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.

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Does Dell Need Its Own Retail Chain?”

Subscribe: RSS Leave a comment
Chronno S. Trigger says:

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://

Beefcake says:

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?

Steevo (profile) says:

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.

sam says:


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…

Jonathan Orlev says:

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.

Stu says:

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.

Will says:

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.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...