As Dunelm posts a strong set of full-year results, Retail Week asks chief executive Nick Wilkinson a year into his role how the homeware retailer plans to keep impressing the City.

Dunelm’s share price has risen around 50% since last September, has a market cap of around £1.6bn and is quickly becoming “something of a stock market darling”, according to GlobalData senior retail analyst Hannah Thompson.

With the retailer’s preliminary results, it is easy to see why.

The homeware retailer’s total like-for-like sales increased 10.7% to £1.1bn during the 52 weeks to June 29. Profit before tax increased 23.4% to £125.9m during the period, placing it firmly in the lead of the £13.5bn UK homewares market.

But even with a stellar set of results and as it celebrates its 40th anniversary of trading, chief executive Nick Wilkinson admits the retailer still has catching up to do on online and feels “paranoid about not being relevant” in a “world that’s changing so fast”.

Online investment

Last July, the retailer simplified its business model and closed its Kiddicare and Worldstore sites to concentrate on one supply chain and one website.

The retailer is investing in a new ecommerce platform as a result of this strategic shift, which will be unveiled in the coming months.

Wilkinson says with the right technology “lots of things can be done to improve the [online] offer” and it is investing in product visualisation technology that enables the customer to see how an item will look in their house prior to purchase.

Wilkinson, Nick

Nick Wilkinson says Dunelm is better placed to innovate with its online offer

Wilkinson says Dunelm is now at a “major milestone” especially as it has been a “store-based business for most of [its] history”.

“We’re now in the final stages of the development of a completely new commercial digital platform that will serve our customers using the latest cloud-based technology,” Wilkinson explains.

“We’ve built that in-house, which if you’d asked us five years ago we would have said we could never have done that.

“It’s a much faster site with better search, better checkout, the fundamentals are much better. It also allows us to innovate our proposition.”

The retailer is yet to add click and collect to its online offering – something other retailers have been doing since the early 2000s – but plans to roll out the service imminently.

But even without offering click and collect, the retailer still registered a 28.4% jump in unique online customers during the year, while overall online sales jumped 35% to £140.2m.

Money-making marketing 

During a time of economic uncertainty when so many other retailers are struggling to keep their heads above water, Dunelm is heavily investing money to attract and keep customers.

With a strong performance in both its bricks-and-mortar stores and online, Wilkinson and his team are focusing their efforts on the ‘Customer First’ strategy to widen the brand’s reach.

“The standout thing we’re most satisfied with is we’ve worked really hard to think about how to stay relevant to more customers across a wider range of homewares products through more channels than we’ve ever done before,” says Wilkinson.

“Staying current and relevant in the world is a full-time job and we’re working hard to do that”

Nick Wilkinson, Dunelm

By pumping an extra £4m into marketing spend this year, on top of an undisclosed figure, the retailer has branched out into the world of sponsorships and TV advertising with its ‘Home of Homes’ campaign reaching a host of new customers.

This March kicked off a year-long sponsorship of This Morning — whose 35- to 55-year-old viewers overlap with Dunelm’s core demographic – alongside marketing campaigns across radio and social media.

The business has also partnered with ITV dating show Back to Mine – in which contestants assess their compatibility based on each other’s home decor – in a bid to woo Gen Z viewers.

The marketing investment has already started to pay off, as the retailer reported an 8.5% rise in the number of unique active customers during the year. 

“All those things have worked, and they are continuing [to work],” says Wilkinson.

Catering to younger shoppers

As a younger generation become more interested in homewares – thanks to social media and the search for DIY inspiration – Dunelm has noticed an increase in younger customers coming to its site via Instagram and Pinterest.

As Dunelm’s average product price is still £10, Wilkinson says the retailer’s offer is resonating with younger shoppers who have less disposable income.

“Fundamentally it’s a consumer shift that our brand is playing into,” Wilkinson explains. “Staying current and relevant in that world is a full-time job and we’re working hard to do that,” he adds.

Dunelm is expanding its ranges in homeware and dinnerware categories and rebalancing the price points on a number of products in a bid to keep new and old customers engaged with “newness” and “great value”.

The specialist retailer is also branching out into bigger-ticket items like own-brand furniture ranges in a wider range of colours and fabrics.

There are also plans underway to add 6,000 more products to its online-only ranges, as well as products featuring Gen Z-friendly staples such as unicorns, sausage dogs and sloths.

Dunelm

Dunelm stores ‘have really high satisfaction scores’, Wilkinson says

As Dunelm continues to do everything it can to reinforce its position as a market leader and appeal to a wider audience, Wilkinson is quietly confident of the retailer’s future success.

“Dunelm has always been a good business and we’ve got a great reputation for value for money,” Wilkinson says. “Our stores have really high satisfaction scores and we’re just broadening out and reaching more customers.”

But the chief executive is not resting on his laurels and says he will “carry on being paranoid about not being relevant and will continue to work hard and [think] about customers” to keep the momentum going.

Even though a lot of time and investment has gone into bringing the 40-year-old retailer into the digital age, Wilkinson says all the different channels are “just things that connect products to customers”.

The boss says “fundamentally understanding what customers want and having beautiful products that are great value for money” is the key to its success.

With 40 years of growth behind it, and a host of new initiatives in the pipeline, Wilkinson’s paranoia is delivering welcome results.