Our Marketplace well positioned for growth

Macroeconomic Trends

The UK retail sector has endured another volatile and uncertain year, with many well-established retailers struggling to adapt to rapidly changing consumer behaviour, disruptive competitive pressures and continual technological progress.

The consumers' channel shift online continues apace, with online shopping now a part of almost every shopping journey. At the same time, consumers are looking for value and convenience. The economic backdrop remains fragile and uncertain with high levels of employment but stagnant productivity and low real wage growth.

The year ahead does not look any less tumultuous for retail in the UK.

How We are Responding

At Dunelm, we are focused on our customer and the things that we can control. We are clear about the opportunities and challenges ahead of us, and we are responding quickly to the changing consumer and market conditions.

Our competitor set is fighting hard, so we're looking to reassert our value credentials while improving ease of shopping in a multichannel world and we're adding more inspiration to help our customers create a home they love.

We know we have a product and service advantage, and we want to spread the word. That's why we're launching a brand building programme so more customers can get to know us and shop with us.

Key Differentiators:

  • Product obsessed - focus on style, quality and value
  • Everyone's welcome in our home
  • Multichannel convenience - shop when, how and where you want
  • Our people - friendly and knowledgeable service

The Homewares Market*

Headlines

The UK homewares market is worth over £13bn per year. Based on estimated GlobalData research, the homewares market has grown in FY18 and this is supported by our internal analysis, based on actual weekly sales data for our trading period. Growth in the market has been driven by price, rather than volume, which our analysis indicates has declined in the year.

Online penetration is still growing, and estimated to be 13.6% in 2018 (2017: 12.7%), and is forecast to reach 16.5% by 2022. Improved convenience through shorter delivery times and cheaper deliveries will support growth.

Stores continue to play a key role in the shopping journey with research highlighting an increasing importance of the in-store experience to consumers.

Most consumers purchase homewares every four to six months and the most frequent and highest spending shoppers are 25-34 year-olds. Younger shoppers especially are influenced by trends and design-led ranges.

Key growth drivers and inhibitors

  • Store space and new formats improve experience
  • Fashion and design-led ranges increase visit frequency
  • Online provides more choice and convenience
  • Economic uncertainty, inflation and price competition
  • Leisure favoured over retail

Market size

£bn

Our Marketplace Homewares

The Furniture Market†

Headlines

The UK furniture market is estimated to be worth £11.4bn in 2018. The market is expected to grow slightly in 2018 but this growth is driven by price inflation and volumes are expected to decline, impacted by economic uncertainty, lower consumer confidence and the weaker housing market.

Online penetration is forecast to grow to 17.3% in 2018 (2017: 15.7%), and is forecast to reach 22.4% by 2022 with customers becoming more comfortable with shopping this channel and benefitting from broader ranges, convenient delivery and lower pricing.

The market is expected to continue to consolidate with independents declining most, as costs erode margins, and online retailers capitalise on the benefits of the channel to attract and convert customers.

Key growth drivers and inhibitors

  • Online growth: lower overheads, broader ranges, keener prices, convenient deliveries
  • Growth in sales of bedroom furniture categories will be driven by increasing well-being and health awareness
  • Growth in sales of living room furniture as space is more constrained and innovative storage solutions are needed
  • Economic uncertainty, inflation and price competition

* Homewares market data is based on GlobalData analysis. The methodology has been revised in the last 12 months; prior years and forecast market sizes, including retailers' market share analysis, have been amended to reflect better available information.

† Furniture market data is based on GlobalData analysis.

Market size

£bn

Our Marketplace Furniture