Dick Smith says Woolworths and Coles need to adopt Aldi’s business model or risk being wiped out

Dick Smith says supermarket giants Woolworths and Coles will have to consolidate their product lines or face being wiped out by Aldi.

The entrepreneur argued the popular Aussie retailers would have to adopt the German powerhouse’s model of single line of groceries.

Smith believes Aldi threatens Aussie food manufacturers and the once Coles and Woolworths duopoly.

His his own company, Dick Smith Foods, has taken a massive hit, the Herald Sun reported.

Dick Smith (pictured) has shared his opinions on the future of Woolworths and Coles supermarkets as competition from Aldi continues

Smith believes that Woolworths and Coles will need to adopt Aldi’s business model of single line of groceries

Woolworths (pictured) has roughly 30,000 grocery lines compared to Aldi which typically has one type per product

He compared the 30,000 (rough) grocery lines available in Woolworths to the Aldi shelves where there is typically one type of each product.

‘Woolworths and Coles will eventually have to copy Aldi, the incredibly successful German company,’ Smith said.

‘They will have to compete with Aldi or, more likely, be taken over by Aldi.’

Dick Smith Foods has already been impacted.

It once had a turnover of $80million and produced 17-18 lines of groceries.

It now has a turnover $16million with for four or five grocery lines.

Smith said consumers want to purchase the cheapest food, which he believes is unlikely to be Australian.

‘Unfortunately, people don’t feel patriotic when they’re in the supermarket,’ he said.

Woolworths and Coles did not respond to Smith’s comments but do acknowledge their different business model.

A Woolworths spokesperson said their business model reflected customer choice and variety for their consumers.

Smith believes that Australians are no longer patriotic about Australian brands but would rather buy whatever is cheapest

‘We know that a one size fits all approach to ranging won’t deliver what our customers want or need,’ he said.

‘Our long-term vision is to broaden the range we carry across our network and then provide the most appropriate and locally relevant range in each store.’

A Coles spokesperson said supermarket value was important as customers already suffered strain from rising household costs.

‘We have reformulated virtually all our Coles brand products in the last five years to improve the quality across the range and ensure that they are offering great value,’ he said.

Dick Smith (pictured) said Dick Smith Food’s turnover declined from $80million to $16million as well as dropping at least 10 grocery lines

Earlier this month, Daily Mail Australia reported on Coles’ plan to open about 1000 smaller stores to fit the demand of high density areas.

The announcement came shortly after Coles vowed to make 40 per cent of its products home brand by 2023, with boss John Durkan saying it would improve customer choice, rather than limit it.

While Smith  said cheaper supermarket food wouldn’t come from Australian markets, an Aldi Australia spokesperson said more than 1000 of their 1200 suppliers were Australian, due to their ‘Australia first’ supplier policy.

‘Each day, Aldi’s operations improve the livelihood of local businesses, create employment opportunities and deliver high-quality, locally made products to Australian families at permanently low prices,’ he said.

‘More competition spurs other retailers to improve their offering and lower prices, which means shoppers benefit.’

An Aldi Australia spokesperson said that they implement a ‘Australia first’ policy

 

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