Consumer Affairs Victoria has launched a legal case against discount chain Dimmeys’, alleging the business has a record of selling unsafe goods and that it should be barred from selling products in several categories, including cosmetics, fitness gear and childrens’ clothing.
The case which has been brought in the Federal Court has prompted retail experts to remind SMEs that brand positioning is critical – even when your business is a discount operator.
“Any retailer has to look after their brand,” Retail Doctor Group managing director Brian Walker told SmartCompany this morning. “Safety should be a top priority.”
The case is targeted at Dimmeys, which operates 45 stores across the country, supplier Starite Distributors and the owner of both companies, Doug Zappelli.
Dimmeys, Starite and Consumer Affairs Victoria were contacted this morning, but no reply was received prior to publication.
Dimmeys’ legal officer Ken Hampson told Fairfax in a statement the company was “taken aback by the draconian orders sought in relation to the extensive prohibition on goods that Dimmeys Pty Ltd would be able to sell”.
”Dimmeys Stores has fully co-operated with Consumer Affairs during the course of its investigations and will continue to work with it in order to bring about a speedy and satisfactory resolution of the proceedings in the best interests of the public and Dimmeys,” he said.
Some of the product categories cited in the case include swimwear, cosmetics and sporting goods.
The principle concern from Consumer Affairs is that the two companies breached the law by selling four items that weren’t sold with the necessary warning labels. This is a reference to a case last year that saw Dimmeys attacked for supplying clothing without proper safety instructions.
The ACCC fined the company $400,000 for supplying children’s dressing gowns which didn’t comply with mandatory consumer product safety standards. It emerged during that time Dimmeys was suffering financial difficulties.
Those warnings are mandatory under relatively new consumer laws introduced last year.
The case places Dimmeys in a difficult position. As a discount brand, it has been able to survive due to a focus from shoppers on lower-priced products. But if too many people are concerned about shopping there due to safety concerns, the business will suffer.
Brian Walker says it’s imperative that every business, whether it’s a high-end shop or a discount store, maintain a solid brand reputation.
“At the end of the day, the discount brand is about offering value. The product will do what it says it can do, but if you’re talking about safety faults, that’s an indictment on the brand.”
“You have to keep on top of that, or you won’t stay in business. You’ll be affected legally, or customers will stop shopping at your stores, but it’ll happen.”