May 23, 2006 3:39 PM PDT

Dell to try branded stores--sans inventory

Dell plans to open two stores this year, but has no plans to abandon its direct-sales model, a company representative said Tuesday.

The first store will open in Dallas' NorthPark Center, while the second is destined for the Palisades Center in West Nyack, N.Y. Neither store will carry inventory. Rather, the shops will allow customers to order products through Dell's Web site after trying out the display models, said Venancio Figueroa, a Dell spokesman.

Prototype of Dell store

Dell has been experimenting with kiosks inside retail shopping malls, and within Sears stores, for a few years. One of the problems with Dell's famous direct-sales model is that consumers don't get to see and handle products before they buy. The kiosks provided a partial solution to that problem, but the kiosks can't hold much more than a few items.

The 3,000-square-foot stores will allow Dell to set up a mock living room full of its products, where customers can learn more about PCs, digital televisions and other electronic equipment, Figueroa said.

Dell says it's making money from its kiosks, so extending the concept to larger stores makes sense, said Stephen Baker, an analyst with NPD Techworld. "They still control everything. The essence of being direct is that I control the entire transaction set with the customer," he said.

Dell's stores should do better than Gateway's defunct retail operations, because Dell is focusing on high-traffic upscale shopping malls, whereas Gateway built its many of its stores in strip malls. Dell, however, will be going head-to-head with Apple Computer stores in the same facilities in both Texas and New York. "It has to be a real high-quality experience in there" to compete against the meticulously planned Apple shops, Baker said.

The Dallas store is expected to open in July, according to NorthPark Center's Web site. The New York store will be the second to open, Figueroa said.

Dell's once-rapid growth has slowed in recent quarters, especially among U.S. consumers. Last week the company said it plans to spend $100 million to improve the service and support of its products.

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41 comments

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Ironic
Hmmm...Micheal Dell once said that the best thing Apple can do was to close-shop and return an investor's money (this was before Steve Jobs and the iPod). Funny, that today his eating his words and is even copying the competition...

...btw, I have a Dell.
Posted by dquiec (7 comments )
Reply Link Flag
Agreed
Yes, it is very funny to see the entire industry reorganizing itself.

Now Dell Copies the Apple Model.

So does Microsoft.

Wow.

. . . by the way, I have a Dell too, and a few Apples . . .
Posted by dansterpower (2511 comments )
Link Flag
The problem is...
...he's not copying the competition. 3000 square feet of retail space and you can't walk out with any merchandise? Lame idea.
Posted by J_Satch (571 comments )
Link Flag
Will They Bring In Sales Staff From India?
After all, the inability to communicate in American-English is a hallmark of Dell. :-)
Posted by john55440 (1020 comments )
Reply Link Flag
You Mean Robots Controlled by Staff in India?
Its cheaper that way... at least living expenses are lower there.
Posted by shawnlin (75 comments )
Link Flag
awesome lol
that was probably one of the funniest and wittiest posts I have read in a well, and I agree 100%.
Posted by talus7 (15 comments )
Link Flag
Would be Nightmare on Dell street
"ex-cuse-me-sir-would-you-like-to-try-a-dell-com-pu-ter-with-an-in-tel-pen-ti-um-pro-cess-or-and-two-hun-dred-and-fif-ty-six-meg-a-bytes-of-ram?
Posted by Seaspray0 (9714 comments )
Link Flag
Would be Nightmare on Dell street (readable)
"ex cuse me sir would you like to try a dell com pu ter with an in tel pen ti um four pro cess or and two hun dred and fif ty six meg a bytes of ram?
Posted by Seaspray0 (9714 comments )
Link Flag
Success is its own argument
So, I'm not surprised to see Dell try retail locations like Apple has.
But, its stores will have to meet the same standards, particularly if
they are located in the same malls as Apple Stores. If they don't, a
direct comparison will actually be bad publicity for Dell. A person
somewhat interested in buying a computer will stop at both
computer stores in a mall. Dell had better be on its toes.
Posted by J.G. (837 comments )
Reply Link Flag
They are just like every pc maker now
They have turned into every other major pc maker. It seems like they are going the route of gateway maybe with the same results..
Posted by Pushrod (6 comments )
Reply Link Flag
not quite...
...they're worse now moreso than Dell's ever been in the past which has varied between being rotten outright con-artists at worst upto lousy suppliers of overpriced and carefully engineered *planned obsolesant* hardware at best
Posted by i_made_this (302 comments )
Link Flag
What other PC co's have boutique stores??
"Like every other" - whatever do you mean?

Gateway's stores closed. Apple's stores are going gangbusters, with more stores opening up everyday.
Posted by technewsjunkie (1265 comments )
Link Flag
This is the sound of Steve Jobs laughing
Even with the Dell stores in the same malls as Apple stores... Dell might have a leg up with a decently trained staff based on the price issue. Even Apple purests have to admit an Apple is more expensive. But noticed I said trained staff... odds that will happen are slim, no profit margin in satisfying customers in the PC market.
Posted by akbar_or_jeff (14 comments )
Reply Link Flag
?
when is the last time anyone got excited about a dell? by saying
they might have a leg up, you discount why apple is so succesful in
retailing. great products, great staff, and a great atmosphere. i'd be
surprised if Dell has anyone who can pull that off.

i'm puzzled why you had to say that macs cost more than pc's.
sure, barebones cost, you might be right. but everyone knows it's
the software.
Posted by regan2 (29 comments )
Link Flag
Not quite...
Steve won't be laughing until he's making 50 billion a year like Dell does.
Posted by Betty Roper (121 comments )
Link Flag
Gateway Stores anyone?
Was Dell asleep during the great Gateway debacle?

