January 30, 2003 9:00 AM PST

Shopping at Sears? Try a Dell

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Dell Computer is experimenting with a plan to extend its retail kiosks into Sears stores.

The PC manufacturer on Wednesday set up a trial site inside a Sears Roebuck store in Austin, Texas. The kiosk, measuring 10 feet by 12 feet, is a facsimile of the company's kiosk displays used elsewhere in the United States, the company said. Dell isn't traveling far for the experiment. The company is based in Round Rock, a suburb of Austin.

Dell, which is looking to expand sales to consumers in the United States and elsewhere, wants to see whether customers looking at items such as television sets, refrigerators and lawn mowers at Sears might also take the opportunity to peruse a new Dell PC.

"What we want to do is look at the foot traffic in that store," said Venancio Figueroa, a Dell spokesman.

The kiosk displays Dell's desktops, notebooks, PC peripherals and devices such as digital cameras and printers. Dell employees are on hand to demonstrate the technology, answer questions and assist customers in ordering products online from Dell's Web site. Shoppers can order a product online using one of the PCs located at the kiosk or print out a configuration and either call in an order or place it online from home.

Analysts say Dell's Sears kiosk experiment is an inexpensive way for the company to try to reach new demographic groups and to give customers another way to get a hands-on experience with Dell PCs, which are sold directly to customers, not via stores.

"The kiosk is similar to Dell's white-box PC initiative," Brooks Gray, an analyst at Technology Business Research, said referring to Dell's work with mom-and-pop PC makers. "It's another method for reaching an untapped segment...A lot of customers like to look at electronics equipment and test it out. This is a way to fill that requirement."

The kiosk could also expose Dell to a wider audience, said Steve Baker, an analyst at NPDTechworld. Compared with Dell, Sears has a much higher percentage of customers who are women, who are over the age of 55 and whose annual incomes are less than $45,000, according to NPDTechworld.

Through most of last year, women accounted for more than 55 percent of Sears' technology product sales, while just under 40 percent of Dell's sales went to women, according to NPDTechworld survey data.

"Let's not forget that sticking a kiosk in a store is a pretty low-risk strategy for both Dell and for Sears. There aren't a lot of costs either," Baker said.

Dell stressed that the Sears kiosk is an experiment. The company wouldn't say what its plans would be, if the kiosk meets its criteria for success. "It's too soon to say," Figueroa said.

The company's kiosk program in the United States apparently has done well enough. Dell chose to make 57 of its mall kiosks in the United States permanent, year-round operations. They were originally set up as an experiment meant to last through the 2002 holiday season.

Dell, which launched the kiosk program in the United States in July, also has a number of kiosks in Japan and Singapore. In the United States, its kiosks have always been located insides shopping malls, as opposed to inside stores themselves.

After trying out retail sales years ago, Dell avoided establishing a direct presence in stores, but the company has been exploring new ways of using retail and other sales channels to reach customers. For example, Dell has a partnership with club store Costco, which sells Dell PCs via its Web site. Dell also sells PCs via the QVC cable TV channel and through small distributors via its white-box program launched last summer.

Analysts say that Dell is also exploring partnerships with retailers other than Sears, but some, such as electronics retailer Best Buy, see Dell as a competitor and have rebuffed its advances.

 

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