Dick Smith: Sydney small businesses doomed to sell nothing but coffee unless Lucy Turnbull has a solution

Dick Smith

Dick Smith. Source: AAP/Lukas Coch.

Entrepreneur Dick Smith has called on Lucy Turnbull, head of the Greater Sydney Commission, to address the city’s rapidly growing population or face the consequences of fewer jobs and less prosperity in the region.

In an open letter published in national newspapers today, Smith tells Turnbull: “You are far better educated than the rest of us – so you must have a plan”. Smith argues the “perpetual growth” in Sydney supported by the country’s major political parties is unsustainable and is having a negative effect on house prices and employment.

This morning Smith told SmartCompany that if Sydney continues to grow at its present rate, small businesses in the city will be doomed to sell nothing but coffee.

“We’re all just going to be selling coffee to each other, because we have 10 million coffee shops,” Smith says.

He believes the small business community in Sydney will continue to face tough conditions, with an increasing population meaning too many people are trying to start similar businesses within a limited area.

“There’s too many people and that makes it far more difficult to be successful. You have too many people trying to start small businesses,” Smith says.

Smith, who told SmartCompany earlier this year he believes his own business, Dick Smith Foods, is doomed to fail because of the rise of international discount grocers in the Australian market, says many business owners in Sydney agree with his sentiments.

“Eight out of 10 business people I talk to tell me I agree. It’s just common sense that it’s basically only cancer cells that believe in perpetual growth,” he says.

In his address to Turnbull, Smith laments the major political parties’ immigration targets, saying he supports a lower migrant intake of 70,000 a year.

Smith says the world of politics is “completely irresponsible” and those in power know that highly concentrated growth across the nation cannot last.

“My attitude is that we’ve gone past the sweet point,” he says.

Read more: Dick Smith claims Aldi will send Coles and Woolies broke and says “extreme capitalism” is to blame

In response to Smith’s open letter, Sarah Hill, chief executive of the Greater Sydney Commission told The Australian that the level of growth seen in Sydney is a hallmark of successful cities around the globe.

The Greater Sydney Commission has a number of strategic focuses for the Sydney over the next 20 and 40 years, including its blueprint for the city, Towards our Greater Sydney 2056. “Our responsibility is to plan for this to make our city more liveable, sustainable and productive, rather than to debate the facts,” Hill said.

A spokesperson for the commission told SmartCompany “The Greater Sydney Commission isn’t driving growth, it’s responding to it”.

“We’re doing this through engagement with Greater Sydneysiders about what they want for their city.”

Is Sydney bad for small business?

While Smith’s concerns are centred on population growth and impact of this on Sydney residents, this year has also seen considerable tension between business owners and the New South Wales government over regulation, particularly in relation to Sydney’s lockout laws.

Some members of the SME community believe the government’s approach to the policy has shown a disregard for Sydney’s nightlife culture and contributed to the closure of some businesses.

In February, Freelancer.com founder Matt Barrie wrote a rebuttal of the lockout policies on LinkedIn, arguing recent political leadership had “systematically dismantled the entire night-time economy”.

“It is grossly unpopular and purely driven by religious ideology,” Barrie told SmartCompany at the time.

“It’s been absolutely devastating for small businesses.”

NSW Premier Mike Baird said at the start of December that the government would be implementing changes to the policy as recommended in the Callinan Review. This includes changing the cutoff time for bottle shop and alcohol delivery sales from 10:00pm to 11:00pm, and changing closing times for Sydney venues from 3:00am to 3:30am, with lockout times extended by half an hour from 1:30am to 2:00am where there is live entertainment. The changes will come into effect from February, but some in the business community in Sydney saw the reforms as tokenistic.

“Thanks Dad!” said nightlife culture group Keep Sydney Open, who have been protesting the lockout laws since their introduction and believes even with the changes, Sydney is still being left behind in “the global race” for a strong nightlife culture.

Long-term prosperity

When it comes to economic growth and prosperity, it’s not just NSW in the spotlight. Concerns over Australia’s long term prosperity also continue, with warnings that Australia could lose its AAA credit rating before the end of the year.

UK think tank The Legatum Institute’s most recent Prosperity Index survey ranks Australia as the sixth most prosperous country in the world, but analysts are keen to point out that of the 20 top countries listed, Australia is the only one to have an overall fall in its prosperity over the last decade.

Australia ranked second in the world for social capital, but Legatum pointed to the country’s falling economic diversity and a more inflexible labour market as areas of concern.

To Dick Smith’s mind, the lack of a plan on population, jobs and infrastructure will be a problem for business and prosperity in the long term, including for his own venture.

“The only venture I have is Dick Smith foods – and it’s doomed. Every year it has less turnover,” Smith says.

Discount retailers from overseas that operate with fewer staff will also compound the challenge, throwing down a challenge to even the bigger supermarkets, the prominent entrepreneur says.

“When Lidl comes in—well, they work by employing hardly any people,” he says.

Australians want an answer to the problems they see on a daily basis, Smith says, and he is calling on Lucy Turnbull to provide them in Sydney.

“What’s your answer to them? Are they wrong? Please tell us what your plans are for the future,” he wrote this morning.

* This article was updated at 1:00pm on December 15 to include a comment from the Greater Sydney Commission. 