Customers (US anyway) are impulse buyers. This will be an even bigger flop than Gateway.

Are there any places you can bet on this flopping? I need to put some cash to work for me.
Posted by Jim Hubbard (326 comments )
Reply Link Flag
Yes Bet on Stocks
Yes,

You can bet in the Stock Market.

And I agree. Dell is about to enter a steep dive downward.
Posted by dansterpower (2511 comments )
Link Flag
re:
Did the Gateway stores close because of failure or because they bought eMachines and needed to cut costs?
Posted by darrius3365 (98 comments )
Link Flag
Dell never got accused of vision
Dell being the company they are are not burdened with the onerous
task of having to come up with an original thought. Hey Gateway
hows that store thing working out?
Posted by groyal (45 comments )
Reply Link Flag
actually...
Dell became the company they are today because they had an original thought...their supply chain and sales model.

they just haven't had another one since then...
Posted by bob blob (118 comments )
Link Flag
Dell is like the Volvo of PCs
Dell - we are boxy and we are safe.
Posted by groyal (45 comments )
Reply Link Flag
Message has been deleted.
Posted by Stalin Hornsby (60 comments )
Link Flag
What a lousy buying experience!
What exactly will bring them to the store if they can't walk home
with a computer anyway? This has to be the dumbest idea. How
can the store be profitable? That's going to be a tough battle
when they could walk home with that MacBook a few stores
down - Today.
Posted by jwmoreland (48 comments )
Reply Link Flag
Huh?
How can touching the product be a lousy buying experience? The article says that the Kiosks are profitable. And what is 'a lousy buying experience' is finding out after you bought the MacBook that it can't do what you want to do!
Posted by kquickkquick (21 comments )
Link Flag
What's that smell?
Oh . . . a Dell!
Posted by James P. Larsen (28 comments )
Reply Link Flag
they should open up in the DC metro area first
Of course they will do better than gateway.
Gateway lost due to low quality parts being used.

DELL workstations are the best whereas compaq/gateway uses the worst hard drives ever imagined. I like the one study that part per million gateway/compaq had hard drive failure rates at 100,000 per million VS IBM 10,000

you can bet within 6 months the hard drive of gate way will reduce in speed and suffer data loss within 6 to 10 months to top it off my company broke off the contract with compaq due to their high failure rate on NEW COMPUTERS bought from them in bulk. never deal with gateway or compaq
Posted by inachu (963 comments )
Reply Link Flag
THE GATEWAY MISTAKE!
Didn't getway do this in the 90's? It did not work for them? Why Dell? People want a quick fix, they want there systems! If this is going to work, they need to stock inventory!
Posted by albert3167 (1 comment )
Reply Link Flag
No Inventory - Why Bother?
Home computer shoppers can go down to Best Buy or Circuit City or CompUSA, and have an HP computer in their hands the same day.

Why would they want to go to a bricks-and-mortar store, and leave empty handed?

Dell may know business computer buyers, but when it comes to the needs of home computer buyers/users, they are clueless. I bought one Dell computer - never again. (Currenty using a 2002 HP computer.)
Posted by john55440 (1020 comments )
Reply Link Flag
EXACTLY!
This is probably the dumbest thing Dell will ever attempt.

Speaking of BestBuy et al, why the hell doesn't Dell sell through them? They could have product readily available to consumers without paying for empty retail space.
Posted by J_Satch (571 comments )
Link Flag
It could be an interesting move...
Done correctly, Dell enters a new PC channel that is urban /high density /high wealth /tactile. Apple has done well opening up this retail consumer path to market. For Apple they have also succeeded in sustaining high market volume growth while sustaining higher ASPs(people pay for that fab look/feel/Brand). Apple has opened a great path to market here! Dell should (has to) try to compete here. If they did it correctly; plush stores, trained staff, comfortable retail interfaces (tactile/human & transactional), including a plan to get paid for the cost of the retail experience, this could drive direct sales, or more importantly, overall sales back into the direct order channel(assuming retail Dell gets credit for any coincidential direct sales Biz growth). Their success here can be even better if all this coincides with the launch of a cool new set of consumer form factors (NB T&L/Mini, DT SFF, Cube, etc). The big two (PC-CE devices)had to eventually meet each other from their relative market directions; Dell (EoS, SOM), Apple (Style, Brand, High Margin). They could also position retail in cool ways (store look/feel/lighting), telling people that they could save more money by going home and doing it themselves, but they prefer the customers stay and let "us" do this together. Offer shipping/explanations/installation packages (outsourced)with appointment like timing (tonight/tomorrow/next day - we'll get it there fast!!). Overall, the PC market is growing fast but also dealing with consolidation and ASP decline (mature market dynamics). However, still a lot of milk left in this cow.....
Posted by reger001 (1 comment )
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