Dell to Open Storefronts in Dallas, New York StateBy John G. Spooner | Posted 2006-05-23 Email Print
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Despite its continued commitment to the direct model, Dell is opening a pair of stores to extend its reach to consumers and small-business buyers.Dell is opening a pair of storefronts this summer and fall, in Dallas and West Nyack, N.Y., as part of a pilot program to extend outreach to consumer and small-business buyers, the company confirmed May 23.
But the outlets will carry no inventory and no service components, leaving the direct model king, the PC and hardware manufacturer said.
Dell, based in Round Rock, Texas, characterized the move as an extension of the network of kiosks at 161 malls, where customers can review products, but must purchase online, either at the stores or at home, said Jess Blackburn, a Dell corporate spokesperson.
Analysts are speculating about what the move means to Dell's commitment to the direct model.
"In our view, these pilots raise questions about Dell's confidence in the direct model," wrote Cindy Shaw, a hardware analyst at Moors and Cabot, in Boston. "We view Dell's store pilots as either an acknowledgment that retail matters in some segments and/or a signal management will try anything that might stimulate revenue. We continue to believe many of Dell's less established markets, particularly high-growth emerging markets, favor retail."
"It makes sense. Right now, the channel and the consumer market are experiencing a lot of growth that Dell has been boxed out of" given its direct sales model, said Richard Shim, an analyst at IDC, in San Mateo, Calif.
Meanwhile, "Dell's in a position where it's not growing as much. So Dell's in a position where it's going to want to study this," Shim said. In that respect, "It's also a validation [of retail]. It's a significant channel. It's not going away."
Shim suggested that Dell might be using the pilot as a research portal, gathering data on foot traffic and buying habits.
The move may be a boon to VARs, who would likely benefit from increased exposure to small business owners, said Steve Baker, an analyst at NPD Group, in Port Washington, N.Y.. If you're a VAR selling anything, better visibility is better for you, especially when you're not the one paying for it.