail order department, at the age of 19. He rose rapidly through the ranks helping IKEA to internationalize its operations, opening stores and running operations in Sweden, Switzerland, Germany, Austria and France becoming President at the early age of 35.

He left IKEA in 1999 to head up Home Depot’s international division and joined Royal Ahold in May 2003 in the wake of accounting scandals in its US food services division. Mr Moberg, who leaves Ahold in July 2007, is the principal architect of Ahold’s recovery programme. The core planks of this programme are: divesting non-core assets to refocus its store portfolio, identifying areas for savings (such as deploying sourcing scale, streamlining infrastructure and excellence in store operations), improving innovation and building its store brands to achieve sales and margin growth.

ICR: You are taking over as cochair of ECR Europe with Peter Brabeck from Nestlé. What do you want to achieve over the next two years?

Anders Moberg: When I looked at what ECR has done I saw a lot of good work and a lot of good ideas. We need to get them done; to nail them down and get a return on that work. Execution is everything.
In many areas for example, we have developed standards. But if we look at how these standards are being executed, they are not being executed well everywhere. The standards are fine. The whole point about a standard is that it is the same everywhere, however in some areas we are not at the same level yet. The problem lies in the implementation.
Closely connected to this is how we as ECR Europe spend our money. We need to look more carefully at this. What initiatives are we investing in and what returns are we getting? What is our expectation of success? Can we be more precise?
I also wonder whether we really are focused on the consumer. I think we need to bring the consumer back into the heart of what we do. Sometimes I think we are a little ‘inside out’ in our thinking. We don’t look at ourselves from the consumer’s point of view. We don’t question ourselves enough – what are we doing and why are we doing it?

But ECR is all about meeting consumers’ needs better, faster and cheaper. So what do you mean we are not focused enough on the consumer?

We have worked a lot on the ‘back’ sides of the business – on efficiencies. We have focused a lot on the bottom line. We have not been so growth focused. We really need focused consumer understanding to grow. So how can we use consumer data better? There is a lot of data out there, but do we know how to use it? What are the conclusions we can draw from it?

Can you give me an example?

Well, when I first came to Ahold I made sure I spent many weekends out in stores. I kept on coming back to my colleagues, asking them all sorts of questions. I told them I didn’t understand the logic of this range, or that merchandizing, or that pricing. I’m pretty sure they got very irritated with me. But out of it came a discussion: do we really understand our customers?
So the Dutch management decided to do a very simple survey of our top people. We asked them some basic questions about our customers such as, What is their average income? How much do they spend on an evening meal? We were shocked by the results. To a degree, we had begun to live in a bubble of our own making. We were making decisions more in reference to ourselves than to our customers. So we have developed some specific initiatives to bring ourselves closer to our customers. Each senior executive has ‘adopted’ a family for example.
He does the shopping with them (and by the way, that also means shopping the  competition too). He does the cooking with them. He washes the dishes. He does the cleaning. This has created huge awareness in the organization. We have learned a lot. It is a good reference point.
Being immersed in customers’ lives like this matters. When I was at IKEA, 95% of our product range was the same wherever we were in the world. But we marketed it in different ways. We would go out with a camera and visit apartments: see how big they were, how people organized their furniture and so on. We used this information when planning new stores and when displaying our furniture in catalogues. When people saw what we were offering them they thought to themselves ‘that is my home’. It was one way of being local.
So we need to be looking for learning all the time. The customer doesn’t stop. The customer is on the move, all the time. So we cannot stop either. We have to be on the move all the time.

What about the core ECR challenges of better retailer/manufacturer cooperation?

I think that is a second priority. How can we really cooperate better across the whole value chain? We want to deliver good quality at lower prices, but there are still many areas of inefficiency. Look at the countless hours we spend in negotiations for example. We spend an awful lot of time negotiating when we could be looking at the supply chain in fresh ways. Perhaps both sides could do things in different ways. Perhaps we should be opening the books a little to make the right analysis. If we did this, perhaps we might redefine who does what work in the supply chain. Perhaps we as a retailer should be doing some of the things that manufacturers do. Perhaps they should be doing some of the things we do. Maybe someone else could do it better.
For example, if we look at manufacturers’ and retailers’ warehouses there is a lot of
duplication. Would it be better to store stock at just one point? As we learn more, we can find different solutions. If this cost is 100, how do we get it down to 90?
Of course, because I work for Ahold I like it when I see trucks in the street with ‘Albert Heijn’ all over them. But perhaps we should be sharing in areas like this, because what consumers don’t want to see is half full trucks travelling up and down the country. It’s wasteful. And it’s bad for the environment.

