UPDATED: Dell to open direct stores

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Direct seller Dell Computer Australia has announced a plan to open a series of direct stores, or 'multi-media kiosks' placed in major shopping centres around Sydney and manned by Dell staff.

Under the program -- which was already operating in the US, Japan and Singapore -- Dell is opening its first direct store this weekend at Chatswood Westfield Plaza in Sydney.

The company is also considering rolling out the concept to a "few other locations in Sydney," according to Nicole Gemmell, a spokesperson for Dell Australia.

Dell would evaluate the stores in Sydney and look to launch in other states down the track, according to Gemmell.

Gemmell claimed the stores were a way to "reach out" to first time PC buyers who want to touch the product before they purchase it.

The stores were a complement to the company's online business, which equates for over 60 percent of the company's sales in Australia and New Zealand, she said.

"It's a good complement to the Dell model. We're not going to hold inventory [and] when it comes to the time of purchase, they [the customer] would purchase online. Product would be shipped directly from Dell's manufacturing plant in Penang, Malaysia in seven to 10 days," Gemmell said.

The kiosks will display Dell's Inspiron notebooks and Dimension desktop computers, peripherals, software and service and warranty options. Staff at the kiosks would assist customers order online and custom build-to-order systems. After sales support would then operate via a centralised Dell support helpdesk, Dell said in a statement.

"Dell has tested this approach in markets across the world and received a tremendously positive response from our buyers," said David Miller, managing director at Dell Australia and New Zealand.

"It's way for them to get more comfortable with a new system, experience what a new Dell system will look like in their home and talk to someone about what accessories make the most sense for them," he claimed.

One reseller was up in arms over the move. Rod Stern, owner at Sydney reseller PC Fever, said Dell is "going to kill the whole industry."

"All I can say is beware [of] the direct-sale cancer. What they will do is, they will eventually kill the channel and the people who will suffer will be the consumer," he said.

Stern continued: "There's obviously a strategy at work to put the industry out of business. And once we're gone, guess what the prices will be?" he said.
"It's also part of their overall grand plan. It's an onslaught. This is not part of this marketing strategy -- this is an onslaught," he said.

"A company that spends zillions of dollars on advertising, [a] 36 page colour glossy brochure going to every single business in Australia, every month by post, alone, as well as sending the same thing to every house, as well as full page advertising in magazines and newspapers, as well as TV advertising -- that costs zillions of dollars -- who do you think is paying for that?"

"And then they sell a system with a 21 inch plasma screen for $999 -- what kind of a system do you think you will get?" he said.

Stern also claimed that Dell's competitor Acer "have their eye on Dell's model" and were copying them.

Commenting on the move, Acer's marketing director Raymond Vardanega, said the stores were no big deal. "There's nothing really significant there (regarding the direct-sale model)."

"The experience of the customer at the point of sale is the most important thing to customer. The experience of the customer through a channel partner is undoubtedly more valuable."

"They are able to negotiate specific requirements. There is a level of trust going into purchasing IT equipment. There is a benefit of knowing a person face to face," he said.

He said that a retailer which was trading beside the Dell kiosk might get upset but "business focusing on their value to customers should not be affected," he said.

John Slack-Smith, GM of computers and communications at mass market retailer Harvey Norman, felt that the Dell kiosk concept would be a "blip on the radar" for Australia's computer retailers.

"I don't think it will amount to much. I think their [Dell's] business model will stay in that direct internet/telephone play," he said. "I was aware that they were going down that path," he said.

Between December 2003 and March this year, a Harvey Norman group store in Singapore trialled the "Dell kiosk" concept inside the store. As of 31 March, the company decided not to continue with the trial, Slack-Smith said. "There are no plans to do anything like that in Australia and New Zealand," he said.

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