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How Dunelm is adapting to changing customer behaviour

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Dunelm aims to give customers the best multichannel experience from a homewares brand
Dunelm aims to give customers the best multichannel experience from a homewares brand
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How Dunelm is adapting to changing customer behaviour

Dunelm today reported strong online growth, and says that it is now moving to simplify its business as it works to give its customers the best experience they can get from a homewares brand.

 

The homewares retailer, which bought the Worldstores and Kiddicare brands from pre-pack administration in November 2016, reported total revenues of £1bn in the year to June 30 2018. That’s 9.9% up on the previous year. Pre-tax profits of £93.1m were 0.8% up on the previous year after exceptional items of £8.9m. Customer numbers grew both online (+18%) and in-store (+5%) in a year that home delivery sales grew by 37.0% and in-store like-for-like sales by 1%. Dunelm says dunelm.com sales, including via its reserve and collect service, accounted for 13.5% of its total sales in 2018.

 

Dunelm has now transferred the profitable products - around 15,000 lines – previously sold by Worldstores and its subsidiary Kiddicare (the two “unsustainable” businesses closed in September and July 2018 respectively) to the Dunelm website and says it now has a clear plan to use the technology that it gained through its acquisition of the brand.

 

Nick Wilkinson, chief executive of Dunelm since February, said the retailer was taking steps to simplify the business under the core Dunelm brand, through one web platform and an integrated supply chain. “This will allow us,” he said, “to respond more quickly to the changing consumer environment and drive future profitable growth.”

 

He added: “Dunelm’s purpose is to help everyone create a home they love. Our committed colleagues, our great products, and our increasingly integrated in-store and online offer, mean we are well placed for success as a leading multichannel specialist.

 

“The Worldstores acquisition has given us the key ingredients for a step change in our digital capabilities. We are preparing to launch Dunelm.com on our new proprietary technology to give us much greater agility in improving our customer proposition. This is a new and exciting chapter for Dunelm as we fully embrace digital retailing.

 

“The UK retail environment remains challenging, but against this difficult background we have traded in line with expectations during the current financial year to date."

 

Here’s what else the retailer, a Leading trader in IRUK Top500 research, said about its multichannel strategy.

 

Multichannel aims

Dunelm sells from 169 superstores and online, having opened 10 new stores over the year towards its target of around 200. Its aim over recent years has been to become a “truly multichannel business” by growing its online business and bringing more shoppers within reach of its stores so that they also choose to take products home immediately. Its aim is to be “the leading multichannel brand in homewares for customer experience.” The retailer has made “large investments in our systems” and in supply chain logistics; in November 2016 it bought Worldstores to speed up the process. Today the Worldstores integration is almost complete, and its most profitable products are now transferred to the dunelm.com site.

 

In the last year, customer numbers grew both online (+18%) and in-store (+5%) in a year that home delivery sales grew by 37.0% and in-store like-for-like sales by 1%. This, said Dunelm, reflects its “increasing focus on this channel as customer shopping behaviour continues to shift,” although as yet, admits Wilkinson, “we are still in catch-up model for online capability.”

 

“With the integration behind us,” said Wilkinson, “it is clear that Worldstores has created a new level of energy and focus in the business around digital growth. This will play a key role in driving Dunelm’s growth for the foreseeable future.”

 

Operations & logistics

Simplifying the business on the dunelm.com website, and moving that website to the Worldstores platform, set to complete in early 2019, will enable the business to launch click and collect and in due course improved payment delivery options.

 

It also aims to reduce the costs of its channel operations: currently the profits generated by one man home deliveries are around 15% below those sales made in store.


In-store technology and service

The retailer has now introduced tablet-based selling to its stores, supported by customer hosts who can advice shoppers and help them navigate its ranges. It now plans to trial new store formats and concepts ahead of major refits in a small number of stores in the next financial year.

 

Image courtesy of Dunelm

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