ell by over 30 per cent to $5.3 million (A$8.3 million), down from $7.7 million (A$12 million) in FY22. While its earnings before interest, taxes and depreciation (EBITDA) of $9.5 million (A$14.8 million) were down compared to $10.4 million (A$16.2 million) in the year prior, the retailer reported over 80 per cent EBITDA growth in the second half of the financial year. This momentum has continued into the beginning of FY24, with revenue up by over 16 per cent in the six weeks to August 13, compared to the year prior. This revenue growth is reportedly due to an increase in both first-time and returning customers. Temple & Webster also has plans to achieve $640 million (A$1 billion) in annual sales within the next three to five years. Caring about every dollar Mark Coulter, Temple & Webster co-founder and CEO, attributes the business’  strong start to the year to a change in consumer sentiment, as well as an enhanced focus on value – which is resonating with its customer base in a retail recession. “You can see it in the items that are doing well. People are still searching for things like sofas, but they are looking for more value, which is what we offer,” Coulter told Inside Retail. The brand has also increased its promotional activity and marketing investment. It recently appointed a chief marketing officer, and is seeing a 200 per cent return on its marketing investment. It plans to increase its brand spend in the upcoming financial year. Coulter added that customers don’t tend to impulse-buy items that it specialises in – such as sofas. Rather, it’s a relatively non-discretionary product that’s typically bought on a need, rather than want, basis. However, in this macroeconomic environment, customers are particularly responsive to a high-value offering.   “We know that customers are more likely to switch brands during tough economic times,” he said. “Customers start caring about every dollar they spend, do more research and are looking for value. We are cheaper than a lot of our offline competitors, and now is the time to let the rest of the country know about our offer.   “We have put our foot down to take advantage of the shift from offline to online, and making sure that when people do change channel, they change to us.” Beautiful spaces through AI As part of its plan to gain market share and reach $640 million in sales, Temple & Webster has invested in its private labels. According to Coulter, it is working to ensure that the majority of its sales come from its own brands moving forward. Its goal is to grow the share of private label sales from 40 per cent – as recorded in FY23 – to 70 per cent over the next three to five years. Temple & Webster is also launching a new private label range in the first half of FY24, which will be its first to be oriented around bathroom fixtures. “The beauty of Temple & Webster is that it’s very flexible and agile. About 70 per cent of what we sell is drop-ship, so there’s no inventory. The private label division focuses on perennial best-sellers, and we can dial our price points and types of products up and down,” Coulter said. Temple & Webster has also invested heavily in generative AI technology across both its internal processes and customer interactions. Working with Israeli R&D company Renovai – as well as an internal team of data scientists, engineers and product managers – it is using generative AI to enhance product descriptions for over 200,000 products, as well as customer live chats, and a range of other uses. The adoption of AI technology has reportedly led to an increase in customer satisfaction and conversion rate, as well as add-to-carts and revenue per visits. “A lot of people are talking about the efficiency side of AI, and how processes can be replaced by AI, and we’re seeing strong wins already,” Coulter said. “We’re not planning to do any mass cost reduction. It’s more about redeploying that free capacity to chase what we’re after – whether that be using our existing customer care team to complete high value orders, or handle more complex transactions.” Coulter added that the potential for AI to transform the shopping experience, and enhance conversion rates, is particularly exciting.  The brand is already using AI to develop an interior designer and stylist function through its website. Customers would be able to submit photos and input texts of their homes and products through a chat box, and the AI technology would be able to suggest Temple & Webster products to suit their home. They would also be able to see how the product would look in their home through this function.   “This has the capacity to democratise interior design for everyone. Accessing an interior designer can be expensive, and our vision is for everyone to be living in beautiful spaces. We are more able to execute that vision using AI,” he said. Winning proposition Regarding the collapse of other Australian furniture and homewares businesses in recent times – including Brosa and Fenton & Fenton – Coulter believes that the pressure on competitors has increased amid more challenging economic circumstances. This is especially the case for businesses operating at a smaller scale, which might not have the financial capacity to weather economic headwinds. “You really want to make sure that your price position resonates with customers, and in both of these examples, their price-points were higher,” he said. “I think people always want to get value – it’s built into human nature.” Meanwhile, Coulter believes that the pureplay homewares and furniture market is set to grow substantially over time – especially as Australians become more comfortable shopping online within this category. He pointed to data showing that 18 per cent of the market shops online for furniture and homewares in Australia, compared to around 28 per cent in the US and UK. Regarding the future – he said that the brand has reported strong results to start the year, and is working to achieve the goal of becoming the front-of-mind brand within this category over the next three to five years. “We think our core value proposition is a winning one in these tougher conditions, and we’re working to let people know about this proposition,” he said.