Is there room for
Dell (Nasdaq: DELL) between an
Urban Outfitters and a Baby
Gap? We'll see, now that Dell is testing a new retail concept. In a story that first appeared over the weekend in
The Austin American-Statesman, the company that popularized the consumer-direct model is hoping to get a little closer to the consumer with 3,000-square-foot stores that will showcase dozens of Dell systems.
The two trial outlets will open in Dallas and New York in malls that just happen to house Apple Computer (Nasdaq: AAPL) stores as well.
It's not a bad move. Since the company acquired Alienware earlier this year, it's got some sweet eye candy to feature beyond its powerful custom-ordered systems. Critics may argue that Dell will be at a disadvantage because the two stores won't stock inventory, but big-ticket retailers like Select Comfort (Nasdaq: SCSS) have no problem ringing up sales with buyers knowing that they're not taking the air-chamber beds home with them.
The one valid knock here is that self-branded stores haven't fared too well in the past. Gateway (NYSE: GTW) went into retreat mode with its standalone shops years ago, and as great as Apple has done, I wonder how well the shops would be doing if it weren't for the runaway success of the iPod.
Dell had to do something. Hewlett-Packard (NYSE: HPQ) is swiping away its mojo, topping analyst expectations every quarter since CEO Mark Hurd came in last April. In that time, Dell has managed to beat market forecasts just once.
It's the right thing to do. If it's a fiasco, so what? Shutter the two mall-rat guinea pigs and try something else. This is the time to do it, as the industry shuffles its feet until Microsoft (Nasdaq: MSFT) rolls out its new operating system to consumers early next year.
Maybe Dell will be bold enough to make the two stores completely different to truly gauge whether one model is superior to the other. Let one stock some actual inventory of entry-level machines or popular accessories, and let the other convey a hipper image. Maybe let one offer in-store discounts.
Dell has the luxury of time and money to see this through. The patience of disgruntled investors who have suffered with Dell's stock lately? That's a different matter altogether.
Dell is both aMotley Fool Stock Advisorand Motley Fool Inside Value recommendation. Microsoft is also aMotley Fool Inside Valuenewsletter service selection. Select Comfort is aMotley Fool Hidden Gemspick.Take the newsletter of your choice for a 30-day free trial.
Longtime Fool contributor Rick Munarriz does have a pair of Gateways in his house, but he favors working on his HP computer and Dell monitor. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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