Dunelm praises ‘broad value proposition’ as customer numbers rise

The homeware retailer has driven more small-ticket purchases this year, as it increased volume sales by 6.2% and sales value by 4.1%.

Dunelm
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Dunelm has praised the success of its “broad value proposition” for helping grow customer numbers by 5%, as the retailer aims to “unlock [its] full potential as the Home of Homes”.

The homeware business reported active customer numbers increased by 5.1% in the year ending 29 June, with that growth broad-based across different ages, incomes and geographic locations.

Recruiting more customers has helped fuel volume growth, up 6.2% year-over-year. The brand claims to have achieved volume growth by providing product value and relevance to consumers, as well as utilising performance marketing.

That said, the business also made £11m in productivity savings over the year, including savings in performance marketing. Dunelm spent £528.5m on sales, marketing and distribution in the year to 29 June, up 7.9% on the same period last year. The retailer noted this investment was fed into brand marketing, the customer proposition and opening new stores across a variety of formats.

Volume growth for the year exceeded sales growth. Sales grew 4.1% to £1.71m, something CEO Nick Wilkinson told investors today (11 September) is “a positive indicator of [Dunelm’s] consumer appeal”. Digital now represents 37% of total sales, up one percentage point on the same period last year.

The business reported its pricing has been “broadly stable” in the year, meaning the reduction in average item value was driven by consumers opting to buy cheaper items.

“Whilst we are gradually seeing improvements to economic indicators, we are yet to see a meaningful change in consumer spending habits in our markets,” Wilkinson commented.

How Dunelm’s top marketer shifted focus from product to customer

Dunelm drove more frequent purchases of smaller-ticket items in the year, according to GlobalData lead retail analyst Emily Salter. She added the brand’s price structure has also helped it recruit consumers, a point echoed by the Dunelm CEO.

“In the current environment, with customers making different choices about whether and when to release the reins on their spending, our broad value proposition with choice across multiple price and value tiers continues to resonate particularly well,” said Wilkinson.

Dunelm is on a mission to become “the UK’s most trusted and valuable brand in homewares and furniture”, he added. That goal was underpinned by the release of the retailer’s ‘Home of Homes’ brand platform last year, designed to raise awareness of the breadth of the offering.

“Where we have a huge market share, customers understood it, like curtains, cushions, the heritage categories,” marketing director Sean McGinty told Marketing Week last year.

“But then some areas of the business, there’s so much they just didn’t know we sold. It’s not top of mind, there’s no mental availability for anything outside of the heritage categories.”

Today, CEO Wilkinson described the homewares market as “highly fragmented”. In its financial year, Dunelm increased its share of the combined furniture and homeware market by 60 basis points to 7.7%. Despite the progress, Wilkinson claimed there is “enormous headroom” for continued market share growth.

“Our share in [fiscal year 2019] was only 5% and our next market share milestone is to reach 10% but there’s no ceiling at 10%. Indeed, we continue to gain share very strongly in categories where we’re already at a mid-teens market share,” he added.

Dunelm will aim to achieve these market share gains by redoubling its focus on product development, connecting that product to more customers and harnessing its operational capabilities.

The company indicated it has been investing in marketing to achieve the second goal of connecting its product to more consumers and is also looking to drive efficiencies to make the most of its spend.

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