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Dunelm sees online grow 111% as it outperforms homeware market

Dunelm is among the retailers that are seeing more of their sales take place. Image courtesy of Dunelm

Homeware retailer Dunelm has reported total sales growth of 23% and an online boom of 111% in its preliminary H1 FY2020/21 results.

Generating a pre-tax profit of £112.4m, the results see the company outperforming the mean homewares market, which grew by 9.7% overall across the same period.

The company attributes the growth to a range of steps it has taken to both improve its technology and delivery, as well as tapping into shifting consumer demands.

Across the period, Dunelm says it has completed a £3m re-engineering of all of its foundational digital micro-services: checkout, product information management, delivery promise. It has also significantly scaled its web services and has become one of AWS’s largest serverless partners in Europe.

The retailer has also doubled its peak run-rate home delivery network capacity and reduced lead-times and has, it says. Improved post-sales customer communications, self-help services and performance analytics.

For customers, the retailer has instigated a price-drop campaign, added more ‘newness and choice’ to core ranges and pushed its ‘Home. We get it’ brand campaign across the Autumn, which it says has driven increased engagement.

However, 2021 may not be as good. Currently all the retailer’s stores are closed and, while online and delivery is doing well, it is only covering around 70% of prior year sales and the retailer is currently making a modest weekly loss.

The company is hoping that continued investment in tech and product across the year can help improve this and predicts a strong bounce-back once stores are open again. Key to its plan going forward, it says, will be to build on the online growth and create a “total retail system that combines the advantages of digital and local shopping experiences to better serve UK homewares shoppers, and benefits from our well-invested, low-cost store portfolio”.

Commenting on the results, Emily Stella, lead analyst at GlobalData, says: “Dunelm is rightly confident about its future. The retailer has seen total active customers grow 4.4% in the 12 months to December 2020, which includes the impact of lockdowns on store customer growth (historically the channel where Dunelm acquired most of its customers). The challenge for Dunelm, and where its greatest opportunity lies, will be to retain these customers and grow their shopping frequency across channels and categories.”

She adds: “Although Dunelm has been squeezed by online-only retailers and discounters such as B&M in recent years, the homewares specialist will benefit from expiring department stores, including Debenhams. There is also plenty of room for Dunelm to grow within the burgeoning Home market, which continues to flourish as consumers stay home.”

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