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Dunelm focuses on “massive” multichannel opportunity

Dunelm this week said its focus was on the “massive” multichannel opportunity that its 2016 acquisition of Worldstores in November 2016 had given it, as it reported full-year results.

It reported total revenues of £955.6m in the 52 weeks to July 1, up by 8.5% on the same time last year, although like-for-like sales, which strip out the effect of store openings and closures, were down by 0.5%. Underlying pre-tax profits of £109.3m were down by 15.2%, reflecting £10.7m in losses related to November 2016 acquisition Worldstores, which the retailer says will create a “springboard for online growth and range development”.

Chairman Andy Harrison said: “Dunelm has made good strategic progress over the year, most notably with the acquisition of Worldstores, which moves us closer to our goal of being the biggest and best multichannel homewares retailer in the UK. Over the medium-term we are aiming to double our sales to £2bn, with 30%-40% from our increasingly important online channel.

“The Worldstores acquisition provides a step change in our online scale, product range and capability. Our reported profit for the year reflects an investment of nearly £28m in the acquisition. The integration is going well and we remain confident in the benefits that it will generate.”

Here’s what Dunelm, which trades through 164 stores, all but four out-of-town, and online via said about its multichannel strategy. Homewares retailer Dunelm is a Top100 retailer in IRUK Top500 research, while it also owns Top250 retail brand Kiddicare and Top500-ranked members-only online store Achica following its Worldstores acquisition.

The strategy

Dunelm aims to lead the UK homewares and furniture market through its stores and online. It targets a doubling of sales to £2bn, of which between 30% and 40% would come online.

It plans to deliver “significant profitable growth over the medium term,” delivering the benefits of the Worldstores acquisition, in a “challenging trading environment”. At the same time it aims to improve the Dunelm customer proposition both online and in-store.

It says it currently leads the homewares market in the UK with a 7.9% share; this, it says, reflects an opportunity for growth, especially through a multichannel model.

Its strategic priorities include creating new reasons for customers to shop with Dunelm through innovation, new services such as its relaunched made-to-measure curtain and blind service and new categories such as the nursery range offered by Kiddicare as well as making it easy and convenient for shoppers to buy from it.

It aims to have a simple and low-cost operating model and to make Dunelm a good place for its staff to work.

Multichannel growth

Online sales rose by 23.5% at Dunelm, reflecting, it said, changing customer shopping habits. Internet shopping, it said, was now part of customers’ everyday shopping experience, with competition increasing within this market.”However, our combined store and online business enables us to offer a leading customer proposition which neither the discounters nor the pure-play operators can match,” it said.

It aims “to create a seamless proposition across all channels, making life easier for our customers wherever and whenever they shop with us”. New measures include tablet-based in-store selling, which now includes an in-store mobile point of sale. It is now planning a click-and-collect service.

The customer

The retailer says its customers need inspiration and convenience across channels in a market where the ability to look, touch and feel products remains important and “rendering colour and texture online remains challenging”. That means it will continue to roll out physical stores, “which remain a highly profitable part of our business”.

Operations and fulfilment

“Offering a convenient home delivery service is key and next-day, nominated day/ time and other services such as furniture recycling are in high demand,” said the retailer. “In this area, we are really excited by the opportunities on the horizon, as we leverage our Dunelm Home Delivery network.”

Its Worldstores acquisition gives it, it says, a “massive leap forward for our online and store offer,” including wider product ranges, an improved two-man home delivery service and improved technologies including better customer websites and stronger delivery management. One upcoming feature will be a click and collect service.

Its spending on logistics increased by £6m year-on-year as a result of factors including the opening of a second warehouse.

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