Does Dell Need Its Own Retail Chain?

from the just-say-no dept

For a long time, Dell's direct sales approach was considered to be far superior to its competitors' retail strategy, as the company was able to tightly manage its inventory and keep costs low. But as laptop sales started to grow in importance, the direct sales model started to lose its luster. Suddenly, it became a disadvantage that Dell customers couldn't go into a store and and actually see and touch a product before they bought it. Thus, companies like HP and Apple, which had considerable retail presence, were able to take market share away from the onetime leader. For the most part, Dell has stuck to its guns, but it has made a few timid attempts to sell through retail channels. These efforts haven't accomplished a whole lot though, so there continues to be a lot of pressure on the company to come up with a serious retail strategy. An article in BusinessWeek suggests that Dell could solve its problems by buying tired electronics retailer Radio Shack, which it could use as as a direct outlet. While this would, in theory, give the company an instant retail presence, it would create a lot of new headaches for the company. The obvious problem is that the company has no experience running a nationwide retail chain, and it's safe to assume that the integration would create some major problems. Also, it's important to consider the customer experience. Radio Shacks are nice when you're in a pinch and need some new cable, but the small, dingy stores don't make for a nice environment for more serious electronics shopping; on this measure, it's easy to see why Best Buy has done a lot better over the years. At this point, making a purchase like this and becoming a big, vertically integrated distributor would be the equivalent of a premature Hail Mary. For some history on this, they should take a look at Gateway's frustrating experience as a retailer. At this point, more incremental changes, like improving its product image and getting more shelf space at big retailers, would make more sense. As for Radio Shack, when even The Onion sees you as a target, you know things have gotten ugly.


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  1.  
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    Chronno S. Trigger, May 4th, 2007 @ 3:00pm

    May be a good change.

    Since Radio Shack started moving away from selling the small obscure electronic components and more towards the audio/video side, it's gone downhill. I never go in there any more. Maybe this will be good for them. It's about time for a change.

    The link for "tired electronics retailer Radio Shack" has an extra Http://

     

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  2.  
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    Disguy, May 4th, 2007 @ 3:14pm

    srsly

    Every time Short Circuit is played on tv people feel the overwhelming nostalgia and head to their local Radio Shack. You cant beat Johnny 5 and Steve Gutenberg aka The Guch.

    pshew! pshew! chacow!

     

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  3.  
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    Beefcake, May 4th, 2007 @ 3:32pm

    Small and Dingy

    Sure, size matters in many aspects of life, but one place it doesn't is targeted retail. Radio Shack takes a small space and fills it with as much cheap inventory as possible. But look at the Apple stores-- roughly same size as a Radio Shack, but with no confining ceiling-height racks they're much more pleasant. Apple sells fewer and higher-cost, targeted items so doesn't need to fill every cubic inch with cheap merchandise. It wouldn't take much for Dell to update the stores. Dell would also probably shut down most of the stores and focus on bringing the rest into the 21st century.

    Couple that with the idea that Dell would also be buying the retail institutional knowledge and infrastructure, and on the surface it seems like a decent idea to me. But I'm just some guy, you know?

     

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  4.  
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    Steevo, May 4th, 2007 @ 4:46pm

    Radio Shack is likely highly profitable

    Radio Shack? Moribund?

    I just looked up RSH, Radio Shack's stock symbol and they seem to be doing fine. Stock up 50% in the last few months!

    Don't feel sorry for Radio Shack. Their method of doing business is absolute genius.
    They have 7500 stores. So many stores they can't even visit them all once a month.
    They have managers in each store, and their business is set up so the manager is nearly in business for himself.
    If he has inadequate sales for his stock level (or he orders too much) they will adjust the amount of stock he is floored for. He is charged interest for the excess.
    So it affects the manager's bonus if he has to much stock, too little sales, etc. Directly.

    It's one way to make an employee keep the company's interests in mind, and it works great for Radio Shack. It's brilliant. The whole thing is genius.

    Not that Dell might not benefit from a deal with Radio Shack, they might. But I think Dell needs RS more than the other way around.

    But Dell is used to keeping the retailer's markup for themselves. If they had retail sales they would have to leave some margin for the retailer, something they haven't ever done.

    Less profitable for Dell, for sure.

     

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  5.  
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    sam, May 4th, 2007 @ 5:08pm

    hey...

    i've often wondered why someone hasn't started a chain of electronic stores, that were essentially geared towards demonstrating/trying out equipment...

    allow people to come in at their leisure, show them how to setup different systems, let people really get their hands into understanding/using the systems, etc..

    the whole thing is funded by the companies of the products you're demonstrating, as well as online purchases...

    if you made it clean, well run, with seriously intelligent people, you'd probably have a nice business...

