January 31, 2008
Dell Focuses on Retail Stores, Closes Mall Kiosks
Dell Computer has decided to get out of displaying its products in kiosks located at malls in favor of promoting its business in retail chain stores.
The company, which originally launched its kiosks back in 2002 to help its consumer direct business, has moved its products into Wal-Mart, Best Buy and Staples in the U.S. while striking up relationships with a wide range of retailers in other parts of the world including Carrefour and Tesco.
Tim Bajarin, a technology consultant, said the 140 kiosks operated by Dell were limited in their ability to affect sales because consumers were not able to purchase a computer at the mall site. Orders had to be placed with Dell, according to its consumer direct model.
“This was a minor attempt to get Dell products in front of customers,” he told The Associated Press. “Dell missed the real trend in retail, and is having to play catch-up.”
Bob Kaufman, a Dell spokesperson, told the news service that the kiosks “were very good for the business at the time, and now we’re moving into a variety of retail outlets. This is clearly an instance of Dell listening to customers.”
Tony Weiss, vice president for Dell’s global consumer business, said, “Ever since we began our journey into retail, we wanted to give customers the opportunity to call, click, or visit Dell and have access to our award-winning products. This move fits in with how our broad global retail strategy is evolving.”
Discussion Questions: What is your reaction to Dell’s decision to close its mall kiosks? What is your assessment of how Dell operated the kiosks? Do you see mall kiosks as an effective means for retailers and manufacturers not normally in malls to increase visibility and drive sales?
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Worth remembering here: Dell also has tested an in-line mall store, with considerable resemblance to the Apple or Bose stores. This unit has posted Apple-like numbers and so has not been closed (a source informs). So, even though Dell has folded up its kiosks and cultivated distribution deals with Best Buy and Wal-Mart, it may not be completely abandoning retailing under its own banner.
The Dell kiosks will rank as a noble experiment, in my opinion, marked by an innovative design and business model. However, we may also now consider that they were a transitional step toward multi-channel selling. They introduced the Dell brand to many shoppers who might never have gone online to shop. In the process, they helped Dell to shift its positioning from geeks-only to mainstream player.
One question I’d like to see answered in more detail: How will Dell manage the latency in its supply chain required when it loads finished stock into hundreds of retail outlets? In that scenario, just-in-time manufacturing has a whole different meaning compared with build-to-order. This portends a profound adjustment to Dell’s business model.
This is actually a very interesting development and very positive for traditional retail. It may have come as a result of some of Dell’s new retail partners suggesting having a competing retail channel was not good for the relationship or strategy.
I say interesting because in theory, the idea makes a lot of sense–a complex, configurable product is ordered with the help of an expert at the kiosk, who sends the order for the factor to assemble and have it delivered in a few days. Most of the product is there to see and touch, unlike the web, even if you can’t take one home that day.
The downside, of course, from a consumer perspective is that they can’t compare across brands. Maybe that, in the end, is really just the killer.
The kiosks might have been useful to Dell as a way to drive traffic to its website when 100% of its sales were being conducted over the Web. But clearly there has been a major strategic change at Dell, embracing more traditional retail channels as a way to regain its momentum and market share. I doubt that the customer service experience at a mall kiosk would be consistent with what the consumer expects when buying even a low-end laptop or system. Think about the Apple Store shopping experience, or even the expertise offered by a big-box retailer, as a more credible option.
Mall kiosks are good avenues for retailers to brand their products. By limiting it to only within general stores, the products may be lost amidst all other products that have not branded themselves.
Moreover, mall kiosks will also enable retailers to test consumers’ response of new products that they may introduce into the market.
This is a no-brainer. And, with Apple ringing up a published $4000+ per square foot, you have to wonder what took them so long. It’s also a missing consumer proposition…there’s the “Mac” guy and the “PC” guy, right? Where does poor Mr PC shop? Up till now, it’s on line or Best Buy…is that fair? Time to extend that brand, Mr. Dell!
For brand building as well as direct sales, mall kiosks are often terrific vehicles. It boils down to the financial results. The proliferation of cell phone kiosks proves the value for that industry. I saw a Benjamin Moore sampling kiosk (they don’t sell gallons, just samples) which seems like a branding-building exercise.
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Worth remembering here: Dell also has tested an in-line mall store, with considerable resemblance to the Apple or Bose stores. This unit has posted Apple-like numbers and so has not been closed (a source informs). So, even though Dell has folded up its kiosks and cultivated distribution deals with Best Buy and Wal-Mart, it may not be completely abandoning retailing under its own banner.
The Dell kiosks will rank as a noble experiment, in my opinion, marked by an innovative design and business model. However, we may also now consider that they were a transitional step toward multi-channel selling. They introduced the Dell brand to many shoppers who might never have gone online to shop. In the process, they helped Dell to shift its positioning from geeks-only to mainstream player.
One question I’d like to see answered in more detail: How will Dell manage the latency in its supply chain required when it loads finished stock into hundreds of retail outlets? In that scenario, just-in-time manufacturing has a whole different meaning compared with build-to-order. This portends a profound adjustment to Dell’s business model.
This is actually a very interesting development and very positive for traditional retail. It may have come as a result of some of Dell’s new retail partners suggesting having a competing retail channel was not good for the relationship or strategy.
I say interesting because in theory, the idea makes a lot of sense–a complex, configurable product is ordered with the help of an expert at the kiosk, who sends the order for the factor to assemble and have it delivered in a few days. Most of the product is there to see and touch, unlike the web, even if you can’t take one home that day.
The downside, of course, from a consumer perspective is that they can’t compare across brands. Maybe that, in the end, is really just the killer.
The kiosks might have been useful to Dell as a way to drive traffic to its website when 100% of its sales were being conducted over the Web. But clearly there has been a major strategic change at Dell, embracing more traditional retail channels as a way to regain its momentum and market share. I doubt that the customer service experience at a mall kiosk would be consistent with what the consumer expects when buying even a low-end laptop or system. Think about the Apple Store shopping experience, or even the expertise offered by a big-box retailer, as a more credible option.
Mall kiosks are good avenues for retailers to brand their products. By limiting it to only within general stores, the products may be lost amidst all other products that have not branded themselves.
Moreover, mall kiosks will also enable retailers to test consumers’ response of new products that they may introduce into the market.
This is a no-brainer. And, with Apple ringing up a published $4000+ per square foot, you have to wonder what took them so long. It’s also a missing consumer proposition…there’s the “Mac” guy and the “PC” guy, right? Where does poor Mr PC shop? Up till now, it’s on line or Best Buy…is that fair? Time to extend that brand, Mr. Dell!
For brand building as well as direct sales, mall kiosks are often terrific vehicles. It boils down to the financial results. The proliferation of cell phone kiosks proves the value for that industry. I saw a Benjamin Moore sampling kiosk (they don’t sell gallons, just samples) which seems like a branding-building exercise.