Homewares retailer Dunelm has reported further sales and profit growth in its preliminary results covering the 52 weeks to 2 July 2016.
The company has a record of growing sales and profit every year since its IPO in 2006, and in the year it appointed John Browett as CEO the business is confident it continues to deliver across all three areas of its key strategy: in-store sales growth, home delivery development and a push towards 200 stores across the UK.
During the 12-month period in question, Dunelm reported in-store like-for-like growth of 1%, home delivery sales growth of 23.2% and six new store openings to reach 152 sites. Nine new stores are contractually committed and home delivery sales now account for 7% of total revenue – up from 6.1% one year before.
Sales reached £880.9 million and profit before tax stood at £128.9 million.
Underpinning Browett’s initial time in charge of the business has been the recruitment of a new senior team, significant IT infrastructure investment and the opening of new warehousing facilities that are expected to result in capacity benefits and operational efficiencies.
In his CEO review, Browett said: “Last year, we continued to improve the shopping trip for our customers.
“We have improved our ranges, have become more competitive on price, made our stores easier to shop and launched a vastly improved website. I think almost all our customers have noticed the work we have done to clear the aisles, put the product back into logical places and run our promotions much more tightly and effectively. These may seem like small things, but through customer feedback we know they make a major difference.”
A number of digital touchpoints have also been introduced or enhanced as the business looks to maintain and grow its position in the UK homewares market. Essential Retail has highlighted some key moves by Dunelm in this space.
1. Outline Changes
Browett commented: “Whilst we continue to work towards increasing our store estate to 200 stores, we still believe in a multichannel world for homewares and continue to see online as a critical part of our shopping trip.” Last year saw Dunelm work with systems integrator Tryzens to complete its eCommerce re-platforming to IBM WebSphere Commerce v7.6, and the retailer was able to integrate its in-house back-end systems and third-party tech partners into the new platform.
The online retail revamp includes a bespoke order management solution, which was developed by Tryzens, while it is also linked to Dunelm’s existing SAP and product information management systems. Clearly Dunelm will be making ongoing improvements to its web platform, and there are plans to make the website easier to access – for example, by allowing customers to browse and order online in stores.
This financial year is also expected to see the retailer extend its range online through a new drop shipped vendor service, and a full click & collect service is also being established.
2. Made to Measure
Made to Measure is viewed by Dunelm as a service that differentiates the company from most of its competitors, and revolves around the business’s policy of manufacturing the majority of its curtains – which, in turn, keeps prices down.
The retailer is trialling new in-store operations as it looks to gain a greater understanding of how investment in service, presentation and range can enhance its overall offer. Plans are in place to improve manufacturing performance by creating more efficiency in processes, while a new IT system is under development to manage customer orders and make things easier for customers.
3. New POS
As part of Dunelm’s aim to improve its service model, it appears tablet devices and related chip and PIN payment options are increasingly going to be used in the retailer’s stores to sell bulkier products such as furniture. Selling in this more mobile way is expected to give staff an opportunity to show off the wider range because not all items offered by Dunelm can be stocked in store.
During Browett’s time as CEO at fashion retailer Monsoon-Accessorize, where he worked closely with IT director John Bovill, a key strategy was to roll out tablet devices in shops for clientelling purposes and to improve customer engagement.
4. Digital marketing drive
In this week’s preliminary results statement, Dunelm’s CFO Keith Down detailed how operating costs for the year grew by 7.1% over the course of the 12 months. Much of this was down to the store portfolio growth, eCommerce investment and the opening of a new distribution centre in Stoke, but there was also a notable rise in digital marketing spend to offset a dip in natural search rankings caused by the switchover to a new system.
5. Customer insight actions
Earlier this year Dunelm implemented a real-time customer communication channel to replace its questionnaire-format customer feedback process. The new system allows shoppers to score their individual experiences and describe their feelings about shopping with the retailer.
Working with Rant & Rave and using a combination of dedicated customer feedback emails, till receipts and online order confirmations to gather the responses of its shoppers, the questions will be presented to customers as soon as they make their purchases.
Browett referenced the customer voice on multiple occasions in his full-year results statement, saying that customer feedback has prompted the trialling of new category merchandising initiatives to make it easier to shop. There are also plans to extend its value-for-money range and appeal to a wider shopper demographic.
“While our key initiatives are the focus for improving the business for customers, there are several initiatives we are working on to make the business more effective,” explained Browett.
“This work ranges from ‘Keep it Simple’ changes in the store support centre and contact centre, to developing our IT systems to support the key initiatives and customer offer. We could also talk at length about the use of better customer insight, service and sales training in stores and investment in skills and training across the company.”
He added: “At Dunelm we are always looking for opportunities and working on making our business better for customers and a more fulfilling place to work. The agenda is always ambitious.”