👉 Background: Temple & Webster was founded in 2011 and was actually named after two Australians named William Temple and John Webster. In 1820, these two men were commissioned by the Australian Governor to make two large ornamental chairs. Then, 200 years later, they have an ASX listed company named after them.

‍👉 What happened: While Temple & Webster went through some tough times in the mid 2010s, they’ve had a major glow up in the 2020’s. And now, the glow up keeps glowing - its revenue rose 21% to $601 million for the year to June 30. And even better - its net profit jumped sixfold from $1.8 million to $11.3 million.

‍👉 What else: The standout is Temple & Webster's home improvement category — think vanities, tapware and ceiling fans. Temple & Webster reckons that consumer sentiment has turned the tide since the cash rate cuts, so Australians are feeling flush enough to zhuzh up their homes.

‍What's the key learning?

‍💡The wealth effect is the idea that when people feel wealthier, they splash more cash. It might be the perception of growing wealth from rising property values, share portfolios, or lower interest rates.

💡In Australia, about 80% of mortgages are on variable rates, so when the RBA cuts the cash rate, many Aussies are feeling richer. This can often filter into discretionary spending, like homewares and furniture. In fact, a Reserve Bank of Australia (RBA) study found that a 10% increase in housing wealth leads to about a 1.6% rise in household consumption, while a 10% increase in stock market wealth boosts consumption by around 1.2%.

💡For retailers like Temple & Webster, a period of lower rates can create huge demand, which is what we’re seeing right now.