We have five growth levers that are each well established and together have proven successful in driving our Group gross sales growth above furniture market rates over the long-term.
Although some of these initiatives have now been in place for more than five years and have met targets set at IPO, we believe these growth levers have material further potential.
Broaden our product and brand appeal
Building on our leadership across all segments of the upholstered furniture market we aim to increase our appeal to older and more affluent ‘aspirational customers’ while retaining our core mass market appeal.
The DFS tradition of making all products to order, and our own UK manufacturing base, have provided a strong platform to achieve this by broadening the DFS product range, developing exclusive brand partnerships with leading brands such as French Connection, Country Living and House Beautiful and acquiring complementary businesses.
We set a target to reach a share in the ‘aspirational’ customer segment of 25% by the end of FY18, however we have now achieved this target in FY17 a year ahead of schedule.
We have achieved this target without weakening our strong share in and focus on our other core customer segments.
Building on this success, in August 2017 we announced a partnership to design, manufacture and retail an exclusive range of Joules branded upholstery and agreed terms to acquire Sofology.
Exploit already identified opportunities for new store roll-out
We see continued potential to build on our nationwide store coverage by both opening three to five profitable new stores each year in the traditional 10-15,000 sq ft DFS store format and by developing smaller stores of as little as 2,500 sq ft in high footfall urban locations.
Our proven, bespoke customer catchment area model enables us to predict accurately where future store opening opportunities exist.
Three new larger format stores were successfully opened in FY17 at
Salisbury, Truro and Ashford, and we also opened a third smaller urban
store in Crawley.
We have identified and secured further locations for additional 10-15,000 sq ft stores that are each predicted to generate over £500,000 of incremental EBITDA net of existing store cannibalisation.
Establish our international store presence
Our ability to extend the DFS brand to new markets was first demonstrated by our successful expansion into the Republic of Ireland, where we opened our first store in 2012, and is continuing with our more recent developments in The Netherlands and Spain.
We continue to be encouraged by the results of our trial in The Netherlands. To continue the learnings from this trial we will conduct a national marketing test campaign in 2018, to
understand the potential opportunity from further roll-out.
The DFS Spain operation acquired in October 2015 has benefited from showroom refurbishment and the opening of a second store in Malaga.
Full utilisation of store retail space
Releasing former warehouse space in our store estate enables us to generate incremental retail sales while consolidating warehousing and delivery in lower cost and more logistically efficient offsite locations.
A store-in-store concept to expand the Dwell brand alongside DFS has been proven to deliver a superior sales and profit performance in relevant catchments compared with trials of using the additional space to retail beds and dining furniture.
In FY16 we accelerated our planned Customer Distribution Centre (“CDC”) conversion programme, and as at the end of FY17 we had a total of 17 CDCs with the final two CDCs opening in early FY18.
Maintain online leadership
We have the clear market leading online platform in our sector, accounting for over 40% of upholstery segment web traffic, and a proven track record of growing margin-enhancing sales through this channel.
With most customers now beginning their research on potential furniture purchases online, our website provides the inspiration to visit our physical stores, the opportunity to make direct purchases through a convenient, interactive platform that is available 24
hours per day throughout the year, and a low-cost but effective means of providing customer service.
Sales completed online continued to show double digit growth during FY17.
Integrating online technology into our stores through the roll-out of “Swoosh” furniture visualisation technology across the DFS estate demonstrates our ability to offer our customers a true omnichannel proposition.