Our vision is to move from being a great British business to being a world class business.
We will achieve this by delivering:
- the widest choice of sofas in the market;
- the best value at every price point; and
- a world class customer experience
In each case without compromising quality.
In achieving this vision, we will continue to focus on our proven levers of growth:
Developing our premium branded ranges
According to Verdict, DFS currently accounts for over a quarter of all UK upholstery market sales by value1, however our market share with a segment of aspirational customers has historically been lower than this. Over the last three years we have proven our ability to grow our market share in this segment, which has increased from 18% in 2012 to approximately 23%, including Sofa Workshop and Dwell.
Our growth has come from a combination of own brand development – including the introduction of Grand Tour and Capsule Collection, marketing refinement, brand partnerships with Country Living, House Beautiful and French Connection and acquisitions. We intend to continue this trend by growing our own brands and brand partnerships and maximising the benefit from our recent acquisitions of Sofa Workshop and Dwell.
Exploiting already identified opportunities for new store roll-out
Having grown our UK estate by over 25 stores since 2010, we will continue to open new stores utilising our bespoke customer catchment area model, developed in partnership with CACI Ltd. This model has proved highly effective in predicting returns from our new stores – in 2011-2014 we delivered an average cash payback on new stores of 21 months.
We intend to open 3-5 new UK stores per year and have already identified up to 20 further UK sites for 10-15,000 sq. ft. stores. As new stores are added to our estate and the impact on customer catchment areas is assessed, we expect that additional sites will be identified. We are also trialling the roll-out of smaller format stores of c. 2,500-5,000 sq. ft. to target urban areas and small market towns.
Selectively expanding our international store presence
DFS entered the Republic of Ireland in 2012, opening stores in Dublin and Cork – both of which achieved payback within a year of opening. Consequently, we now possess valuable experience in areas such as developing international websites, regulatory considerations and foreign exchange management that provide a good base of knowledge for further international expansion.
Following a global opportunity review, the Netherlands was identified as a promising initial location and our first trial store was opened in Cruquius in November 2014, with our second opened in Rotterdam in September 2015.
Releasing additional retail space from conversion of onsite store warehouses
Under our Customer Distribution Centre (“CDC”) trial programme we are moving and consolidating warehouse facilities currently located in our existing retail store sites to lower rent and more logistically efficient locations. CDC conversions provide further retail space to generate additional sales.
We are trialling using this additional retail space to offer a complementary range of dining furniture and beds or broadening our in-store upholstery offering.
Benefiting from the increasing importance of online channels
Our online channels provide a valuable means to inspire and engage with our customers as well as attract them to our stores, and we continue to develop online content and functionality to achieve this.
We believe we are well positioned for future online growth. In addition to adding style and buying guides to our website, we have launched tablet apps for iOS and Android, a live video chat facility and introduced an appointment bookings service for our stores.
1 Source: Verdict Retail, January 2015