RISK |
DESCRIPTION |
HOW WE MITIGATE |
PROGRESS IN 2019/20 |
COMPETITION, MARKET AND CUSTOMERS
Link to Customer 1st strategy: Our customer proposition All focus areas
Performance indicator: Market share
Executive responsibility: Chief Executive Officer
Reports to: N/A
Impact compared to 2018/19:
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Failure to respond to changing consumer needs e.g. the shift towards online sales, personalisation, rental versus ownership, sustainability and customer experience, and to maintain a competitive offer (range, quality, value and ease of shopping) could impact profitability and limit opportunities for growth. A downturn in consumer spending could impact sales and profit. |
- Customer 1st strategy in place, to continue to drive our multichannel proposition, refined post Covid-19 to accelerate growth levers.
- Focus on new product development, particularly own brand, in both existing and new categories, to strengthen our offer. Continue to make our products and their packaging more sustainable.
- Investment in brand marketing, digital engineering, data insight capability and service to raise awareness of Dunelm and meet customer needs.
- Investment in supply chain capacity and capability, and delivery of productivity improvements to enable us to compete effectively and allocate resource to growth driving activity.
- Monthly customer insight report tracks performance against the market, competitors and other key indicators.
Board oversight:
- Reviewed annually in depth by the Board at its Strategy Day and individual topics considered throughout the year.
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- Dunelm continues to lead the UK homewares market with an increased estimated share of 7.6% in 2020 (2019: 7.2%) (Source: GlobalData).
- Development of our Customer 1st strategy, to include a significant increase in our sustainability programme, and focus on customer experience.
- Successful replatform of our dunelm.com website and introduction of a Click & Collect offer with minimal disruption, enabling us to accelerate our digital proposition. Enabled us to serve customers when stores were closed due to Covid-19.
- Increased brand awareness through continued investment in brand marketing, including sponsorship of Back To Mine, This Morning and First Dates.
- Local Facebook groups created, based around our stores, during the Covid-19 crisis, to provide relevant and meaningful engagement with our customers – to continue post-crisis.
- Continued product innovation in existing categories and strengthened seasonal campaigns and promo buys to increase ‘newness’ and promote our value credentials.
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RESILIENCE
(New/emerging risk)
Link to Customer 1st strategy: All focus areas
Performance indicator: Sales and profit Market share

Executive responsibility: Chief Executive Officer
Reports to: N/A
Impact compared to 2018/19:

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Failure to withstand the impact of an event or combination of events that significantly disrupts all or a substantial part of the Group’s sales or operations (e.g. pandemic). |
- Internal control and risk management process in place to identify and manage risks (including emerging risks) that may impact the business.
- Conservative financial approach – strong balance sheet, relatively low levels of external debt, low risk property portfolio, ‘value for money’ mentality.
- Strong and united Board and Management team in place, strong managers in key roles and committed colleagues.
- Strong values – emphasising ’long‑term thinking’ and ‘acting like owners’ – which Board and senior management are required to role model, embedded in the business through recruitment and appraisal, and colleague communications.
- Strong relationships maintained with key stakeholders (shareholders, colleagues, customers, suppliers, community).
- Investment in Dunelm brand and diversity of routes to market provide flexibility if one channel cannot operate.
- Business continuity plans in place and kept up-to-date for sites, operations and technology.
- Insurance cover in place to cover key risks.
- Expert third-party advisers in place (e.g. PR, corporate, banking, legal, tech) to assist.
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- Action taken to mitigate impact of Covid-19 crisis including:
- Securing financial position of the Group by ceasing all nonessential expenditure, drawing down on committed bank facilities, and securing funding under the UK Government’s COVID Corporate Finance Facility (CCFF) (not used).
- Increasing the frequency of Board and Executive Board meetings.
- Ensuring that we had plans in place for colleagues to work remotely where possible and contingency plans to close/ re-open stores and facilities safely in accordance with legal requirements.
