The CEO of home-wares retailer Dunelm Group, John Browett, certainly has plenty of digital credibility – dating back to his days running the online business of Tesco in 1999 and then on to turning around the troubled Dixons business as it grappled with, and then embraced, the internet.
His ease playing across multiple channels was in evidence recently when it was announced Dunelm had bought WS Group – comprising Worldstores, Achica and Kiddicare – in a deal worth a modest £8.5 million.
In one fell swoop he has doubled the online base of Dunelm, acquired some complimentary categories, and has got his hands on a quality bit of logistics infrastructure within Worldstores that has a cutting edge two-man delivery capability that is fully integrated into suppliers’ systems.
Each of the three components within WS Group has had its challenges of late but each has a sound underlying business. Kiddicare went from being the great online hope for owner Morrison’s to an unloved child before it was sold, while Achica found it tough to compete with the myriad flash-sales sites that launched, and Worldstores endured a lengthy and costly exercise moving from its original model of clever search term analytics to having to build the Worldstores, Modern and Casafina brands as well as creating its own bespoke delivery systems.
With the care and financial support of Dunelm – with projected sales of nearly £1 billion for 2017 and a market capitalisation of £1.5 billion – these three operations could well be on their way to delivering on their potential.
What is for sure is that this looks like a transformative deal for Dunelm and is an example of the consolidation that is likely to be a feature of the retail sector in the coming years. We are entering a period when some traditional retailers will undoubtedly look to bolster their digital capabilities through bolt-on acquisitions. These will be online specialists that maybe have decent customer bases and quality technology infrastructures but lack sufficient capital for the tough and bruising battle ahead.
Glynn Davis, editor of Retail Insider
K3 Retail deliver multi-channel solutions that enable retailers to create joined up shopping experiences for their customers whether they choose to buy on-line, direct, in-store or via mobile. It has over 20 years’ experience delivering award winning solutions, to more than 175 internationally recognised retail brands.