“UK consumers have been miserable for a long time,” said Clodagh Moriarty, CEO, Dunelm, a homewares retailer and FTSE 250 business, at the FT Live: Future of Retail summit in the City of London on 6th October. During the event, other CEOs from B&Q and The Works also spoke about cost of living and doing business pressures.
“We are still a strong growing business that generates cash. We’re trying to bring certainty to customers in terms of value,” said Moriarty, who joined Dunelm in 2025 after 15 years at UK grocers Sainsbury’s, at the gathering of senior retailers in London’s Convene venue attended by Treasury Today Group.
Moriarty announced a three-year growth strategy on joining Dunelm called ‘Winning Hearts & Homes’ that will see ten stores open initially and 90 more planned, alongside a £100m cost-cutting plan that will cut 95 central support and distribution roles – about 8% of the company’s central workforce – to streamline operations and costs. This is necessary in an era where high oil prices are leading to rising inflation, reduced consumer demand, and higher business costs.
Dunelm’s own shares fell last month following profit warnings about future sales due to softer early summer trading due to the excessive heatwave in the UK this summer and cautious consumer spending. This was despite reporting total sales of £1.83bn for the 2026 financial year, up 3.1% year-on-year.
Firms in the UK and beyond are all too aware of the tougher trading environment, with higher energy costs feeding into a global trade landscape that is already suffering instability due to President Trump’s tariffs. The cash and liquidity situation is particularly evident for discretionary spend corporates in the retail sector as well, where buying a new sofa or homewares is often put off when family finances come under strain.
Inflation in the pipeline
Graham Bell, CEO of DIY firm B&Q, spoke at the same event in London alongside peers from The Works stationers and clothier, Sweaty Betty. “We know we’re going to get inflation”, he said, when discussing his own cost control plans.
He also compared the excessive paperwork and cost of apprenticeships and training in the UK to “walking through treacle”.
Bell pleaded for the UK government in its imminent Budget announcement “not to hit us” with any more rises to national insurance (NI), minimum wage or building tax rate hikes, due to the present tough trading conditions.
Gavin Peck, CEO of The Works – a presence on most UK high streets – agreed that “there is unfair tax on physical stores” in the UK. These typically pay more than a huge warehouse for an e-commerce retailer because they are not situated in the countryside, where the building’s local tax rates are cheaper. Peck also called for action against substandard imports that can be delivered from abroad, potentially without the usual checks and staff rights, to ensure a level playing field for all.
This debate is big in the retail sector at present where the ‘drop shipping’ model is gaining traction. Under this model, a third-party manufacturer, wholesaler or distributor stores inventory and ships products directly to the customer on the retailer’s behalf, often from abroad, with the later merely marketing and selling them without any of the usual back office of a traditional player. It’s another way to cut costs for online, e-commerce players – but again doesn’t lead to a level playing field with high street retailers.
Omnichannel response
Technology is another disruptor – but one that is increasingly being used to help mainstream retailers as they merge their online and in-store offerings in an omnichannel manner. Consequently, customer data, payment processing, targeting, inventory listings and operations are being merged to deliver the best customer experience (CX), sales and efficiency, however the consumer wants to come to the retailer.
“We now sell 42% via our e-commerce offering, but it’s about the bringing the two together,” explained Dunelm’s CEO Moriarty. She pointed out that many higher ticket homewares items are researched online and then purchased in-store, where the material of a sofa, throw or other product can be physically felt. The expense of returns doesn’t apply as it would for an online-only operator, and the store can additionally act as a warehouse running click and collect for smaller ticket items.
Despite the challenges, Moriarty was still optimistic when discussing the 90 new store openings Dunelm is planning in the UK.