- Prioritising safety of colleagues and customers.
- Working closely with suppliers to implement alternative fulfilment routes.
- Increasing engagement with colleagues, customers and suppliers.
- Customer 1st strategy in place, based around agreed purpose and ambitions (profitable growth, brand, being a good company) with six focus areas, underpinned by our shared values.
- Actions taken to improve productivity and efficiency, and reallocate resource to priority activities, including reduction in support centre headcount.
- Focus on value and affordability to respond to likely recession.
- Plans in place to prepare for a ‘second wave’ of Covid-19 or local lockdowns in FY21.
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BRAND DAMAGE
Link to Customer 1st strategy: Customer Sustainability Committed suppliers
Performance indicator: Product recalls Percentage of audits completed within policy
Executive responsibility: Commercial Director
Reports to: Chief Executive Officer
Impact compared to 2018/19:
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Our customers expect us to deliver products that are safe, compliant with legal and regulatory requirements, and fit for purpose. Increasingly, customers also want to know that products have been responsibly sourced and that their environmental impact is minimised.
We must also ensure that our suppliers share and uphold our approach to business ethics, human rights (including safety and modern slavery) and the environment.
Failure to do so could result in harm to individuals with the potential for customers, colleagues and other stakeholders to lose confidence in the Dunelm brand.
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- We have a range of policies specifying the quality of own brand products and production processes which suppliers must adhere to.
- Factories complete a profile questionnaire to obtain a more holistic assessment.
- We operate a full test schedule for all new own label products and on a sample basis for ongoing lines, overseen by our Specialist Product Technology team.
- Food hygiene and allergen awareness in our Pausa cafes is maintained through the adoption of clear operating guidelines and compulsory colleague training. Compliance audits are performed regularly. Monthly food safety committee meeting in place.
- All stock and food suppliers and the majority of our other suppliers are required to sign up to our Anti-Bribery and Ethical Code of Conduct, which is in line with international guidelines, and also covers modern slavery.
- Periodic audits on all suppliers of own brand products. Specialist partner appointed reviews and grades audits and follows up on corrective actions.
Board oversight:
- Ethical trading/modern slavery/ responsible sourcing reviewed at least annually in depth by the Board.
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- Independent third-party due diligence testing introduced for high-risk products during the product lifecycle (in addition to tests completed when first sourced).
- Updated our Code of Conduct and set out standards for working conditions which all factories supplying Dunelm branded products must adhere to (the ‘Dunelm way’).
- UK premises of all stock suppliers completed a modern slavery assessment with follow up action where needed.
- Developed online quality and ethical assessment for secondary branded products.
- Launched supplier portal so own brand suppliers can access latest product specifications and testing requirements.
- Implemented a new food standards and sourcing manual for suppliers.
- Simplified and updated allergen information introduced, now available electronically to enable real time updates to be made.
For further information please see the Sustainability Review. |
CLIMATE CHANGE AND ENVIRONMENT
Link to Customer 1st strategy: Sustainability
Performance indicator: Prosecution and other regulatory action
Executive responsibility: Company Secretary
Reports to: Chief Executive Officer
Impact compared to 2018/19:
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Failure to anticipate and address the strategic, regulatory and reputational impact of climate change. |
- Sustainability – ‘Make sustainability accessible to all’ is one of our six focus areas from FY21.
- Sustainability Committee, chaired by the Company Secretary, oversees our approach to sustainability issues, including climate change.
- Targets in place to reduce emissions, energy usage and waste to landfill, and increase recycling in our own operations.
- Sustainability is part of the Product strategy and product selection process. Policies in place for high-risk product types and routes (timber, animal welfare, cotton, feathers and down).
Board oversight:
- Presentation at least once a year, also now forms part of Customer 1st strategy.
- Topic at the Board’s strategy days.
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- Sustainability – ‘Make sustainability accessible for all’ adopted as one of our six focus areas.
