Dell experiences retail
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Nobody ever accused Dell of being stupid. Dell’s second test of retail waters shows this may not be an eternal truth.
Dell is faced with two ugly facts. First, though wildly successful in
direct marketing of personal technology, and corporate sales of business
technology, they have left money on the table. When Dell opted not to
aggressively pursue store-front retail of PC’s, HP, e-Machines/Gateway, and
others swooped in to claim as much shelf space as they could, and reaped the
profits and consumer mindshare therein.
The other hard fact is that none of Dell’s consumer technology has any real
differentiation. This has been part of Dell’s strategy from birth, as they
have always waited for technologies to mature, demonstrate market traction, and
then become commoditizable. This allowed Dell to be good at what they do,
namely highly efficient manufacturing and distribution.
But between HP et al eating the low hanging fruit, and Apple’s retail outlets
growing by 45% and earning nearly three times what Best Buy does per square
foot, Dell saw opportunity and necessity.
The problem is that Dell sells a commodity. Sure, they could slug it
out with HP and battle for shelf space by igniting price cutting wars. But
that is a self destructive catastrophe for which Dell is too smart.
Instead, they saw an opportunity that was well demonstrated by Apple retail
stores.
Apple retail employees are not in the business of selling gizmos. They
sell a consumer electronics experience. They differentiate their
products not by feature and price, but by subjecting innocent bystanders who
wander into their outlets to the total Apple electronic lifestyle. People
don’t buy an iPod - they buy wonton dancing in the streets. They don’t buy
Macs, they buy sharing their home movies with the known universe.
Dell is inching toward the same goal. Having had their products
misrepresented by Sears (the former great retailer in a perpetual state of
decline), they wanted to assure that Dell products were properly showcased, and
that people leaving a Dell store held the felling that Dell products would make
them happier, if not smarter and more attractive to the opposite sex. As a
Dell representative said they want customer to "touch and feel" the products.
But Dell has missed a major fact of retailing, and unless they address this,
their new storefront plans will go up in smoke like an
overly hot laptop. Dell is not carrying inventory in the stores.
Customers finding a cute laptop, or a Super Sized plasma TV, will encounter a
built-in delay as the best they can do is wander over to a terminal and order
that product online.
Yep, you read that right. Look, touch, then go online and go home empty
handed.
One of the hard and fast truths about retail is that it is a game of instant
gratification. People go into stores with the desire to leave them with
goodies in hand. Circuit City has that wall of TV’s not only to offer
customer’s a huge selection, but also to build the sense of anticipation in
taking one home. In fact, Circuit City once had a brand of mall-based
stores designed to illicit fast purchases of jazzy and pricy consumer
electronics gear. That chain was called "Impulse" as in "impulse buying
habits".
We can predict the behavior of Dell storefront customers. They will
look, they will ask, they will think about it for a moment, then walk out of the
store with a "Well, let me sleep on it" response.
There is more to experiential marketing than a chaste electronic experience.
There is the nearly orgasmic sensation of walking out of a store with a
cardboard box full of hopes and dreams and lifestyle choices. Perhaps Dell
is simply testing this new relationship before committing to the ultimate acts
of retail carnality. If not, this experiment will make their Sears debacle
look like a game of spin
the bottle against the Rape of the Sabines.
