Dick Smith lashes out against ‘secretive’ Aldi
ENTREPRENEUR Dick Smith has taken aim at Aldi, calling for the German supermarket chain to rein in its expansion and stop sucking wealth from Australia.
The outspoken businessman has written an open letter to owners Karl Albrecht Jnr and Beate Heister after Aldi was voted the most trusted brand in Australia and our most profitable supermarket chain.
But Mr Smith has asked "when will enough be enough?", outlining how Aldi is employing less staff per dollar turnover compared to Australian owned supermarkets.
He said he wants to know if the owners have plans for "endless expansion" and the selling of lower and lower priced goods.
"Will these goods, just like your peanut butter, come from countries like Argentina where wages are extremely low?," he said.
"Won't this mean our Australian farmers and food processors will never be able to compete with such low prices?
"You are privately owned, so it is not possible for Australians to share in the wealth creation of your company, and you also don't have the costs of publicly listing on the stock exchange which would result in the employment of many additional Australians."
Mr Smith pointed out major retailers such as Coles, Woolworths and IGA were predominantly Australian owned by tens of thousands of Aussie shareholders, quite often typical working Australians, through their superannuation and pension funds.
He said Aldi's "phenomenal success" had taken billions of dollars of business from existing Australian owned companies.
Mr Smith said he met Aldi's chief executive in May 2000 and asked him why they decided to open in Australia.
He said he was told, "Dick, in Germany if we don't keep expanding we would be going backwards. Our plan is to expand throughout the world."
Mr Smith said the owners' father, Karl Albrecht Snr, came up with the Aldi "plan" which was "basically sharing wealth less".
"Your father, who started the great expansion of the company, worked out that by having a lesser selection of products, you could therefore employ less workers," he said in his open letter.
"This would result in lower prices and higher profits.
"This plan has worked incredibly well in Australia. So well that the larger Australian owned supermarkets are criticised by many, while your company is praised.
"I have an important question to ask you. When will enough be enough?"
Mr Smith said under Aldi's success, ultimately less Australians would be employed.
"We already have a problem in Australia," he said.
"We have 14 per cent youth unemployment and over 20 per cent youth underemployment - that is, where our young people can't get a proper full time career."
He said the company went against Australia's tradition of openness and was rather secretive.
"Can I ask why you are so secretive? Surely being worth $30 billion US dollars (that's $40.63 billion Australian dollars) you have a responsibility to be open and explain your long term plans to all those who are affected."
Mr Smith said he wanted to invite the owners to come to Australia and explain their plans here.
Aldi Australia chief executive Tom Daunt responded to the letter, saying the company employs more than 11,500 Australians and partners with more than 1000 Australian suppliers.
"We continually refine our exclusive brands together with our suppliers while supplementing these with other popular national brands," Mr Daunt said.
"As a privately owned business we have never sought to 'maximise' profits at the cost of something or someone else. Rather, we opt for long term sustainable growth strategies.
"We are proud to have influenced the entire grocery sector, which has lead to price deflation benefiting all Australian shoppers.
"Our estimates suggest that we are saving Australians more than $1.5 billion per year.
"This is money that is returned to the economy for bills, holidays, education and other vital expenses."
Mr Daunt said Aldi's international heritage and global presence was no secret, nor were their intentions in Australia.
"We want to supply great quality products at affordable prices," he said.
"We do this by adopting a different business model that is different to our competitors.
"We proudly support an Australian first buying policy and have shared our growth with hundreds of Australian manufacturers and thousands of staff who have been direct benefactors of our business growth.
"We are proud of the reputation we have built and feel strongly that the recognition we have earned as Australia's most trusted brand is a result of our commitment to openness, honesty and integrity in all our dealings."
Since releasing his open letter, Mr Smith has announced a press conference tomorrow in Sydney.
A notice sent to media did not say what Mr Smith would be discussing, but him saying, "This is the most important news conference of my life."