- Work started on developing climate change strategy, carbon footprint measurement, climate change risk assessment and long-term targets, with the help of Carbon Trust.
- Committed to report in accordance with the Task Force on Climate‑related Financial Disclosures by 2022.
- New factory environmental assessment in place for water, energy, waste and emissions reduction for all own brand Tier 1 suppliers.
- Appointed Track Record to develop our Responsibly Sourced Cotton policy and supply chain assessment programme.
- Completed annual timber supply chain assessments of own brand suppliers in line with the EU Timber Regulation (furniture).
- Reduced our plastic packaging by over 50 tonnes and on track to eliminate all single-use plastic (that cannot be recycled) within our high volume categories in FY21. To support this we have introduced On-Pack Recycling Labelling (OPRL) on our packaging.
- More sustainable and recycled materials introduced into our product ranges.
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PEOPLE AND CULTURE
Link to Customer 1st strategy: Committed colleagues Customer Shared values
Performance indicator: Colleague engagement

Executive responsibility: People and Stores Director
Reports to: Chief Executive Officer
Impact compared to 2018/19:
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The success of the business could be impacted if it fails to attract, retain and motivate high-calibre colleagues.
Maintaining and evolving the culture of our business (embodied in our shared values) is essential to delivering our strategy and ensuring the longterm sustainability of our business.
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- The composition of the Executive team is regularly reviewed by the Board to ensure that it is appropriate to deliver the growth plans of the business.
- Succession plans and appraisals are in place across the Group.
- High calibre individuals are retained and developed through sponsored talent management and development.
- Shared values describe and embed our culture.
- The Group’s remuneration policy detailed in this report is designed to ensure that high-calibre executives are attracted and retained. Lock-in of senior management is supported by awards under the Long-Term Incentive Plan.
Board oversight:
- People plan, talent and succession and culture reviewed at least annually by the Board.
- Monthly CEO report covers People.
- Colleague dashboard regularly reviewed by the Board.
- Nominations Committee and Remuneration Committee oversight of People policies and practice.
- Group Board engagement with colleagues through site visits, senior executive mentoring, NED attendance at annual seminar, at National Colleague Voice in November 2019 and June 2020, and Board presentation in November 2019.
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- The safety and wellbeing of our colleagues was central to our response to the Covid-19 crisis.
- Business principles refreshed as shared values to better align them to our purpose and ambitions. Guided the Board and Executive Board’s response to the Covid-19 crisis.
- Plan to increase our focus on diversity and inclusion, starting by building awareness across our senior management.
- Capability increased through creation of a dedicated Data Insight team and development of the Senior Leadership team.
- Increased Group Board focus on Board and Executive team succession and talent management.
- Established Store Colleague Safety Group to oversee colleague personal safety in stores.
- Mental health awareness continued – all line managers now trained, and trained mental health first aiders available throughout the business.
- Successful colleague engagement methods used in the Covid-19 crisis will be the model for future communication.
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REGULATORY AND COMPLIANCE
Link to Customer 1st strategy: Customer Sustainability
Performance indicator: Prosecutions and other regulatory action
Executive responsibility: Company Secretary
Reports to: Chief Financial Officer
Impact compared to 2018/19:
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Fines, damages claims and reputational damage could be incurred if we fail to comply with legislative or regulatory requirements, including consumer law, health and safety, employment law, GDPR and data protection, Bribery Act, competition law. |
- Policies and training in place in respect of key compliance areas. These are regularly reviewed and updated.
- Operational management are responsible for liaising with the Company Secretary and external advisers to ensure that new legislation is identified and relevant action taken.
- Dedicated Group health and safety function to oversee this aspect of compliance.
- Training on the requirements of the Bribery Act and competition law is in place for all relevant colleagues and policies are communicated to all suppliers.
- Whistleblowing procedure and independently administered helpline which enables colleagues to raise concerns in confidence.
