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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 21 March, 2018

Retail excellence bucks the big-ticket market

Several retailers bucked the challenging conditions in the big-ticket market this week. Dreams, which went through an administration five years ago, has grown profits and sales for the fourth consecutive year, recording LFL growth of 3.3% against strong comparatives. Dreams’ turnaround is down to improving efficiency and cost control, as well as a focus on better quality products, reducing the number of returns. Dreams has also trebled the size of its online business (which now represents c20% of all transactions), recognising that nearly every customer journey start online.

Made.com's focus on fashionable and high-quality products also continues to pay dividends, with over 30% growth in sales in its UK operation in 2017, firmly outpacing the -0.4% growth across the total UK furniture market. These results highlight Made.com's keen awareness of consumers’ desire for innovative, digitally-available retail experiences, which it provides through a combination of its online offer and brand showrooms. The retailer has also secured a £40m cash injection, in order to roll out more showrooms, and launch into new European markets. Some of the funding will be used to ‘pioneer the creative use of technology’ in a bid to further improve the shopping experience for its customers.

However, the ongoing consumer squeeze and inflationary environment (despite easing CPI) continue to act as significant headwinds to the big-ticket market more broadly. With costs increasing, and digital playing out across the retail spectrum, further retailer casualties are inevitable. Carpetright, for instance, which has issued three profit warnings since December, saw shares fell 11% last week, following reports that it was considering closing stores as part of a turnaround plan. A clear sign that, regardless of the retail sector, ‘average’ will no longer cut the mustard – retailing excellence is the only way to thrive in the current environment.

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