Dick Smith: Big two supermarkets competing on price alone will lose

By Rosie Baker | 16 December 2013

Dick Smith has twigged that he needs to shout about giving all the firms' food brands profits to charity. He's taking a leaf out of Paul Newman's book, and also launching the Dick Smith Foundation so that the company can carry on giving to charities after he “pops it”.

As well, he reckons that the big two supermarkets need to focus on quality not just price or be decimated by cheaper competition.

Smith told AdNews that the Dick Smith As Australian As You Can Get food brand has been donating profits to charity for 11 years. It's based on the Paul Newman model, he said, but now the firm realised it needed to better market its noble intentions in its comms and packaging. The launch of the Foundation, plus a beefed up Woolworths presence with branded display units, was the next step.

Shoppers will also be able to have a say in where the money goes. Smith reckoned it was the “ultimate crowd sourcing” initiative: Shoppers can take a picture of the item they have bought and text it to the organisation along with the name of the charity they want to support.

If the Woolworths trial is successful, the supermarket will roll out the Dick Smith branded units nationally. It is launching in Woolworths' Balgowlah store tomorrow.

Smith says he wants to prove to the supermarkets that even though the brand's goods are more expensive, they can sell more of the products if it's sold on a standalone unit that draws attention to its 'made in Australia' claims. He said that is because, on traditional shelves, it is dwarfed by the multi-national brands who have more shelf space.

Premium will win out over low prices, according to Smith. The Dick Smith product range sells for around 30c more than other branded goods, but Smith says shoppers are willing to pay it when they know that they are getting a quality product that supports Australian farmers.

“People tell me they want to support Australian farmers and will pay more to do it. If you keep doing the low prices thing that Coles is doing, Aldi and Costco win that battle because they don't have the same costs or staff. You have to go premium and quality.”

Smith claims sales have increased 100% from $8m to $16m this year on last year.

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