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Furniture 2021: Dunelm’s growth through focus on omni-channel

The RetailX Furniture 2021 Sector Analysis Report offers clear cut insight into the wider furniture landscape, from a strategic and commercial perspective.

Digital Editor, Scarlette Isaac, zooms in on how leading industry player, Dunelm has achieved exceptional growth over the past few years.

Dunelm is an exemplar of how focussing on omni-channel retail actually helped it cope with the pandemic and saw the company generate growth across 2020, while others struggled.

In fact, it 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 UK furniture 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.

Dunelm has maintained its strong online growth, even as stores reopen, with digital sales up 38% year-on-year. Sales across all channels including stores was up an impressive 44%, says the company.

The retailer is predicting a full-year pre-tax profit of around £158m, with pent-up demand for homewares from customers who want to shop in-store continuing to play through, the company says.

The importance of physical stores is also seen in its online growth, with click and collect accounting for around a quarter of all online sales.

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. 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.

Since this case study was published in the Furniture report 2021, Dunelm has continued to show strong growth with a record pre-tax profit of £140.8m for the FY22H1, up 25.3% on the same period last year.

Find out more about the wider furniture landscape, including sustainable production, emerging technologies and new entrants by downloading the full report here.

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