Board oversight:
- Monthly Board report on health and safety, GDPR compliance and whistleblowing.
- Health and safety reviewed in depth by the Board at least annually.
- GDPR and Bribery Act are standing Audit and Risk Committee agenda items.
- Non-compliances reported by the Company Secretary by exception.
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- Health and safety team have been integral to our response to the Covid-19 crisis and this has been the main area of focus between March and June (and beyond) as we developed and implemented safe physical measures and processes at our stores, warehouses, vehicles, manufacturing site and offices.
- Reviewed and updated policies in place in respect of age-restricted sales, with the support of Trading Standards. Continued programme of test audits with pass rates above industry average.
- Refreshed health and safety compliance processes, moving to mainly digital rather than paperbased processes – saves time and enables real-time compliance checks to be made centrally.
- Accelerated programme to reduce risk to colleagues by removing fork lift trucks from stores –144 of our stores now operate without them.
- Continued to strengthen governance of food safety in Pausa cafes including refreshed hygiene and allergen training, and introduction of a simplified allergen guide available electronically.
- Policy on use of independent contractors in place in advance to ensure that appropriate tax and NI is paid by all workers.
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BREXIT
Link to Customer 1st strategy: Customer Delivery
Performance indicator: Sales and profit

Executive responsibility: Chief Financial Officer
Reports to: Chief Executive Officer
Impact compared to 2018/19:
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A disorderly Brexit could impact sales and margin due to a downturn in consumer demand, increase costs due to the fall in the value of sterling against the US dollar, or cause supply chain issues, supplier failure or labour shortages. |
- Brexit risk assessment in place and regularly reviewed, and mitigations in place.
- Steering group meets regularly to review developments, updates issued to the Executive Board and Board.
- Very few products are sourced from the EU and we have no sales into the EU. Impact of tariffs in a no-deal scenario anticipated to be immaterial.
- Hedging position regularly reviewed.
- Plans in place to adjust to new legislation from January 2021.
Board oversight:
- Twice-yearly review of principal risks.
- Updates through CFO report.
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- Assessed number of colleagues who are EU nationals and assisting to obtain ‘settled status’. Ensured logistics partners take similar mitigating action.
- Continuing to work with logistics partners and suppliers to minimise risk of supply chain disruption and ensure that processes are in place for new customs regimes.
- Plans in place to manage potential port congestion in January 2021.
- Prepared operational plan to manage fall in value of sterling.
- Focus on affordability to respond to any consumer downturn.
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IT SYSTEMS, DATA AND CYBER SECURITY
Link to Customer 1st strategy: Customer Digital Operations
Performance indicator: Number of major incidents
Executive responsibility: Chief Information Officer
Reports to: Chief Executive Officer
Impact compared to 2018/19:
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Operations impacted by failure to develop technology to support the strategy, lack of availability due to cyber attack or other failure, and reputational damage/fines due to loss of personal data. |
- Information Security Steering Group (ISSG) in place to oversee the Group’s approach to IT security and data protection.
- IT security function in place, reporting to the ISSG.
- Formal IT governance processes in place to cover all aspects of IT management.
- Changes to IT services are managed through a combination of formal programmes for large and complex programmes, or bespoke iterative development methodologies for smaller-scale changes.
- A detailed IT development and security roadmap is in place, aligned to strategy.
- Comprehensive third-party support in place for relevant technologies.
- Business continuity in place for all major systems and applications.
- Business process, authorisation controls and access to sensitive transactions are kept under review.
- Cyber insurance cover in place.
Board oversight:
- Cyber security is a standard agenda item for the Audit and Risk Committee.
- Major security incidents reported by the Company Secretary.
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- Relaunch of dunelm.com platform achieved with minimal disruption. We now have greater control over our intellectual capital, and the capability to make more rapid and agile development of systems.
- Restructured our IT security governance and increased capability and resource.
- Significant improvement in vulnerability management delivered.
