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.