Sears to Greatly Expand Dell's Physical Presence

[Ed Hansberry]

<div class='os_post_top_link'><a href='http://news.com.com/2100-1040-982735.html?tag=fd_top' target='_blank'>http://news.com.com/2100-1040-98273...html?tag=fd_top</a><br /><br /></div>"Dell Computer is experimenting with a plan to extend its retail kiosk program 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."<br /><br />I am not sure how this will be better than putting the Kiosk in the mall from a shopping standpoint, but it makes it easier for Dell. They negotiate one time with Sears and are done. With malls, you negotiate with a myriad of management companies and various rules about square footage, hours of operation, etc. If nothing else, it should speed up the deployment of the kiosks.

[jet8810]

I still think that Dell is making these Kiosks attempts in vain. I cannot imagine that they make that much money off of these Kiosks. People who want to buy Dell merchandise go to Dell's website. The only thing I think Dell should do is sell their Handheld line and accessories in CompUSA and/or Best Buy. They would get much more bussiness like that. People know of Dell PCs and know they should go to Dell.com to customize one, but the handheld market is close to clueless. Peopel who go into Best Buy to buy a "palm pilot" dont know that Dell.com sells a great priced, full-fledged PDA.

[GoldKey]

Seems like a bad deal for Sears. They sell computers in their stores, I would think unless you had to have your computer right then, you would order a Dell while in sears rather than buy an HP.

[Abba Zabba]

I still think that Dell is making these Kiosks attempts in vain... People who want to buy Dell merchandise go to Dell's website. The only thing I think Dell should do is sell their Handheld line and accessories in CompUSA and/or Best Buy. They would get much more bussiness like that.

Great point. If Dell wants to make such a huge leap in market territory the best thing for them to do is to get the product out to the general public and show them what their PDA is made of, and no other venue is better than say a Comp USA Circuit City or Best Buy.

[Ed Hansberry]

I still think that Dell is making these Kiosks attempts in vain. I cannot imagine that they make that much money off of these Kiosks. People who want to buy Dell merchandise go to Dell's website. The only thing I think Dell should do is sell their Handheld line and accessories in CompUSA and/or Best Buy. They would get much more bussiness like that. People know of Dell PCs and know they should go to Dell.com to customize one, but the handheld market is close to clueless. Peopel who go into Best Buy to buy a "palm pilot" dont know that Dell.com sells a great priced, full-fledged PDA.
You'd be surprised. I couldn't get near the Axim and the kiosks around here in December. People were lined up to talk to a person and place their order. They'd whip out their credit card, hand it to the Dell rep that would then key it in the web site for them.

Not everyone likes the online shopping experience, and Dell is catering to them.

[Janak Parekh]

Ed, re Sears vs. malls: realize that not all Sears are in malls. In NY surburbia, there are a lot of "singleton" Sears stores where such a kiosk might be a good presence.

--janak

[Timothy Rapson]

This is so odd, just plain odd.

Sears is the most stoggy, old Brick and Mortar style marketeer on earth. Dell is the absolute cutting edge in online ordering. Their instant access to new servers and the latest WWW technology puts them up at Amazon's throat.

This is like oil and water making a deal to mix. I have no idea what to make of it. I mean, I love to buy PDAs online and think it a wonderful way to go. But, I also like to have a real store, right here, so that I can go see and feel stuff and return it without shipping myself.

But, how do Sears and Dell combine to make money on a relationship that must cost both more, and add complexity to every transaction? If this works without raising Dell's price I say bully for both Sears and Dell.

I still have no clue what to make of it, though. It is like hearing that that Osama Bin Laden was chosen as Pope.

[jet8810]

true. It does seem kind of odd that Dell chose SEARS of all stores to put kiosks in. Why not put a Kiosk in say, Office Depots everywhere, or even CompUSAs or Best Buys...some kind of technology related store!

[TrojanUO]

true. It does seem kind of odd that Dell chose SEARS of all stores to put kiosks in. Why not put a Kiosk in say, Office Depots everywhere, or even CompUSAs or Best Buys...some kind of technology related store!

Probably because they can sell to Technology savvy customers quite well already. They're trying to reach out to a segment of the market that they wouldn't otherwise reach.

[EvilOne]

Not everyone likes the online shopping experience, and Dell is catering to them.

Even more reason why they should just sell them at stores like Best Buy, Circuit city, and whereever else PDAs are sold.

