I Believe In Tech — Nick Wilkinson

I Believe In Tech —?Nick Wilkinson

Written by Nick Wilkinson , CEO

It’s been a bad year for Big Tech. The reasons why are interesting for us to understand.

I’ve just read an article in the Financial Times about how 2022 has been a?bad year for Big Tech?companies.

For 20 years, the Silicon Valley giants and their peers have set the standard for corporate success with a simple set of strategies: innovate rapidly and splash out to woo customers…Those days are over…The share prices of Google, Amazon and Facebook are down between 40 and 60 per cent year on year, and their younger emulators have done even worse. A Goldman Sachs index of unprofitable technology companies has fallen by 77 per cent since its February 2021 peak.

(Source: Brooke Masters, FT 28th December 2022)

More on this shortly, but first I must declare my hand.?I believe in Tech.

I believe in its power to change the world and make it a better place. I am excited that the Lawrence Livermore National Laboratory recently sparked a nuclear fusion reaction that released more energy than went into it. I love the fact that Elon Musk is offering his Starlink satellite internet systems to help Ukraine stay online. I’m feeling stronger this winter for having had a Covid booster and a flu jab; and I’m awestruck that can cer treatments using base-edited gene technology are now being tested. In Leicester.

And in Dunelm, in my 5 years here, I’ve learnt that tech is big. OLI (the name of the programme to move D.com off IBM’s Websphere) showed all of us (digital natives and newbies alike) the power of well-architected, proprietary digital systems, when we went live in October 2019. Then, during the pandemic, the ability to write and release at speed, and to scale our serverless cloud infrastructure, allowed us to grow very successfully.

And now? Well, in the last few months I’ve been getting my head around the fact that digitising the whole business — every process — will herald a new era: by providing us with the data to optimise our growth and our productivity. Some of that data will allow colleagues to make better decisions. Some of it will power intelligent systems to support personalisation, forecasting, automation and more. This isn’t a 2x optimisation. Get it right, it’s a >100x optimisation. We’ve been on this journey for a few years now, and it’s very exciting to see new foundational tech starting to power the business.

So, I believe in tech. And reading that FT article about Big Tech’s problems makes me believe in tech’s role in Dunelm even more. Here’s why….

The article offered three reasons why Big Tech has come undone in 2022. In summary:

1. Inflation and rising central bank rates have changed the financial calculus. When investors can earn measurable returns from bank deposits and top-rated bonds, speculative investments that promise growth lose their edge.
2. The assumption that first-time customers will always stick around is just wrong. Think Peloton. Netflix. Too many digital service and ecommerce companies believed that their rapid growth during pandemic lockdowns heralded a lasting uplift in revenues. Close to home we can see that in the downfall of Made.com and the re-structuring pains at Wayfair.
3. The growing sense that the most important challenges of our time — improving health, cutting carbon emissions, basically anything that involves a real world rather than purely digital product — will require a different approach to that heralded by the Big Tech companies.

Each one of those insights could be a blog article, but I’ll focus on just the last one. This idea that the world is a complex system that has physical elements as well as digital ones is something that we know very well in Dunelm. We’ve got stores, right. We’ve got homeware products as well as tech products. We’ve got factories making things, and our products are moving around the world on boats and trucks, and in cars heading home with our customers from our stores.

Indeed, it is the combination of the physical and digital elements of our ‘retail system’ that make us popular with customers. Of course, customers ‘want it all’. Why wouldn’t they? They want the convenience of digital reach and information, they want the ability to touch and feel, and get it now, beautifully designed, great value, and have friendly assistance from expert colleagues, and have it delivered to their home. And they just assume we’ll be able to optimise this system, around their needs.

And that’s why the role of tech in Dunelm is so big. The system is now so complex that without tech it is unmanageable (just like my car is now undrivable without the tech working). We need tech to make the digital processes work. We need tech to support our colleagues make the physical ones work too. And we need tech to allow us to embrace ever more complexity — from personalised communication to accurate forecasting for each SKU we sell.

Few businesses are ‘at home’ in both the physical and the digital parts of this system. In my mind,?the best thing?about our business is that (when we are at our best) we are genuinely ‘at home’ in both parts. If you like, we’ve become digital without falling out of love with our stores. And our store colleagues don’t feel threatened by tech, they want more of it to help them do their jobs, and to automate routine tasks.

So, what are the three most important challenges we are facing as a business at the start of 2023?

1. Offering more value and choice, to help our customers experience the joy of truly feeling at home during this cost-of-living crisis
2. Creating ways of working that are effective and foster well-being as we digitise our business, and our working practices evolve in these post-pandemic years
3. Learning how to cut carbon emissions to achieve our 2030 target of a 50% reduction, and be at net zero by 2040

These are multi-dimensional, complex problems. None of our competitors are better placed to solve these problems than we are. Let’s go for it. Let’s use all of our tech know-how and all of our physical world capabilities.

Happy New Year, and Happy 1st Birthday Tech Blog!

Nick