>>Investment in new warehouse capacity with a new partner to support the growth of our home delivery business In May 2021, we entered into an agreement with a new partner, GXO, to provide increased capacity for our home delivery fulfilment operations, together with a lease of a new site close to our existing warehouse operation in Stoke. With existing operations at full capacity, a new operation to support our future growth ambitions is essential.Our new partner’s improved systems and processes will enhance our competitive position and allow us to offer better service to our customers, for example faster delivery, later order cut-offs, and more combined deliveries; the latter will also reduce our environmental impact, as we will need to make fewer deliveries. In making its decision, the Board considered the risk to profit of increasing our fixed cost base (offset by lower variable costs) and of disruption as we transfer to a The Board noted that although no RISKS TO DUNELM new partner – potentially impacting Dunelm colleagues would be impacted, Short-term impact on profit; shareholders and any colleagues the permanent employees of the increased fixed cost base; diversion whose pay included performance- incumbent partner (currently operating from other investments. related incentives. The investment is at our Stoke site) would transfer to significant and funds could have been GXO under legislation, and GXO was OPPORTUNITIES FOR DUNELM allocated elsewhere. also likely to engage agency workers. Improved customer proposition; Dunelm will meet its commitments in additional capacity for growth of the respect of termination of the contact home delivery business; reduced with the incumbent supplier and there carbon emissions; long-term benefit is no impact on product suppliers. to shareholders, customers, suppliers The Board decided that the long- and communities. term benefits of investing in capacity to meet our growth and improved KEY STAKEHOLDER customer proposition with a proven TRADE-OFFS service provider outweighed the disadvantages. Customers v Shareholders DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021 109 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTSOTHER INFORMATION