- Continued to implement the GDPR risk treatment plan.
- Network re-architecture project implemented to allow better control, visibility and security.
- Continued to implement security improvements. Working towards a third-party Cyber Essentials certification to provide independent assurance.
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SUPPLY CHAIN DISRUPTION
Link to Customer 1st strategy: Customer Delivery
Performance indicator: Service levels
Executive responsibility: Chief Executive Officer
Reports to: N/A
Impact compared to 2018/19:
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Sales/profitability and customer satisfaction could be impacted by supply chain disruption or loss of access to key support locations. |
- Supply chain strategy in place to ensure capacity is in line with long-term financial plan.
- Detailed budgeting and forecasting in place to match capacity to demand.
- Business continuity plans in place for Dunelm non-store facilities.
- Contracts in place with third-party logistics partners.
- We seek to limit dependency on individual suppliers by actively managing key supplier relationships.
Board oversight:
- Business continuity is a standard Audit and Risk Committee agenda item.
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- Covid-safe processes implemented in our distribution centres and Home Delivery Network to enable operations to continue throughout and post the Covid-19 crisis. This included a significant increase in ‘Direct to Customer’ deliveries from our suppliers.
- ’Fit for Future’ logistics capacity plan developed. Will need to evolve as we increase capacity to meet increased demand for home delivery.
- Renewed long-term contract for store deliveries.
- Upgraded home delivery vehicle fleet.
- Business continuity plans for all sites reviewed.
- Continue to strengthen relationships with key suppliers.
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BUSINESS EFFICIENCY
Link to Customer 1st strategy: Customer Operations
Performance indicator: Operating cost %
Executive responsibility: Chief Financial Officer
Reports to: Chief Executive Officer
Impact compared to 2018/19:
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Profitability could be impacted by failure to operate the business efficiently or to manage cost-price volatility. |
- Costs are managed by the Board and Executive Board through the budget and forecasting process and monthly management accounts reviews.
- 'Evolve smarter stock flows and operations’ is one of our six focus areas.
- Dunelm’s scale, growth and increased buying power allows it to secure supply of key services and raw materials at competitive prices. Commodity price tracking covers all key materials.
- Major non-stock purchase contracts regularly tendered.
Board oversight:
- Board receives monthly management accounts and regular updates on strategic focus areas.
- Long-term plans and budget reviewed by the Board at least annually.
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- Continued focus on cost discipline through monthly Executive Board performance review and robust investment approval process.
- Working groups in place to manage product lifecycle, sourcing, stock and returns. Significant improvement in stock loss delivered in the year.
- Productivity group focusing on delivering productivity in stores, more efficient stock processes, and supply chain.
- Support centre headcount reduced and resource realigned to strategic focus areas.
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FINANCE AND TREASURY
Link to Customer 1st strategy: Operations
Performance indicator: Operating cash conversion
Banking covenant compliance
Executive responsibility: Chief Financial Officer
Reports to: Chief Executive Officer
Impact compared to 2018/19:
Increased during Covid-19 crisis.
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Growth constrained by lack of access to capital/ financial resource. |
- Dunelm works with a syndicate of long-term, committed partner banks. The Group has a £165m, five-year Revolving Credit Facility in place until March 2023.
- Further, uncommitted borrowing facilities have been agreed for possible short-term working capital requirements.
- A Group treasury policy is in place to govern levels of debt, cash management strategies and to control foreign exchange exposures.
- Hedging is in place for foreign exchange, and freight and energy prices are agreed in advance, to help mitigate volatility and aid margin management.
Board oversight:
- Board receives monthly treasury report.
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- Actions continue to improve controls around stock and cash management, including controls around stock purchasing and forecasting.
- COVID Corporate Finance Facility funding approved to support future liquidity if required by a second national lockdown due to the Covid-19 pandemic.
- New model created to provide dynamic forward-looking cash flows by week.
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