Tuesday 19th of February 2019

shopping in zombieland because it's cheap...


Dick Smith has laid the blame for closing his Australian-made processed food lines squarely at the feet of Aldi Australia.

He accused the German retailer of "extreme capitalism" and warned the CEOs of Woolworths and Coles that "unless your companies move towards [Aldi's limited range and high proportion of private brands], you will very likely become uncompetitive".

But this betrays a fundamental misunderstanding of Aldi's strategy and the limits of its appeal in the Australian market.

An important element of Aldi's strategy is a severely limited range of "preselected" products, overwhelmingly private brands. The company's smaller range (some 1,500 store-keeping units as opposed to 20,000 to 30,000 in a large Coles or Woolworths outlet) has several advantages — in terms of store footprints, warehousing infrastructure and supplier discounts, to name a few.

A proportion of these savings are passed on to consumers to ensure their appeal with households wanting to stretch their shopping dollars further.

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This is Gus' personal views (through experience):

To a great extend Dick Smith is correct, yet not quite right... But you can't say that to some journalists who have not understood how people can manipulate the market, or be manipulated by the markets. "Chocolate is chocolate, yet the taste is not the same", but for the price, you might compromise on a tad more or less "sugar" in the product.

I feel that Aldi is importing "surplus" (it's not the only one), like an old army store sells discarded diggers' shovels with a new label. Dumping (it's not dumping but "sourcing") under the guise of being cheap is not a strategy that will benefit Australia in the long run. Should we follow and completely adopt Aldi's market practices, all of our producers will go to the wall, like our white goods and car industries have done. We won't be able to feed ourselves.

Who knows, it could be good for the Aussie environment — going back to the wild? Towns such as Griffith, would become zombie towns though, unless they produce more vino than ever before...

The major thing that Dick Smith did wrong was to trust the Australian bleeding heart. He should know better. Pricing versus value is the principal determinant for moribunds like us to open our wallets... Shopping at Aldi's feels like shopping in third world countries or in a zombieland where goods are a bit cheaper (only a bit when you really compare) and not as "branded". At least Aldi's has gone a fraction up from the sheer warehouse of the Leclerc chains in Europe.

In fact local markets in Sydney, such as the Addison Road or the Carriage Works markets, offer much better value than the mausoleums of Aldi's for many fresh produce, directly from the producers, in a more pleasant atmosphere. There are many comparable markets in most cities and towns around Australia. I suppose it's a question of choice in our own mind — and being able to walk a bit more. 

A better way for Dick Smiths retail products would have been to offer a larger quantity for a smaller price. It's not that hard, considering that most of the cost incurred in products like jam and such comes from "bottling" or packaging. Trying to compete with imported products on the same scale is difficult — as from time to time, these products will be discounted in order to "move them off the shelves". Another point was the products labelling appeared "corny". In the 1980s, we tried the Aussie look for some products and they flopped. It's not the image people want to be associated with, despite being Aussies to the core. I never saw any Dick Smith's product discounted either. Discounting is part of the mass-market strategies. I know. I (we) practiced the technique for more than 30 years. Even "clean skins" wines such as red-ned can be fantastic value, but one needs to be savvy at selling and at buying so that margins are still profitable without killing the goose. "Creating a product" is not enough. One needs to become aware of the "consumer's" position — always looking for a bargain. It does not have to be "extreme capitalism", but having the guts to also advertise in ways that are far more subtle than the big products manufacturers do.

My views...

a fair go...

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Read more: https://www.dicksmithfairgo.com.au



A fair go has never been enough on this planet of the apes — apes who mostly respond to sticks and carrots... Read from top.



go and jam it...

Mr Hickey told ABC's The World Today Coles should have implemented the levy on all sizes of its milk, and said the application model had delayed funds going to farmers.

"I don't know what's wrong with them. I don't know what business school they went to, I don't know what they think they're doing, but their image is just getting tarnished every minute of every day by just being dodgy," he said.

"All they had to do was give the money back to the processors, the companies that pack the milk, to give directly back to the farmers, and have an audit in place.

"Woolworths have done it, and their farmers have already received money, as of today I think it is, they've already received money into their bank accounts.

"But Coles has gone about this crazy scheme where you've got to fill out an application form, you've got to send all this paperwork in."

Mr Littleproud said under Coles's models there was no guarantee the money collected would go to the particular farmers who supplied the milk, or that they would be paid according to the volume of milk they supplied.

Coles has since released a statement rejecting the Minister's comments.

"It is disappointing that the Minister has chosen to criticise Coles — which has already committed over $12 million for drought relief — before becoming familiar with the facts," the statement reads.

"Coles has established the Dairy Drought Relief Fund to ensure 100 per cent of the funds raised from this 30c increase on the price of Coles own brand 3L milk will be donated directly to dairy farmers affected by drought."

Coles said it had also appointed consultancy firm PwC as an independent auditor to oversee the application process and verify that funds have been allocated to drought-affected dairy farmers.

Aldi can 'go jam it'

Mr Littleproud saved some of his most stinging comments for Aldi, saying "the big German ... won't even come to the party and help the dairy industry at all."

"Aldi basically turned around and said 'go and jam it'," he said.


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One thing clear as milk can curdle: One Aldi enterprise could give some philanthropic cash to the farmers without having to go through gymnastic accounting for straw hats on every milk bottles. The difference you may ask? Well, it's a bit more complicated. Adding a few cents per litre of milk which is already underpaid by nearly a buck a dollarlitre, is a fancy way to still screw the farmers, with a bit of compassion added. 


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