Dell to Test Retail Stores
By George Anderson
Slowing sales at its consumer direct business along with success selling through 160 free-standing kiosks in malls has encouraged Dell to take the next step. The computer and electronics company will test a retail store concept with two mall stores this summer.
The company said it remains firmly committed to its direct sales model where consumers purchase product online or over the phone. According to company spokesperson Venancio Figueroa, the move to stores is a natural progression from the kiosk model that Dell has been using since 1994.
Dell moves into its retail store test having lost market share in the personal computer business for the first time since 1989, according to Gartner.
Cindy Shaw, an analyst with Moors & Cabot Capital Markets, told The New York Times, Dell’s retail stores will appeal to consumers and small businesses. Those groups, said Ms. Shaw, represent about 20 percent of Dell’s sales.
Dell has chosen the NorthPark Center mall in Dallas and the Palisades Center in West Nyack, N.Y. to test its first stores. The stores, each with a footprint of about 3,000 square feet, will have products on display for consumers to evaluate. No actual inventory will be kept on hand. Instead, consumers will select the items they want and fulfillment will be handled the same as it is now done through Dell’s other sales channels.
This is not the first time the company has sold its products through retail outlets. The company previously abandoned distribution through Best Buy, Costco and Sam’s Club because of lower margins associated with having products sold through an intermediary.
Ms. Shaw has reservations about the Dell mall store model for similar reasons. She said the company will have to staff stores and “it is not clear to us how cost-effective Dell’s stores might be for build-to-order.”
Moderator’s Comment: What do you see as the pros and cons of Dell operating its own retail stores? What will it take for the company to be successful?
– George Anderson – Moderator