Following today’s release of Dunelm’s figures for the 52 weeks ending 1st July 2023; Sophie Mitchell, retail analyst at GlobalData, a leading data and analytics company, offers her view: “Dunelm’s position as a value player in the home market has set it up well amid the cost-of-living crisis, resulting in an improvement in sales in FY2022/23, up 5.5% year-on-year. Dunelm has continued to benefit from the ‘lipstick effect’ whereby consumers have purchased low-price homewares items for mood-boosting purposes or quick fixes to otherwise delayed home improvement projects. Dunelm’s proposition ensures that consumers can trade both up and down within its wide and varied product ranges, capturing consumers across the spectrum. Additionally, Dunelm will have benefitted from consumers trading down from upper mass market and premium players such as John Lewis & Partners, Marks & Spencer and Next, where the ability to trade down within these retailers is more limited. For instance, while consumers can trade down to the ANYDAY range at John Lewis & Partners, there are fewer options in between this and its higher-end ranges, whereas Dunelm covers a much wider price spectrum, with more incremental price changes between products.
“The home specialist has strengthened in omnichannel shopping experience, opening three new stores, including one relocation, in its FY2022/23, which the retailer has stated ‘underpins its confidence’ in further store openings in the next two years. This focus on store expansion is likely to be beneficial for Dunelm as consumers utilise physical shops for homewares purchases more frequently than online channels. To compete with IKEA’s move into town centre locations, such as its Hammersmith store and future Oxford Street store, Dunelm may need to also branch out from its retail park focus, and provide more convenient locations for shoppers in town centres. Online penetration increased by 1ppt to reach 36% in this financial year, though it remains behind the pandemic peak of 46% in FY2020/21. Dunelm has invested over £20m in digitalising its end-to-end operations, standing it in good stead for future operational growth. This is vital, as consumers continue to use the online channel, despite a preference for instore homewares shopping, and have higher expectations for retailers’ online services.
“Dunelm has stated that it is pleased with early trading in its new financial year, and it expects to continue to deliver a solid performance throughout FY2023/24 as it drives growth through its diverse price architecture, own brand focus, direct sourcing and strategic store rollouts. Additionally, Dunelm is set to benefit from the closure of Wilko stores, allowing the retailer to make further market share gains. 9.0% of consumers would switch to Dunelm for their homewares shopping if all Wilko stores were to close, according to GlobalData’s September 2023 consumer survey of 2,000 UK respondents, with Dunelm’s broad reach across the UK making it an accessible alternative for many consumers.”
