Australia’s rollercoaster love affair with fancy grocers

IT’S the hoity-toity alternative to your local store and now the $20 million gourmet grocer is getting the boot. Could it be the $38 honey?

About Life store manager Pam Branagan at the companys shop in Rozelle, Sydney.

IT’S the upmarket alternative to Coles, Woolies and Aldi, where a bottle of “artisan water” will set you back $5.

But with $20 million chain Thomas Dux dying a slow death, are we falling out of love with gourmet grocers?

Owner Woolworths this week announced the closure of three of the chain’s Sydney stores and its Port Melbourne outlet, following a series of shutdowns that suggest it is gradually letting the leases run out.

Critics have attacked the high prices and mediocre products on sale at ‘The Dux’, with $17 organic cereal and $9 packets of biodynamic lentils not appearing on the typical shopping list for Aussies reining in their spending.

Thomas Dux in Sydney’s Paddington is currently selling $38 jars of honey, $34 packets of chia seeds, $18 tins of loose-leaf tea and $10 ‘Barossa bark’ (100g of crackers). You can purchase $13 spelt flour, $14 choc chip cookies and vital gadgets including a ‘coconut opener’.

That may sound a little crazy, but shoppers are still furious at losing it.

The chain appears to have lost its sheen, with customers complaining about poor quality produce and prices as three more closures are announced. Picture: Adam Ward

About Life, which is taking over the three stores in Sydney and Melbourne, offers self-serve counters, a cafe and seating.

“I can’t believe you are closing both Crows Nest and Lane Cove,” wrote Amy Brittain on the chain’s Facebook page. “Your store in Crows Nest is part of the reason I live in the area and every time I go has a queue for the register it’s so busy. Not impressed, Woolworths.”

Giulia George said she was “devastated” at the closure. “I shop there practically every day — it’s such a convenient shopping destination with a great range of products. Will especially miss the deli section as there is nothing comparable in the main Lane Cove shopping precinct.”

It appears the market for organic wholefoods is still there.

Thomas Dux’s Lane Cove, Crows Nest and Port Melbourne outlets will be replaced by health and wholefood store About Life.

A spokeswoman for About Life told news.com.au: “All stores are expected to open around May/June this year. We are very excited about our expansion, especially our entry into the Melbourne market.”

So why is a shop that began as a small juice bar and cafe in Sydney’s inner west outshining a store linked with one of Australia’s biggest supermarket giants?

Honey reaches almost $40 at Thomas Dux.

Lentils are $9.

Battered boxes of “superfood” cereal reach $17 at the Paddington store.

LOCAL BUT FRESH

“I love the variety of foods, the flowers are good quality, and I’m a coeliac so I buy the gluten-free products,” customer Sally Sweeney told news.com.au as she left Thomas Dux’s Paddington store. “It’s local but fresh. I think it’s more expensive at 7-Eleven than an organic supermarket.”

She said she would be “disappointed” if the store closed, because “it’s a real landmark”.

But the teacher and health educator admitted: “I wouldn’t do my weekly shop here. I normally shop at Coles and do a bit at Woolworths.”

With Australians increasingly buying groceries “little and often” instead of doing one big weekly shop, Thomas Dux should be benefiting — but not if it’s failing to offer reliably better quality produce to the big supermarkets.

Customers have complained online about paying “$8 for a small salad that doesn’t taste particularly nice” (at the Paddington branch) and “$6 for a limp and dead organic kale” (at the now-closed Richmond store).

It seems that Australians will pay for pricier, organic food, but wholefood stores need to offer an experience that’s worth the trip and the extra money.

About Life focuses on self-serve, mix-and-match everything.

And gets away with $4 jars of celery water.

A probiotic drink for $28.

UNDER ONE ROOF

The main reason for Thomas Dux’s demise is that Woolies has little other option as it seeks to cut costs after profits fell 12.5 per cent to $2.15 billion last year.

Losses at its Masters hardware chain plus fierce competition from discount supermarket Aldi left the supermarket forced to look for radical solutions.

Kirsten Lee from Moody’s Investor Services told news.com.au that “Thomas Dux is a small percentage of the Woolworths entity, there are broader issues.”

Geoff Dart from DGC Advisory told news.com.au: “Thomas Dux has struggled for a while. It’s largely because the store is too big for what it’s trying to do. It’s a deli but it’s a supermarket.

“Woolworths owning it is a problem. You look at the shelves, it’s out of stock of some things, it hasn’t embraced lactose-free products. It’s more like a section in a supermarket.

“I think the offer’s confusing, consumers are struggling to see the point of difference.

“Especially when you have children, big supermarkets have a role to play, but there’s a growing number of people looking for organic, healthy, lifestyle products readily available at a good price.”

The gourmet grocer said in a statement: “The Thomas Dux business has been trading since 2008 and while our stores are a fantastic destination to shop and visit, there a number of locations that are providing a poor trading environment for us to continue to operate successfully in.

“The Thomas Dux range will continue to be available at our remaining stores and the business is also trialling a limited Thomas Dux range in a number of our new metro (Woolworths) stores.”

Not only is Woolworths looking at bringing its upmarket brand into its other outlets, it’s also planning to expand its range of gourmet ready meals, taking inspiration from the success of UK chains including Marks and Spencer, Waitrose and Tesco.

“We’ll be competing not just with [other] supermarkets but with quick-service restaurants,” Woolworths chairman Gordon Cairns said.

Woolies is already making headway with its Jamie Oliver and Michelle Bridges ranges, and this year partnered with food processing company Beak and Johnston to set up a dedicated ‘City Kitchen’ in western Sydney employing more than 250 people to produce ready-to-cook and ready-to-heat meals.

Time-poor Australians are increasingly discerning in where they buy food and what they want from the experience.

HOLISTIC EXPERIENCE

There’s still room for small food stores with a focus on fresh, organic and healthy produce in Australia. But Thomas Dux has failed in a thrive-or-die landscape, where in-house chefs whip up pastries and lunches at Jones the Grocer; gourmet store Maloneys offers delivery and IGA recently unveiled baristas, “cheese masters”, a dining area and a perfume counter.

While About Life is still a small chain, it’s worth looking at why it is expanding as ‘The Dux’ collapses.

The health food shop is particularly popular for its self-serve salad, pasta and antipasto counters along with its cafe area with baristas and seating.

Everything is self-serve, from trail mix and loose leaf tea to frozen vegetables and bath salts.

Wayne McDaniel, a customer at About Life in Surry Hills, told news.com.au: “I usually pop in for a salad, or a green tea. It’s easy.

“You can mix and match, it gives people choice. Sometimes I just want fruit salad, sometimes granola.

“It’s good food, good price and a good space. I’m a big guy, I like space.”

The voiceover artist from Earlwood visits for the healthy, organic takeaway food and the fruit and vegetables, shopping at Coles and Woolies for other items and using his friend’s delivery service Doorstep Organics.

He said the store reminds him of Wholefoods in the US, only it offers more fresh produce at the front of the store.

It’s the world-class, high-quality shopping experience for which the modern Australian customer is willing to pay more.