     

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  6.  
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    juan Manuel Handal, May 4th, 2007 @ 5:30pm

    Re: Dell

    yes, such a store exists, its called the Apple Store

     

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  7.  
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    Jonathan Orlev, May 5th, 2007 @ 12:16am

    Maybe Dell should use some videos in it's site?

    Maybe, instead of just showing the products via static web pages and some pictures, Dell should produce detailed videos/selling shows (somewhat like in shopping TV networks) that demonstrate the products?

    This will allow users to experience the look and feel of the laptops, even if not from first hand.

    I don't know how effective it will be, and you also need a computer to watch them in the first place, but since so many people already own a desktop and/or laptop (which the upgrade from time to time), and since producing such videos/tv shows costs much less then distributing to stores, I think it worth trying.

     

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  8.  
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    Stu, May 5th, 2007 @ 8:05am

    I gave up on going to RS 15+ yrs ago because the people there knew NOTHING about ANYTHING. I swear - if I asked them what time it was, they'd tell me the year - and it would be wrong.

    I've been doing business with Dell since 1987 when it was still called "PCs Limited". I hope they stay away from RS.

    Dell has kiosks in malls where you can get a demo, ask questions and place an order. They should increase their exposure that way, and via TV ads. With Dell's fast shipping times, it should work out well.

    For the most part, PCs have become commodities - until you need service.

    The problem in evaluating tech support is that people are already annoyed because they are having problems. The only thing we hear about are the bad experiences. From what I read and hear, Dell, Lenovo and Apple still provide the best tech support.

    I'm an IT manager, and deal with Dell tech support. Although dealing with India can sometimes be annoying (too rigid adherence to scripts), I'm usually well satisfied. Dell support from the USA, Panama and other places is outstanding.

    Getting a new customer is expensive, no matter how it is done. Selling the person again is the gravy. That requires good tech and customer support.

     

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  9.  
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    rEdEyEz, May 5th, 2007 @ 11:27am

    Resurgence of the Zilog Z80!

    Bring back the Tandy TRS-80! YES!!!
    http://en.wikipedia.org/wiki/TRS-80

    ...Tandy XPS?

    Put a Dell logo on it, and WE'RE GOOD TO GO!

     

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  10.  
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    Beck, May 5th, 2007 @ 7:14pm

    Immediate Need

    My laptop died. I need it for work. Had to go to a store and buy a new one. At a store I can walk out the door with a new computer. Can't do that with Dell. I can't afford to stop working while waiting for Dell to build and deliver a new PC.

     

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    JJ, May 5th, 2007 @ 10:24pm

    Many have failed at this

    One of the biggest hurdles is customization. If they dont allow for customizations, then i would rather purchase online. They really need to get that down in the retail stores.

    Gateway tried this but failed. I believe it was Gateway's downfall. (they have been bought out by emachines since).

     

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  12.  
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    Will, May 6th, 2007 @ 9:12am

    RS at the beach

    There's this little grocery/hardware store in Crystal Beach, TX, about an hour closest to the next largest town, Galveston. Imagine my shock and awe when I went there to get a 12 pack of Corona and found a RadioShack nestled next to the giftware department, ready to sell me a HDTV and a satellite dish. I can't imagine this little place selling but one or two PCs every 2 years . . .hell, you can't even get broadband down there yet. That's why I have a beach house down there - to get away from technology.

     

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  13.  
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    Craig Borysowich, May 7th, 2007 @ 12:55pm

    Don't they have retail already?!?

    I thought that Dell's retail presence already existed in the form of Costco. The sell ready-to-go PCs and Laptops from Dell all the time.

    Sure, there is nobody to help you or answer questions...

     

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  14.  
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    steven, May 12th, 2007 @ 8:50pm

    for a first time computer buyer it is much easier to go to a store and pick it up and go home. Instead of having to upgrade it they can ship them with various levels of upgrade ready to go right out of the box.

     

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  15.  
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    Missy, May 13th, 2007 @ 8:12am

    What Dell WILL do if they go into Big Box stores is give up even more profitiable direct sales and have profits cut more.

    What DELL needs to do is to hook up with 2-3 other computer makers and establish computer stores that range from the high to low end.

     

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  16.  
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    miagale, Jul 13th, 2010 @ 2:56am

    Dell Support

    yes , Dell needs its own retail chain but talk about Radio Shack it has gone to downfall, may this will do good for them.
    It would be easier for consumer to go to store and pick the computer.

     

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