18/11/2010 - 00:00

Spud Shed’s fresh challenge to the majors

18/11/2010 - 00:00

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THE Galati family business has come a long way since starting a market garden in Spearwood in the 1950s.

THE Galati family business has come a long way since starting a market garden in Spearwood in the 1950s.

The most striking evidence of this is found on the drive into the Jandakot City commercial centre, where the newest Spud Shed supermarket stands out, surrounded by hectares of yet-to-be developed land.

Spud Shed owners, brothers Tony and Vince Galati, grew up helping their Sicilian parents run a 2-hectare market garden.

Through their youthful experiences they learned of the constant struggles farmers experience at the start of the supply chain – lessons repeated in their days as suppliers to major supermarket chains in later years.

The brothers have gradually collected pieces of land (leasing and owning) in Yangebup, Wattleup, Baldivis, Myalup and Manjimup, and started growing to supply vegetables to chain supermarkets such as Coles and Woolworths.

A combination of the hard work they and their co-workers were putting in as farmers, and the feeling that the monetary rewards didn’t reflect this effort, drove the Galatis to open a storefront at the Baldivis farm 12 years ago.

“We are the donkeys working our guts out. I couldn’t understand why farmers did all the work, took all the risks, and depend on what the market is doing that week. The retailers just put their margin on it, that is why it is hard for farmers to survive,” Tony Galati said.

Another driving force in opening the store was the frustration they felt watching perfectly edible produce go to waste when it didn’t meet the major chains’ supply standards.

Watching the huge mark-ups supermarkets placed on produce he supplied added to the dissatisfaction.

Mr Galati wanted to cut out the middle man, the retail giants, and create a retail front for the farms in order to supply inexpensive produce to his consumers and stop conglomerates like Woolworths taking the lion’s share of profits.

“I am kind of rebelling for all the old Europeans because I understand their frustrations,” he said.

Spud Shed now owns just more than 1ha and leases 810ha of farmland and four retail sites in Baldivis, Mandurah, Wanneroo and Jandakot, with plans to extend this with two more sites in the northern and eastern metro area in Perth.

“Our aim is to put food out there for people who really can’t afford to pay the exorbitant prices at the chain stores. Especially when the product they were buying was my product, I knew what I was getting and I knew what they were paying for it. It was just not fair,” Mr Galati said.

The theory behind the Spud Shed’s low prices is up-selling produce, according to Mr Galati. If a broccoli head is just 49 cents, why wouldn’t you buy two? Why not buy four zucchinis for $1, and a five-kilogram bag of potatoes for $4.99?

The Jandakot store is open 24 hours a day, seven days a week and the popularity of Spud Shed is evident when watching the crowds stream into the store to bag bargains.

If challenging the major chains and independents is what the Galati brothers set out to do, then they need no more proof of success than a bus load of IGA representatives stopping in to scope out the competition.

This sort of interest is common, with major supermarket chains constantly in opposition to the budget-barrel prices Spud Shed offers.

Mr Galati is clearly not afraid of coming up against it, though, and responds in true competitive fashion. When IGA recently offered milk at a cut price with the purchase of ‘discounted’ cheese, Spud Shed moved to give milk away for free with a loaf of bread – one-upmanship is the name of the game.

He has big plans for the business and is working on developing poultry and fruit farms to further enable him to bring produce straight from the farm to the consumer.

Challenging the major chains isn’t just about taking on the issues of past migrant generations and ‘sticking it to the man’, Mr Galati’s personal focus is on doing what’s best for his customers.

“The biggest kick I get is walking out in that shop and seeing all the oldies, they can afford to buy a decent broccoli or a decent bit of meat or even groceries,” he said.

And while the Galati story seems to be one of success in competing with the majors, it has not been without its setbacks.

Just over a year ago the original Baldivis store was burned to the ground – the fire resulting from an electrical fault.

Mr Galati and what he refers to as his family – his staff – didn’t let it get them down and rebuilt the store within a month.

“We burned down on September 17 and we were open again on October 17,” he said.

Mr Galati is currently in a legal stoush with the local council over the quicker-than-allowed rebuild, but he is not concerned and said the most important thing was providing good service to his customers.

“We thought we might lose some customers over that month, but on the day we opened we were busier than ever. We support them and they support us.”

 

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