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Jan Deane
Jan Deane
4 years ago

Well for a long time i have failed to understand why retailers, fast food outlets and various franchises keep flooding the market with more and more outlets.
Each shopping centre looks exactly the same and chains are creeping into shopping strips that were previously home to independent shops. This has happened recently in Albert Park, Vic, a charming shopping village where 2 independent business closed to make way for a huge, boring Country Road store. Why would we need another Country Road store? they are everywhere – overpriced and overdone. In a case like this, i am not sure if the independent business closed down due to lack of business or if they were forced out by their landlord who preferred to have a ‘gilt-edged’ tenant. Who knows?
I make it my business to support small independent retailers whenever i can so they will stay.

Nexusfast123
Nexusfast123
4 years ago
Reply to  Jan Deane

These ‘chains’ also destroy local economic value. Studies have shown that $1 spent with a local business will generate up to $10 in additional local economic activity.

Michael
Michael
4 years ago

When Amazon open for grocery business in Australia in 2017 it will spell the end of the long monopoly Coles/Woolworths have enjoyed in the supermarket space. Retail will increasingly go digital. Australian business needs to wake up to digital marketing and get with the program, many unemployed people could re-train for digital skills, these will become in short supply over the next 10 years. Digital Australia, this is the global climate.

Nexusfast123
Nexusfast123
4 years ago
Reply to  Michael

Smaller businesses need comparable ‘e’ tools to those that the big boys have to level the playing field. Social Media is actually a load of crap in terms of helping a small business connect to their community.

Alf Strijdom
Alf Strijdom
4 years ago

Adapt or die Dick. As an entrepreneur you should be planning your strategy and the changes required to stay on top.

Tony Arena
4 years ago
Reply to  Alf Strijdom

Agree Alf

Nexusfast123
Nexusfast123
4 years ago

They have no plan. Politicians have no idea as to what to do to change the economy and make it more ‘competitive’ The mantra ‘jobs, growth and innovation’ is as hollow as it sounds. All they can do is pander to destructive vested interests that promote ‘financialisation’ and a ‘rentier’ economy (politicians collectively own $300m in property). Running coffee shops and flipping expensive casino chips (houses) really does not have a much future even if a lot of people still believe the debt bandwagon can be kept rolling on forever.

Advansys
4 years ago

Perhaps the unemployed could re-train for digital skills, perhaps not. What are digital skills? The trend is for full automation through the convergence of Artificial Intelligence (AI), Internet of Things (IoT, IIoT), Machine Learning (ML) and robotics (to name a few). This rapid convergence of technologies is likely to displace very many people who will not be in a position or even have sufficient time to adequately retrain for the new ‘digital’ roles which will be created. This will mean lower salaries/wages for the majority, who through necessity will seek the lowest cost goods, which of course can only be delivered by highly automated services from technology driven companies like Amazon. It seems to me this trend is inevitable and cannot be reversed unless there is massive social disruption… which may occur anyway. Interesting times. If you watch one of the latest TED talks, the people who will have the greatest opportunity will be the ones who can work in conjunction with AI driven systems to deliver maximum synergy from human/machine cooperation. Best to start studying now…

Frustrated exporter
Frustrated exporter
4 years ago

They killed manufacturing and say we are in a new economy. They don’t know what it is, they don’t what jobs will come from it and they are not supporting new economy companies such as technology companies.

This is all being driven by public servants who have never worked in business and don’t have a clue.

The rust belt in Australia is growing and we need a Trump rising here.

Dex
Dex
4 years ago

You had me till your last few words. We don’t need another wacko egomaniac in our political system, we’ve got plenty already.

If you want a business brain in the lodge, don’t hope for one who coasted through losing huge slabs of Daddy’s fortune in the process.

Peter John
Peter John
4 years ago
Reply to  Dex

🙂

Tony Arena
4 years ago

Progress is going to continue folks so we better get used to it. The same old worn out arguments were no doubt trotted out during the industrial revolution. “We will have no jobs”, they cried. Well I’ve got news for you. Entrepreneurs like Dick Smith helped make this country what it is today. By coming up with new ideas. And instead of whingeing about it let’s put our heads together and come up with new ideas. Just like we always have. So self drive cars will put Uber drivers out of work. But then they can carry French teachers and ethics teachers if you want. And self drive buses will have tour guides instead of drivers. One door closes and three new ones open.

Michael Ratner
Michael Ratner
4 years ago

10 million? That means they will have to close a few up as they’re nearly at that figure.
Good onya Dick Smith for opening a discussion.Everyone – don’t take it literally. At least it got attention … something even our politicians might relate to.

Michael Ratner
Michael Ratner
4 years ago
Reply to  Michael Ratner

I’m replying to myself. Just a thought…. there must be a lawyer out there that will sue for misrepresentation or something along those lines. Are you getting the message. Political Correctness stands in the way of too many possible intelligent discourses.

Crowd_Sorcerer
Crowd_Sorcerer
4 years ago

It’s sad that Dick Smith is still blaming immigration for traffic congestion. This is nuts.

Motorcars cause congestion. Improving the rail network will relieve it. Migrants have nothing to do with it. Read up on the research of UTS Professor Michelle Zeibots (traffic expert). Whenever Sydney’s western rail line improves its speed, the parallel Parramatta Road also improves, and vice versa. With roads, people will fill whatever capacity is there. Blaming migrants is bonkers.

As for unsustainable lifestyles, it’s not migrants. It’s rich people who fly around in helicopters that emit the most carbon into our atmosphere.

Peter John
Peter John
4 years ago

Most households have no disposable income left after paying their outrageous mortgages in this property bubble. The banks are getting it all. This is hurting small business and retail. I dont see any positives on the horizon. Brace yourself. The next two years are going to be interesting.