[GoldKey]

Probably because they can sell to Technology savvy customers quite well already. They're trying to reach out to a segment of the market that they wouldn't otherwise reach.

Put them in a Target then. Target is currently experimenting with selling items that were traditionally not sold through retail channels (Tupperware right now). They have a better demographic than Wal-mart and have show they are willing to sell some other technology that you would not expect in a discount store (iPods right now).

[gfunkmagic]

I'm not so sure such kioks are a good idea. Do ya'll remember those Gateway kiosks in Office Depot Stores? That failed miserably. I agree though with the strategy and I think its important for consumers to feel and hold such devices like pda's. Unlike desktops and laptops, I think most users want to hold a pda in their hand before they buy one. Perhaps this is Dell's intial foray into brick & mortor stores, ie Dell Country? Probably not, but they need to find some retail space regardless...

[WindWalker]

But, how do Sears and Dell combine to make money on a relationship that must cost both more,.

Remember, the kiosks are stand alone. They have nothing to do with the transaction system of the store/location they are in. What the kiosks provide is the ability to see/feel/touch the product, then stand right there with a Dell rep and order it.

I remember earlier in December, there were a lot of people saying they had no idea how Dell was going to make inroads into the market as an online only sellr of PDAs. THIS is how.....look how shiny neat and cool this is, wouldn't it go perfectly with your new Dell computer?

Say what you will about Sears being old stodgy brick and mortar, but they are still the #3 retailer in the world. For reference sake: Sears had $41.37 billion in revenue for fiscal 2002. Microsoft had $16.39 billion.

Also.....there is relavance in the argument that it's easier to do business with Sears than a series of malls. Sears has 867 locations in North America. One agreement could cover the large majority of them. Clearly you don't put them in your smaller, low volume areas.

This is a smart move by Dell, in my opinion. Sears (and perhaps Target) are at the right "level" for selling their gear, with low overhead and minimal risk. It's not like opening all those Gateway Country stores all over the world, at least...

[PetiteFlower]

Selling PDAs through 3rd party retail stores would raise their cost even more and probably make the cost go up. The kiosks cost practically nothing for them. Hey I wish I could have gotten mine at a store but I probably would have had to wait just as long considering the back order on them (I waited 3 weeks), and it's worth the wait for the lower cost and bonuses like the $50 rebate.

As mentioned, they are TRYING to reach the segment of the population that shops at Sears. People who shop at CompUSA most likely already know about Dell and their web site. And maybe Target wouldn't have them or wanted too much money. It's not exactly a very good deal for the store; the store gets paid for the "space rental" but they don't get anything out of the sales since it's direct through Dell. The article did say that Best Buy wouldn't have them.

I ordered my Dell PC at a kiosk, you know why? Because I got an additional $50 off just for going through them! Of course they're not advertising that too much :)

[Ed Hansberry]

Not everyone likes the online shopping experience, and Dell is catering to them.

Even more reason why they should just sell them at stores like Best Buy, Circuit city, and whereever else PDAs are sold.
Why would Dell want to pay slotting and compete head to head with HP, Sony, Toshiba, et. al. for floorspace?

[luebster]

I ordered my Dell PC at a kiosk, you know why? Because I got an additional $50 off just for going through them! Of course they're not advertising that too much :)

Did they offer this to you or did you ask about it? I visited a kiosk just to have a look and feel session with an Axim and the rep had me ready to check out (all that was left to do was hand over my credit card), but he didn't mention anything about an additional $50 rebate. Are you sure this wasn't the mail-in rebate?

I never did order an Axim, and now the mail-in rebate is gone. :( If I can get $50 off at a kiosk (which are still in some of the Cincinnati area malls), I'll snap one up.

[bdegroodt]

The way I see it, Sears should be coughing up some cash to Dell for this blessing. Not exactly like Sears is the titan of retail that it was in days gone by.

[luebster]

Agreed, Sears may not appear to be the retail giant it used to be, but it was noted in an earlier post that Sears is still the #3 retailer. Unfortunately for Sears, I would venture to say that most of their shoppers are older, more loyal customers and those shopping in their most impressive hardware/tool department. (Please correct me if I'm wrong, as I'm sure you will :D )

I think what Dell is trying to do is reach out to that older demographic who aren't technogeeks like us or have a grandson proclaiming, "Grandma, you're getting a Dell!"

