If there is one thing almost guaranteed in the upholstery market, it is that DFS will grow its market share during downturns in the sector.
It has done so for years and did so again in its most recent financial period, the six months to 25 December. According to the group, sales volumes across the sector dropped by 15% during the period as the post-lockdown boom naturally ended and was replaced by the cost-of living crisis. It says it was able to grow market share from 36% to 38%. So how?
The first thing is the group’s scale, which gives it scope to do things smaller rivals cannot. For example, as rivals increased prices to reflect higher costs, DFS took a longer-term view.
‘We passed on the cost increases to consumers on a pound-for-pound basis rather than with a mark-up applied. This has reduced our reported profit margins in the first half, but we are well set to capitalise on future market recovery,’ says Tim Stacey, DFS Group ceo.
It was able to take this decision due to its £215m bank facilities (extended until 2025). It also cut its IFC offer from four years to three as more shoppers took advantage of credit amid higher interest rates.
While others may have cut back on store investment, DFS has continued. Its updated format is now in 50 branches and it is still delivering sales increases of more than 5% and payback of under two years: as the stores most in need of a facelift did when the programme began.
The ‘What’s Your Thing?’ marketing campaign is achieving record brand connection scores. Add to that its industry-leading website and targeted marketing.
‘Our digital marketing efforts have been recognised by some global digital powerhouses. We are the only retailer across the globe to have been recognised by Meta as a standout partner in 2022 and had a case study written about our best-in-class approach. We have developed a robust, profit-driven, demand-led approach to digital marketing, enabling us to target potential customers with the right messaging at the right time at a hyper local level, to increase our marketing return on investment,’ says Stacey.
‘We continue to see the collection and use of data as critical to maintaining and developing our market-leading position in the sector. Recent examples include the development of our Integrated Retail Intelligence System, which brings together numerous data sources to create one unified view of the customer and the ongoing development of our integrated lending platform to work across our Sofology brand. ILP speeds up the process and likelihood of customers gaining the credit that is right for them and helps enable increased conversion at busy trading times. We have developed middle-mile software that helps enable the sale of cancelled customer orders or returned stock across the country in an efficient manner via our national distribution centre, and there remain further opportunities to develop this solution to use with our manufacturing operations.’
On deliveries, efficiencies are bearing fruit with The Sofa Delivery Company now integrated to handle both DFS and Sofology deliveries, after two pandemic-affected years.
At the heart though is the product, in which DFS has the advantage of in-house manufacturing. This has allowed it to adapt to changing tastes quickly, and having Sofology as a second brand helps the group target different shoppers.
‘Our strategic range development continues at pace and we have seen innovative models with hidden storage, heated seats and reclining memory functions perform well. We have seen a trend develop for large corner group sofas, with our higher price point “Storeaway” ranges a good example of broadening the DFS brand’s appeal.
‘The Sofology brand has become a household name following sustained marketing investment since our acquisition of the business in 2017. Using well-known celebrities in its advertisements, such as Owen Wilson and more recently Helena Bonham Carter in the ‘Bring Imagination to Life’ campaign, has helped contribute to Sofology achieving its highest ever brand awareness.
‘Sofology has also started to collaborate with TV stars such as the architect George Clarke to create sustainable, design-led ranges such as the Gaia and Midland Hill ranges. These have added to the growing number of sustainable-based ranges in the “sustainable edit collection”, featuring fabrics made from recycled pre and post-consumer waste and fillings that are recycled or recyclable to support a circular economy, as well as wooden frames from sustainable sources.’