That sort of redivision of labour is easy to talk about, but very hard to do.

Of course there are difficulties here, and barriers to overcome. For example, in many of these areas companies are scared to take the initiative in building better cooperation. They worry that they might lose some competitive advantage. So we need new types of relationships to do these things.
And we need to go beyond what we have done before. There are still a lot of hidden inefficiencies. There are still a lot of hurdles to clear.
Also, the consumer’s agenda is changing. But are we changing fast enough to keep up? What about environmental impacts for example? How can we cooperate to reduce negative environmental impacts? Where are the common interests? Should we be using ethanol rather than diesel in our trucks? We need to work together to develop initiatives where we can really make an impact.
The same sorts of issues arise in the area of health. Health and wellbeing is the biggest consumer trend in the world. We should be doing more to educate consumers so that they know more about the foods they eat, the ingredients in the food and so on. We need to find ways of guiding them, so that they can eat more healthily if they want to.

Yet, if you and I were to walk into a supermarket today, pick up a pack of food and look at it, what would happen? What does the pack tell us? For a start, you may not even be able to read it, because it is such small print. Then if you can read it, you would need to be a chemical engineer to understand what it means. Can normal consumers really understand the information we put on our packs? Legally speaking, we might have done our job. But we haven’t taken responsibility. We haven’t spoken to consumers in a language they can understand. As an industry we should be helping our customers in taking responsibility so that we can find a common, agreed language for talking about these issues. And that includes educating legislators.

We have similar issues with carbon emissions. What can we do as an industry in this area? Can we develop models to really understand our environmental impact; to develop common agreed measures? What can we do to reduce harmful emissions? How best to do it?
We need to face up to these issues if we want to live up to consumers’ expectations. It’s back to what I said before. Do we really listen enough to our consumers? They are free thinking people. Do we understand what they are thinking about?
And it also takes us back to the question ‘what can we do in common as an industry’? Can we create general principles, or codes of conduct? All the time, we have to ask ourselves, are these areas of competitive advantage or of cooperation?

These are big, long term issues. How do you intend to build consensus around them in the short term?

That is my third priority: to develop a vision of the future. Where will our industry be in fifteen years time? There are many issues to consider – an aging population, the desire for healthier food, a changing population, the environmental impact of our distribution systems, and so on. Each one of these issues impacts on the way we do business and how we impact consumers.
The GCI did a very interesting report on the value chain of 2016 (see page 19). Now we need to look at the issues it raises in much more detail. We need to drill down and think all the issues through. For example, in the future, do we need huge asset bases to be successful?

In all of these areas we need to understand where we can share things better and where the areas of competitive advantage are – the areas where we should not share. Training, for example, may be seen as an arena of competitive advantage. But in many ways it is competitively neutral. Perhaps we should share some training.
Or what about innovation? That is an area where we are not very aligned at the moment. Manufacturers spend an awful lot of money on innovation. But a huge number of innovations fail. Why is this? One reason is because they are not aligned with
the retailer. They do bad launches, based on bad analysis. Many manufacturers are just putting products on the market. They are not really innovating at all. And that is very inefficient.
And it raises an important question about how we use information. If a manufacturer comes along to a retailer and says ‘we are planning to introduce this new product’ some of this information is commercially very sensitive. So, once again, we need to clarify the areas where we should share, and where we should not share?

If we look around our industry now there are many, many industry bodies and there seem to be more every year. Do we really need them all? Should we be more efficient here too?

All organizations come into existence for a reason. If they have solved the problem they were set up to deal with, we shouldn’t need them any more, though once an organization exists it tends to keep on existing. ECR Europe was set up to look into ways of helping retailers and manufacturers to work together, and we still have work to do. As far as the other bodies are concerned, we have a CEO Forum where we try to set an overall agenda – identify priorities – and help guide the various organizations in what they do, so that there is more consistency.