Dell has long been known for selling almost all its consumer PCs sight unseen, many of them, in recent years, over the Internet. Now the company is moving further into the brick-and-mortar world. It plans to open two full-size stores, one in West Nyack, N.Y., and the other in Dallas, in coming months. The units, where customers can browse through Dell products and place orders, are far larger than the 160 small kiosks that Dell already operates in shopping malls.
The openings come as Dell (DELL) tries to reverse a year of disappointing sales and earnings results (see BW Online, 05/19/06, "From Servers to Service: Dell's Makeover"). Meanwhile, Dell's competitors are honing their own consumer marketing: Hewlett-Packard (HPQ) in recent weeks launched its most aggressive advertising campaign, largely targeting consumers (see BW Online, 05/04/06, "HP's Wow Factor").
And Apple Computer (AAPL), which operates more than 100 stores, has just opened a showcase location on Manhattan's Fifth Avenue that resembles a giant cube of glass and features a transparent spiral staircase looming over displays of hundreds of products (see BW Online, 05/18/06, "Apple's New Store is Pure Glass").
Louise Lee, a correspondent in BusinessWeek's Silicon Valley bureau, spoke to Jim Skelding, Dell's director of sales for homes and small businesses, about Dell's newest brick-and-mortar venture. Edited excerpts follow:
Why not just stick with kiosks? There are two restrictions of a kiosk. One, some malls don't allow them. Second, you can't display a lot of products in a 10-foot-by-12-foot kiosk. In a store, you've got a lot more floor space to display products. These stores will be about 3,000 square feet.
What can customers expect to see in the new Dell stores? There'll be a greater customer experience. We plan on showing 30 different product combinations, which will be solution-based, like gaming, home theater, productivity, digital photography, and home office. In a kiosk, you can't show the full usage of products. For instance, you don't have the floor space to see a TV screen from a distance. And with home networking, you need space to show how to set up wireless access points.
Will the stores show products from the recently acquired game-machine maker Alienware? Only Dell products. Alienware is a separate entity.
Can customers expect tech support at these stores? If someone brings in his Dell computer, will he be able to get it fixed? We're still investigating that option. At the very least, we'll facilitate getting the customer to (existing) customer-service call centers.
What do kiosks and stores offer that Dell's e-commerce site can't? There's a subset of customers who want to touch and feel. Some people can't visualize a notebook, or just want to see a TV before they buy. These stores are for that core group. These stores are an extension of the kiosk, just with 25 times more square footage and more products.
How many more stores will Dell open? How about stores outside the U.S.? These stores are a pilot. We haven't discussed expansion further than that. There's no set time frame. I can't speculate on stores outside the U.S.
Running physical stores costs money. Do these stores signal any larger change in how Dell manages costs? I don't think we're changing how we manage costs. And it doesn't change our model, which is a one-to-one relationship with the customer.
What makes Dell's stores different from those of Gateway (GTW), which ended up folding its locations? There'll be no inventory. It's the same sales model as the kiosks. We're build-to-order and ship to you in 7 to 10 days.
Apple's stores are known for cool architecture and design. The new flagship in Manhattan, with its spiral staircases, makes a real brand statement. Is Dell trying to make a statement with its stores? I don't know if they make a statement, other than making the customer experience better. I don't know if there's any hidden message. The stores will show the brand identity, in the Dell blue. It'll be very clean, very spacious, not cluttered. No spiral staircases.
Lee is a correspondent in BusinessWeek's Silicon Valley bureau
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