March 1, 2007 4:00 AM PST
Dell's new focus: Don't look back
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The current approach, experimenting with the inventory-free stores, allows Dell to gain experience in retail environments without diving in head first, Bhavnani said. But it runs the risk of turning out like Gateway's experiment with its own retail stores, which also didn't carry inventory and did not end well.
If that's not enough, Dell could follow Apple's lead and open company stores that carry inventory. Not necessarily a lot of inventory, but perhaps products that don't age as quickly as PCs, which tend to turn over every three months in the retail industry, Bhavnani said. This could include digital televisions and smaller items like printer cartridges.
Or Dell could jump into the commercial retail business, fighting for shelf space with Hewlett-Packard, Gateway, Acer and others. This would be a tough way to go, given Dell's lack of experience in this area, but two or three executives from the right PC company might make all the difference. Of course, acquiring the right PC company itself might also make the job easier, an idea that was floated by Sanford C. Bernstein analyst Toni Sacconaghi this week in a research note discussing a potential Dell purchase of Acer.
If it decides to go this route, Dell might find it easier to strike up an exclusive partnership with a retailer like Costco or Radio Shack. This would prevent it from having to slug it out with its competitors, but still give it a prominent place to showcase its products. Dell already has a relationship with Costco dating back to 2005, when it used certain Costco stores to rid itself of outdated components, Bhavnani said.
A retail strategy would also give Dell a local place for customers to go with support problems or questions. Dell has taken many steps to improve its customer service operation after finally realizing that customers were fed up with poor support, but some people find it easier to seek help in person or just drop off their PC for repairs, Bhavnani said.
In the midst of all the turmoil at the company, Dell has shown a willingness to listen to new ideas. It launched a new
Still, don't expect Dell to radically change overnight. The company has invested a lot of time and money in its direct model and manufacturing strategy, and can't abandon either just yet. But mixing in the right combination of changes could breathe life back into a company that, despite all its problems, is still expected to post a healthy profit for 2006.
"The point is that there are no sacred cows," Kay said. "(They're) not just going to insist that the model is great. The model should be a living, breathing thing."
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