[Jimmy Dodd]

I think the biggest advantage to using the kiosks as opposed to just having Sears sell them is that you have an actual Dell person in the kiosk, instead of a Sears guy doing the selling. With Best Buy, Circuit City, et. al. representatives it's pretty hit or miss whether they will even know the difference between a PPC and a Palm ("I usually work in refrigerators, but Bob's on break. What can I help you with?").

As for putting them in a Sears instead of out in the mall (if there even is a mall) I would guess that it is mainly an administrative/financial decision. One contract with Sears as opposed to one contract with every mall management firm (Simon, etc.) in the country. Probably the same logic as to why cosmetics and jewelry distributors work that way, too.

[bdegroodt]

Agreed, Sears may not appear to be the retail giant it used to be, but it was noted in an earlier post that Sears is still the #3 retailer.

Then why not Wal-Mart at #1? Seems to me the 2 companies business practices would be like "peas and carrots."

Unfortunately for Sears, I would venture to say that most of their shoppers are older, more loyal customers and those shopping in their most impressive hardware/tool department. (Please correct me if I'm wrong, as I'm sure you will :D )

I'm sure you're right. That and Jockey underwear. Perhaps a Craftsman Axim is on the way. :P

I think what Dell is trying to do is reach out to that older demographic who aren't technogeeks like us or have a grandson proclaiming, "Grandma, you're getting a Dell!"

Seems like a tough row to hoe and kind of senseless. I understand expanding markets, but there's plenty of money to be made yet in the generation that do get it. How about setting up in the airport? Maybe handing out a few to some airlines to let passengers play Solitaire while they sit on their butts for 5 hours on a plane (Heck. There's probably even a way to monetize that relationship.)?

[Jimmy Dodd]

Not everyone likes the online shopping experience, and Dell is catering to them.

Even more reason why they should just sell them at stores like Best Buy, Circuit city, and whereever else PDAs are sold.
Why would Dell want to pay slotting and compete head to head with HP, Sony, Toshiba, et. al. for floorspace?

Also, this way Dell gets to have someone there taking loving care of the PPCs: keeping them charged, removing the password protection some bozo turns on, making sure a stylus is present, answering questions, etc. The CompUSA in Knoxville doesn't even man the PDA/Cell Phone/Camera section during the day. You have to find someone to help. And the PDAs are usually in pretty sad shape.

[bdegroodt]

...removing the password protection some bozo turns on...

Hey! I'm no bozo! Just kidding. That's a very valid point. I love walking into the Good Guys et al in NYC here and seeing the absolute beating these devices take. I checked out the Tungsten-T the day it came to the retailers and it was already on its last leg. Screen scratched up, infamous sliding cover busted, alarm cable screaming as soon as you touched it.

Granted the abuse they take here in the city is probably a bit above normal, but I'm sure it happens in the rest of the world, too.

[vincentsiaw]

i still dont understand why they just don't sell the product at compusa or bestbuy or circuit city, but going through so much problem opening a kiosk in sears :roll:

[WindWalker]

There is the issue that Sears has a very large electronics department, Brand Central, in which the foot traffic is high. I would imagine that the Dell kiosks end up there, featured in the same way as DirecTV and the like.

As for not using Wal-Mart.....I think there is a certain level of "panache"....right or wrong as it may be....the Dell is attempting to maintain. Also, isn't Wal-Mart at the head of the line trying to take low end PC market away from Dell and others with the LindowsOS systems?

Again, it seems like a low risk opportunity for Dell to get the kiosks in front of more faces. And let's not lose perspective. The kisoks are not there to only sell Axims. Anything you can buy at Dell, you can buy at the kiosk. It DOES help to overcome the stigma of buying something sight unseen, but Dell is not making much, if anything, on the Axim. You don't make an agreement like this to only promote a loss leader.

As far as the Circuit City/Best Buy/ any other retailer idea: the reason is it is not in Dell's best interest to do that. Dell was built on the low overhead, low inventory, just-in-time model. Remember a couple of years ago when Compaq had tons of equipment sitting on store shelves mouldering because they weren't as fast as the brand newest thing out there? Dell maintains no more than 2-3 days worth of inventory so they can build to order, and keep their prices down. And frankly, they compete all the way up and down the line with Circuit City and Best Buy in the computer area. Setting up such large relationships with these retailers for one device like the Axim makes no sense either. Selling through a third party would simply be against their entire corporate strategy.

[Jimmy Dodd]

Agreed, Sears may not appear to be the retail giant it used to be, but it was noted in an earlier post that Sears is still the #3 retailer.

Then why not Wal-Mart at #1? Seems to me the 2 companies business practices would be like "peas and carrots."

I think Sears probably would give them a better deal than Walmart. Walmart hardly needs a reason to pull people in at this point. Plus, Sears probably gets a lot more business from the loitering spouse. "He: I going to look at these PDAs. She: OK, honey, I'm going to look at shoes/clothes/ovens/whatever." Ka-ching!!!

:lol:

[Steven Cedrone]

Plus, Sears probably gets a lot more business from the loitering spouse. "He: I going to look at these PDAs. She: OK, honey, I'm going to look at shoes/clothes/ovens/whatever." Ka-ching!!!

:lol:

In that case, they better put these kiosks in the Craftsman section of the store :wink:

Steve

[Ed Hansberry]

Just heard on the WSJ - they have 10 open already in Austin TX. Sears isn't the only one. They are going to go onto other "old line" stores.

Compusa/circut city likes stuff in stock. Dell doesn't. CompUSA got burned by Dell in 1994/5 with a deal like this for PCs. This is a great deal for Sears and other old stores. They get the rental and traffic. I'd wager Circut City doesn't even want to talk to Dell.

[luebster]

I thought I'd search Sears' press releases for some sort of announcement that this was coming. I didn't find anything relating to the kiosks appearing in stores, but I did find this:

Sears, Roebuck and Co. (ticker: S, exchange: New York Stock Exchange) News Release - 3/26/2001


--------------------------------------------------------------------------------
Sears Nominates Carty to Board

HOFFMAN ESTATES, Ill., March 26 /PRNewswire/ -- The board of directors of Sears, Roebuck and Co. (NYSE: S) nominated Donald J. Carty, chairman, president and chief executive officer of AMR Corporation and American Airlines, Inc., to become a member of the board. The nominee will be voted on by shareholders at the company's May 10 annual meeting, and would increase the number of Sears directors to 10.

Carty is a member of the board of directors of Dell Computer Corporation and Brinker International.

I guess this ends the question of "Why Sears and not X company?"

The entire press release (http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=S&script=410&layout=7&item_id=161532&sstring=dell)

[bdegroodt]

Sears, Roebuck and Co. (ticker: S, exchange: New York Stock Exchange) News Release - 3/26/2001


--------------------------------------------------------------------------------
Sears Nominates Carty to Board

HOFFMAN ESTATES, Ill., March 26 /PRNewswire/ -- The board of directors of Sears, Roebuck and Co. (NYSE: S) nominated Donald J. Carty, chairman, president and chief executive officer of AMR Corporation and American Airlines, Inc., to become a member of the board. The nominee will be voted on by shareholders at the company's May 10 annual meeting, and would increase the number of Sears directors to 10.

Carty is a member of the board of directors of Dell Computer Corporation and Brinker International.

I guess this ends the question of "Why Sears and not X company?"

The entire press release (http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=S&script=410&layout=7&item_id=161532&sstring=dell)

Well...That answers that. Doesn't it? Case closed. Bailiff please call the next parties.

[luebster]

There's more. Search Dell's press releases for Sears and you find Sears bought approximately 1,800 PowerEdgeTM 2500 servers, seven PowerVaultTM 220S storage systems, 3,700 OptiPlexTM GX50 desktops, and 14,600 Dell E551 and E771p monitors to replace CRT (cathode-ray tube) terminals. So, I guess they've been familiar business partners for some time now. Not so out of the blue any more....

Here's the link:http://www.dell.com/us/en/gen/corporate/press/pressoffice_news_2002-08-06-aus-001.htm.

[Ekkie Tepsupornchai]

Good move by Dell IMO. These kiosks are minimal overhead and they get the opportunity to introduce their line of PPCs to the general public. Without this kind of effort, Dell would have a steeper uphill battle in its effort to win marketshare.

As for those that believe they should locte in Best Buy/CompUSA/etc, that's a great deal for the customers but not for those stores or the other companies who resell their devices there. You think Best Buy wants Dell to be marketing a $299 X5 when Best Buy is still trying to sell off their iPaq39xx for $499?