My grandparents lived in a village on the outskirts of Doncaster called Carcroft, which is where the 40-plus year-old DFS was founded and is still based.
DFS and Morrison’s crank-up vertical integration
Made in Doncaster.
I can recall a school trip to the factory where its founder Lord Kirkham (it was just Graham in those days) proudly explained how the sofas were made on-site. From that early period in the company’s history I also remember the ongoing joke about the DFS TV adverts and the company’s never-ending Sale.
They would promote the ‘Last Days’ of one Sale, only for another Sale variant to turn up on our screens the very next day. Well after many years the furniture group has decided to scrap its strategy of advertising its seemingly endless promotions and has instead shifted the focus of its media spend on highlighting its manufacturing credentials.
After all these years it still continues to make sofas in Yorkshire – as well as in factories in nearby Nottingham – and has in fact boosted the level of UK production from 20% to 30% since Kirkham sold the business to private equity firm Advent in 2010.
And it now wants to shout about this. But doesn’t it seem rather strange to abandon a price-focused approach in the midst of a downturn when consumers are increasingly watching the pennies and big ticket retailers are under great pressure.
Not really. It could be a rather clever move because in these straitened times there is more of a preference among shoppers to buy goods that have a high perception of value. And British craftsman-made products still thankfully hold just such a place in people’s minds.
Increasing production levels within the UK is not unique to DFS as there is a broad shift being made in this direction – especially from the fashion chains that recognise the rationale for sourcing from overseas is not as strong as it was previously.
China: No longer home of the cheapest labour.
This is not only about benefiting from the reputation that the UK has for producing high quality goods, the move is also related to many other factors. For starters there is the rising cost of labour in many markets such as China, which has increased dramatically over recent years as these regions have become more affluent.
Secondly, the lead times between ordering goods and receiving them is so much longer than with UK-manufactured products. This reduces flexibility in the supply chain thereby limiting the ability to shift production from slow selling lines to more popular products.
This enables companies to tap into the growing trend for constantly changing inventories as customers are increasingly demanding new products, up to the minute innovations, and fashion-led merchandise.
DFS can take advantage of this because it is not just selling UK manufactured goods but, as already mentioned, it is actually making them in its own factories. It can therefore dramatically shorten lead times by controlling a great chunk of the supply chain including the design and production process. Probably the only bit it does not control is the rearing of the cattle for the hides it uses on its leather sofas!
This fits very well with consumers’ growing concerns over provenance, which is driving the move towards the vertically integrated model. Just down the road from DFS’ HQ is Morrison’s supermarket that has long recognised the benefits of owning the whole production and retail process.
Unlike the sofa retailer Morrison’s does actually rear a modest number of cattle on its farm in Scotland. What chance of a partnership between the two Yorkshire giants in the future, which would really enable DFS to shout about its UK manufacturing credentials.
This column was originally published in Kbbreview.
Postscript – I have since found that the hides from Morrison’s cattle are used for the interiors of Aston Martin cars.