to 31 December. Meanwhile, its share price fell by 26 per cent after reporting the half-year results. Previously described as a “first stop shop for home renovations and redecorations, Temple & Webster has reduced its investment by about 40 per cent – from about $10 million to $6 million – in its home improvements initiative, The Build. Temple & Webster CEO Mark Coulter told The Australian Financial Review that its target audience – mostly millennials aged between 25 and 39 – is seeking more value in its purchases amid tough times. According to Jarden research analysts Wilson Wong and Matt Johnston, Temple & Webster’s 12 per cent fall in revenue was in line with its estimate. However, the analysts said that the seven per cent drop in sales within five weeks to 5 February was “challenging,” and partly due to a “strong comp period.” Jarden has downgraded Temple & Webster’s earning forecast, with its revenue estimates decreasing by three per cent for the end of financial year 2023, and by six per cent for 2024. Wong and Johnston told Inside Retail that Temple & Webster’s active customers fell by 11 per cent in the first half of 2023, but that was balanced by a seven per cent increase in the average revenue generated per customer. This, they explained, was driven by an increase in average order value and growth in the brand’s repeat customers. They cautioned that the drop in sales over the first five weeks of the calendar year indicate a “potential nascent sign of the impact on demand of the housing market downturn.” “The [12 per cent year-on-year] traffic decline implies uncertainty about whether average revenue per customer has remained positive over the period. [Web] traffic remains subdued [and] exiting FY23 with double-digit sales growth appears less likely,” Wong and Johnston said. “Our EBITDA estimate remains broadly constant for FY23E, though falls in line with revenue for FY24E, remaining within the three to five per cent margin guidance.” Professor of marketing and industry consultant at Macquarie University Jana Bowden believes there are clouds on the horizon for the retail sector. She said this was particularly true for businesses specialising in big-ticket spend items, with furniture brands fitting into that category. Professor Bowden told Inside Retail that customer wallets were under an increasing crunch, with a slowdown in spending starting to emerge. As a result, she believes that the gauntlet has been thrown down in front of Temple & Webster. The brand is tasked with combating a customer base that is under cost-of-living pressures, and looking to sacrifice, or make trade-offs.  “Three in five households are under financial stress right now and 60 per cent of shoppers have changed their shopping behaviour to cut spend[ing],” Professor Bowden said. “The latest ABS data shows that spending on household goods is down 7.8 per cent. We have only just begun to see the tip of the iceberg when it comes to consumer spend softening. With rates going up, inflation getting worse, and house value falling consumers have the jitters. “They don’t feel positive about their wealth right now and [consumer] confidence is running at recessionary levels.”  Price savvy demographic According to Professor Bowden, Temple & Webster’s target audience of deal-savvy millennials “can’t be beat when it comes to hunting down a good deal.” This demographic has an eye on value, and is willing to shop around until they find a bargain. Research provided by Professor Bowden showed that six in 10 customers within this demographic would shop across multiple platforms to find the best price.  As financial pressures are set to intensify, Professor Bowden said that millennials would “pull back on big-ticket spend items.” As such, she believes that Temple & Webster’s pricing strategy will be critical to retaining this price sensitive market segment. “Affordability right now is king, and giving these consumers bang for their buck [will] be the key to driving sales,” she said. She added that sweeteners – such as discounts and lower-price range alternatives – would be critical for the e-commerce brand to retain its audience.  This, she said, is compounded by the fact that 73 per cent of shoppers prefer shopping in-store, rather than online, as per Adyen Australia data. “The evolving consumer behaviour that we are seeing [among] the millennial segment is certainly going to necessitate an innovative and aggressive pricing approach if Temple and Webster are to regain share of wallet,” Professor Bowden said.