Temple & Webster’s CEO, Mark Coulter has told shareholders that he’s confident the online penetration of the furniture and homewares retail category will ensure the brand’s success in years to come.
It’s been a good year for Temple & Webster, with the company improving its gross margins by 44.2 percent, up from 42.7 percent in 2017, while year-to-date trading to November 22 is up 39 percent year-on-year. As the company continues to lay the groundwork for a bright future, Coulter says the business remains confident that FY19 will be the company’s first full year of profit.
According to Coulter, the current housing downturn that’s impacting the rest of the furniture and homewares industry will likely have little effect on Temple & Webster, as the business’s online model will continue to capture the attention of savvy online shoppers.
“We operate in a ~$13 billion market for furniture and homewares and while the Australian online retail market continues to grow, it remains underpenetrated compared to other markets,” he said in his speech to shareholders.
“We continue to keep an eye on the softening housing market. While the broader furniture and homewares category may be impacted by these market conditions, we remain confident that online penetration of the category will continue as the oldest millennials turn 35 this year and enter into Temple & Webster’s core customer demographic of 35-55-year-olds.”
Coulter went on to say that millennials will become a key segment of the company’s customer-base in the coming years, as they grew up in a largely online world and are already among the biggest online spenders in other retail categories like fashion and home electronics. Regardless of what happens in the broader housing market, Coulter believes that a shift in consumer spending habits in the online furniture market will continue to prove fruitful for the business.
Temple & Webster’s Plans for FY19
Moving forward, Coulter says Temple & Webster will be focusing on expanding its product range in all key categories, while also expanding on its new product offerings like DIY goods and small appliances. Continued expansion of its existing private label range is also in the works, as the e-tailer looks to “improve margins” and “differentiate” its product offering.
Another key area of focus will be brand awareness. According to Coulter, “The majority of shoppers in Australia have not yet heard of Temple & Webster”, which is something the business wants to change. “While our preference is for measurable and data-driven digital marketing channels, we will also look at a broader channel mix, ensuring our cost per customer and ROI metrics stay world-class,” Coulter explained.
However, in-line with key consumer trends that have been emerging in recent years, Temple & Webster is shifting its attention to data and personalisation. “We are already using [customer] data to inform our own inventory buying decisions and we also use it to personalise marketing offers to customers,” Coulter said. “Next steps include personalising the site experience itself to help customers find what they are looking for more easily, which will drive conversion and repeat purchasing.”
As the company looks towards the future of online retail, with tech being a key driver of conversions, some key initiatives Temple & Webster is investing in in 2019 is AR and VR, which Coulter says is “an important future trend”, which will see the launch of an e-decorator service and a by-appointment design studio. The company also plans to launch its “Shop the look” functionality to give shoppers the chance to recreate specific looks in their own homes, as well as a new mobile app.
“After the successful implementation of product recommendations on our product page, we will be trialling complementary product upsells at different touch points with our customers to increase average order sizes and repeat purchases,” Coulter said.