Since the upturn in consumer confidence retailers have been quick to examine growth options in a bid to capitalise on the increase in spending power. As a result, demand for retail property is on the rise, with homeware and furniture chains at the forefront of the push to expand into new areas.
Dunelm Mill is one brand which has reaped the benefits of an expansion plan coinciding with the end of the recession. The retailer this week revealed that its first half like for like profits rose by 4.5 per cent, reaching £62 million – despite the fact that like for like sales fell by 0.9 per cent.
The drop in like for like sales is likely to have been caused by poor consumer interest during summer, dragging down first quarter results and therefore having an impact upon the six month period to December 28th. However, the recent housing boom has seen consumers flocking to Dunelm Mill stores, encouraging the retailer to step up expansion plans.
Chief executive Nick Wharton believes that opening 11 new stores by the end of the financial year, rather than the originally proposed 10, will pay off when it comes to additional revenues.
Furthermore, in the longer term, Mr Wharton wishes to almost double the brand’s shops from the present 130 to 200 or more. While this is in stark contrast to the general business plans of rival brands, many of whom are currently downsizing their stores or increasingly relying upon online operations, analysts believe that Dunelm Mill’s position will allow it to succeed in bricks and mortar investment where others have failed.
Conlumio consultant Greg Bromley believes that, while the brand is indeed making good progress, it must not become complacent and forget the challenges presented by its key rivals.
He says; “Dunelm now looks to be back on track: this is largely thanks to its coherent strategy, with its specialist proposition sitting alongside an improved multichannel offer and an expanding store portfolio.
“The retailer can be proud to call itself one of the success stories in the face of the economic downturn although, with significant investment imminent, it will have to work hard to ensure this does not impact top line profits.
“At the same time, it is likely to face increased competition both in terms of the battle for spend from John Lewis and IKEA, and in the search for new sites, from expanding discounters.”
With six new stores and a warehouse dedicated to online orders all having opened in the second half of last year, it seems that Dunelm Mill is keen to continue to build momentum.
