STRATEGIC UPDATE – BECOMING THE Our renewed purpose is founded on the insight 1ST CHOICE FOR HOME that truly feeling at home is one of the greatest Well positioned with a clear runway joys in life. ‘To help create the joy of truly feeling for growth at home. Now and for the generations to come.’ As we look forwards, we are confident and also This is a purpose that goes beyond offering mindful of the work required to grow our business our customers the means to make their homes sustainably. Having been a successful physical comfortable, beautiful, organised and secure: retailer for many years, we are now both a capable touching on how inclusive and respectful we digital player and the operator of great stores, are in operating our business, and how well we run by colleagues with better links to their local respond to the challenges of sustainable living. communities. We intend to use this enhanced This renewed purpose is creating energy and focus market leading position to become the 1st choice and deepening the engagement of our colleagues for home for more customers and to increase and customers. shopping frequency. Significant headroom in a large market We have a distinctive and specialist product The UK homewares and furniture markets are portfolio – offering quality, value and style – that large (estimated to be over £25bn combined)3 is largely own brand and sourced from long-term and fragmented. GlobalData publishes the most committed suppliers. Our total retail system comprehensive assessment of the homewares and combines the advantages of integrated digital furniture markets and estimates that both markets and local shopping experiences to best serve UK declined (vs. the prior year) in FY20 and recovered homewares shoppers. Dunelm remains a highly back to FY19 levels in FY21. There is a potential cash generative business, which provides the agility inflationary tailwind likely in the short to medium to invest in opportunities for growth, and is built term. The market is predicted to grow in low single on solid foundations with deep-rooted shared digits over the coming years. values, strong relationships and a commitment to doing the right thing for the long term, for all our The pandemic has created a renewed focus on stakeholders. the home both practically, as it serves many new purposes, and emotionally, as it provides safety, The digital transition we have been on influences security and sanctuary. In addition, new needs how we now think about growth, and the runway are emerging which are fuelling demand for ahead of us for attracting more customers innovative products and services, with consumers and increasing their frequency. Our brand will returning to ‘wholesome’ home making activities increasingly reach new customers through digital and focussing on wellbeing and more sustainable content and performance marketing. Similarly, living. Our customer segmentation shows that4 digital capabilities allow us to offer more choice, ‘Home Lovers’, classified as those who are highly more reach, more convenient services, and more engaged with improving, styling and shopping for effective marketing, all of which will enable us to their homes, make up over 50% of UK households. grow frequency. As the homewares market leader, but with only Moving forward with renewed purpose 9.1% market share, and with only 1.3% share of the Our experiences during the pandemic caused us furniture market, we have significant headroom to to reflect on the broader role that we play in the grow market share. We expect that share gains will lives of our customers, communities and other be driven equally from acquiring new customers stakeholders. In the first lockdown, when our stores and increasing their purchase frequency. were closed, we began to get to know our local communities better and listened hard to better understand what customers wanted from their homes. This led to a highly collaborative journey with our customers, colleagues and communities to renew and clarify our company purpose. 3. GlobalData homewares and furniture markets. Market size is quoted including VAT. 4. Internal analysis based on Dunelm market segmentation research, February 2019 and August 2020. DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021 23 STRATEGIC REPORT GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATION