Dell makes splash with retail toe-test

By PETER GRIFFIN

Computer-maker Dell has dipped its toe in the retail market for the first time, selling its PCs through The Warehouse.

Last weekend, stores sold out of low-end Dell PCs priced at $999.

Dell has traditionally sold direct through the internet or telephone sales, operating a just-in-time method of production where PCs are assembled overseas as orders come in.

The company is calling the retail debut a "pilot programme". At the moment it involves just one configuration of one model, the Dimension 2400 desktop.

The low overheads of direct selling has allowed Dell to undercut its rivals and become a huge global seller of PCs.

Sydney-based company spokeswoman Nicole Gemmell said the Warehouse deal was the first retail trial for Dell in the region and followed an experiment in Singapore where Dell set up shopping-mall kiosks so people could look at the machines before placing orders.

"We've had feedback that people wanted to touch and see the product beforehand."

Dell has no immediate plans to sell PCs in other retail outlets.

"It's very much contained to the 'red sheds'," said Gemmell.

John Journee, general manager of merchandise at The Warehouse, would not disclose how many PCs had been sold.

"Our initial shipments have sold out, and we currently are confirming the next delivery dates with our supplier."

He did not think the Dell deal would undermine PC sales at subsidiary Warehouse Stationery. "Warehouse Stationery concentrates mostly on the SOHO market [small office, home office] while our red sheds focus on home consumers."

The deal will be hard to swallow for Colin Brown, head of The PC Company, which went into receivership in October after a huge drop in sales.

Brown had for months been in negotiations with a large retailer - believed to be The Warehouse - which may have saved the company.

"We had negotiated some significant new business with a large New Zealand retailer. We believed this would give us the volume required to keep profitable whilst we restructured our existing business," said Brown.

"It was a source of immense frustration to see these negotiations constantly being deferred, making it difficult to reduce support costs without compromising our ability to deliver for this retailer."

Brown has gone on to assemble low-cost PCs for Building Depot offshoot The PC Depot. Those computers have been selling for $899.

IDC analyst Sonja Olsson said Dell's retail push was a good move on the back of third-quarter statistics that showed consumers spent more on PCs.