CEO’s review Growing customer base and increased Customer proposition development engagement drives growth In addition to growth in our overall active customer To become the ‘1st choice for home’ we are base of 8.5% and in digital and multichannel focused on developing our proposition in terms customers of 106%, the levels of customer of products, services and experiences. engagement with digital content also increased. We grew our engaged contactable email base by 1) Products proposition 30%year on year and each of our stores now has a5 We have a comprehensive product offer in local community Facebook group. Membership of homewares and furniture, with over 50,000 SKUs these groups has grown to over 700,000 followers, across more than 30 sub-categories, which are with 78% of them believing that Dunelm makes a largely own brand, including specialist exclusive to positive contribution to their local community.6 Dunelm brands such as Dorma and Fogarty. Our We also experienced substantially higher levels range is curated for choice across price tiers and of engagement through social media channels styles, with strong (and growing) value and quality throughout the year, with our own and customer or credentials understood by our customers. Our9 influencer posts showcasing products and ‘how to’ close relationships with our suppliers enable us to content regularly receiving over 5,000 likes. offer customers excellent product innovation and The frequency opportunity availability. We offer Made to Measure curtains, roman blinds and cushions made in our own UK We classify 12% of our customer base as ‘high factory. value’ and these customers contribute 40% of our sales and are likely to shop across more product Going forward, we will develop our product categories, and across both our digital and proposition further by raising the bar on range physical channels. In addition, these customers development. We are adapting our mix of good/ have a deeper emotional connection with Dunelm, better/best price points and the size of our and are more likely to say they ‘love’ the brand.7 promotional buys. We are now using online We know that a customer shopping multi-category customer insight to increase choice and fill in and multichannel with us shops almost five times gaps in those categories that we know are more more frequently in a year than a single-category, frequently shopped. We will continue to extend single-channel customer and that their average our range in new and developing categories, such spend with us over 12 months is approximately as Decorate, Outdoor Lighting and Sofas & Chairs. six times as much.8 Additionally, we will introduce new collections and sub-brands created by our in-house designers, for We are focusing on growing the number of high example the expansion of Churchgate, a timeless value customers by improving the consistency brand which draws on Dunelm’s heritage. of execution in order to reduce customer friction and churn, for example through growing our rate We are committed to introducing more sustainable of ‘perfect orders’, focusing on a ‘fast & friendly’ products and are building capability to accelerate store experience and improving issue resolution. the introduction of new materials and circular We are developing our insights and capabilities sourcing into the design and manufacturing to understand more about our customers. We are process. We will also be broadening our also expanding our proposition in a way that will sustainable ‘The Edited Life’ range to more encourage frequency as well as building further categories, following the launch of our made to emotional connection and engagement with order sofa range (made from recycled materials, our brand. and designed for longevity with a 25-year guarantee). These product proposition developments are supported by investments we are making into our commercial systems to better leverage product data, accelerate the product onboarding process and add capacity for range expansion. 5. Active email customers who have opted-in to marketing in last 30 days and customers who have opened an email in the last 90 days. 6. Source: Community Insight question in NPS survey, May-June 2021. 7.Dunelm customer survey, March 2021, 68% of ‘high value’ customers love or like Dunelm vs. 54% of other customers. 8. Source: Internal analysis based on Barclays Analytics, FY21 data . 9.BrandVue Retail, 3 months rolling to June 2021: 26% of customers chose Dunelm as ‘Good value’ (up 1.3%pts vs. FY20) and 36.6% of customers chose Dunelm as ‘Quality’ (up 2.4%pts vs. FY20). 24 DUNELM GROUP PLCANNUAL REPORT & ACCOUNTS 2021