July 10, 2002 1:50 PM PDT
Dell PCs coming to a mall near you
The Round Rock, Texas-based company began opening a chain of kiosks in shopping malls throughout its home state this week. The Dell Direct Store Program will sell Dell PCs and related products to customers who are willing to order direct from the company but want first to bang on a keyboard--or literally weigh their notebook options.
"For some folks, it's been that last step--the ability to pick up a laptop or listen to THX sound--that's held them back," said Chris Bates, the program's senior manager.
The effort is part of a bigger push by Dell to expand sales into the consumer market. A few years ago, the company sold PCs mainly to enthusiasts. Now it wants to sell to a much wider range of consumers to increase its market share in the PC market and double revenue over the next few years.
Dell tested two kiosks last year and found them successful enough to expand the initiative. Ultimately, the company will establish 21 kiosks in 7 different markets by the end of next week. Each location will include a number of Dell PCs and peripherals, devices such as digital cameras or printers. Dell employees will be on hand to demonstrate the technology and assist customers, who can order the products online from Dell's Web site via any of the Dell PCs set up at the direct store.
"We've been very pleased with the feedback we've gotten from customers and the (sales) results" from the early kiosks, Bates said.
Analysts said the kiosks are an inexpensive method of reaching customers who might not otherwise buy the company's wares.
"Dell needs to get a retail presence, and this is a good way for them to get it," said Roger Kay, an analyst at IDC. "A manned kiosk will give them a good way to evangelize with minimum overhead."
But other kiosk efforts have met with mixed results. Compaq Computer, Hewlett-Packard and Apple Computer, among other companies, have tried kiosks and "store-within-a-store" promotions. Some of the businesses have said the programs help sales. Some of the initiatives, however, have been quietly shelved.
Apple and Gateway have also opened their own branded stores, where people can test and buy technology. CEO Michael Dell, though, has consistently said that he has little interest in owning retail outlets. Revenue growth in retail tends to plateau after a few years, he has said. His autobiography, "Direct From Dell," is also filled with personal anecdotes about terrible shopping experiences.
Unlike Apple or Gateway stores, or some other in-store promotional vehicles, Dell kiosks will carry no inventory locally.
Although it's unclear how much the kiosks will increase sales, the effort "shows that Dell...realizes the limitations of its business model to reach all consumers," said Steve Baker, analyst with NPD Techworld. "I don't think it has the potential to be a huge opportunity, but it is a decent niche, even if a seasonal niche," Baker said.
Dell will bring the program to Dallas/Fort Worth and Houston, as well as to Raleigh, N.C., and to Orlando, Tampa and Broward County locations in Florida.
If Dell Direct Stores in these locations are deemed successful by the company, it will consider expanding to other areas such as the Northeast or the West, a company representative said. The 21 Dell Direct Stores in place this week will remain in their locations through the holiday season.
Dell's past efforts to reach more consumers have ranged from creating lower-cost desktop and notebook computers to launching its now famous "Steven" television ads. The ads were well enough received that Dell introduced Dudewear, a line of T-shirts, hats and other apparel that sports the now famous television tagline, "Dude, you're getting a Dell." Dell also regularly pitches its products on the QVC shopping network.
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