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How ScS uses digital to improve the customer experience, as full-year sales grow but profits decline

Image courtesy of ScS

ScS today shows how it has invested in digital over its latest financial year, both to improve the in-store experience and to give customers visibility of their orders.

The update comes as the retailer reports strong sales growth in a year marked by pent-up demand for its furniture in the wake of Covid-19, but falling profits following the reduction in pandemic business rates relief. Online sales fell by 30.8% in the full-year, while in-store sales of both furniture (+14.7%) and flooring (+13.6%) grew. Sales have slowed in the opening weeks of its current financial year, however, as customer confidence is hit by rising inflation. 

Multichannel strategy

ScS has continued to invest in digital and in customer service as well as in people and in its products over the last year. It has taken a new omnichannel-led design into three stores, where it is trialling new formats alongside new ranges. In-store additions include digital stations offering an ‘endless aisle’ view of the range, and QR code scanning for product details, recommendations and payment options. Since January its digital team has been based within its Coventry store, which acts as a concept store to trial and integrate new technologies. Its digital and technology teams and the digital strategy are led by a newly appointed chief marketing and digital officer. 

The ScS website now includes product reviews which, says ScS, “allow us to better understand out customers and ensure that our products are meeting their expectations” as well as online wishlist functionality. A new influencer programme is helping it to engage with relevant social media audiences. 

Shoppers can now track their orders online, while quick delivery sofas arrive within two weeks of an order, delivered direct from suppliers. More of ScS’ suppliers are now closer following a shift away from the Far East and towards Europe and the UK. ScS says it both aims to reduce its reliance on the Far East while improving product quality and cutting the environmental impact as well as lead times. 

Full-year figures

The update comes as ScS today reports revenues of £331.6m in the 52 weeks to July 30. That’s 8.6% up from the previous year. Gross sales grew by 8% to £344.7m. Within that, online gross sales of £32.2m were 30.8% lower than the £46.5m it reported a year earlier. At the same time, in-store furniture sales grew by 14.7% to £279.9m while in-store flooring sales grew by 13.6% to £32.6m. By the end of the year ScS had outstanding orders worth £71.7m – down from £103.5m a year earlier – following supply chain improvements that enabled faster delivery. 

Pre-tax profits of £16.4m were down by £6.3m, or 28%, from £22.7m last time. The previous year’s figure was boosted by business rates relief that reduced in the last financial year, from £10.2m in 2021 to £2.6m in 2022.

Since the start of the current financial year, trading has been “tougher”, with like-for-like orders – that strip out the effect of store openings and closures – down by 14.4% in the first 10 weeks of the year compared to last year. Last year, it says, was boosted by pent up demand as stores reopened following the Covid-19 pandemic. They are also 7.8% lower than in the same period in 2018, the opening weeks of the last full year that was not affected by the Covid-19 pandemic. 

Steve Carson, chief executive of ScS, says: “We are pleased to be announcing results that are ahead of market expectations. The year saw the group deliver record sales, maintain its strong gross margins and manage costs effectively, resulting in a 68% increase in underlying profit before tax, excluding business rates relief. We also saw excellent progress win year one of our refreshed strategy, including strengthening our teams as we look to drive the business forward in the coming years. 

“Trading since the start of the new financial year has been subdued, with the challenges of high inflation impacting consumers’ disposable income. As previously reported, the sector is seeing softening demand as consumers defer spend on big ticket discretionary purchases. 

“We are pleased with the strategic progress we have made which, coupled with the strength of the group’s balance sheet, places the business in a strong position to deal with current headwinds. Whilst we expect the coming months to be challenging, we are confident in the longer-term growth prospects of the business.” 

ScS is a Top250 retailer in RXUK Top500 research

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