Photo by edans Founder and CEO of Dell, Inc. image:41926:0::0

DigitalJournal.com has learned Dell is closing all of its retail kiosks across Canada as part of its corporate growth strategy. In an exclusive interview, Dell says its retail business is booming across North America and times are changing.

Digital Journal -- In a series of one-on-one interviews with Dell, DigitalJournal.com has learned Dell is positioning itself for significant growth in the consumer retail space and its restructuring involves more closings of mall kiosks.

"At the end of January, we decided to exit the Dell Direct Stores (kiosk business) in the U.S.," Phil Bryant, Vice President and General Manager, Dell Americas, Consumer Sales, told DigitalJournal.com in a phone interview today. "We have 18 [of these] locations in Canada and as we've ramped up the Best Buy, Future Shop, Wal-Mart and Staples relationships, we need to put our focus on these retail locations. Today, we're going to be closing [Dell Direct Stores] in Canada."

The Dell Direct Store model began in 2002, and the company closed 140 kiosks in the United States earlier this year. Dell says the Canadian closures will be finalized by the end of the month and July 29 will be the last day the company sells through its kiosks. Kiosks in Australia, New Zealand, Japan, and the UK are not affected by the changes the company is making in Canada today. The company now sells laptop and desktop computers in 13,000 retail outlets worldwide.

"It's not a bad thing," said Bryant. "It's more a reflection of our multi-channel business model."

Bryant oversees Dell's business in 45 countries, including the U.S., Canada, Mexico, Brazil, Colombia and others.

In recent years, Dell has seen increased competition from companies like HP, Acer and even Apple. The move to retail was an important part of the company's competitive strategy, as consumers wanted to be able to see the company's product before buying. And despite growing economic concerns in the U.S., preliminary reports indicate the demand for PCs has grown 16 per cent year-over-year for Q2, with 71.9 million PCs sold worldwide.

According to an early Gartner report: "HP continued to maintain the No. 1 position with its worldwide PC shipment market share totaling 18.1 per cent in the second quarter of 2008. HP's growth rate exceeded the industry average in the worldwide market, hovering a little above the industry average in the U.S. Dell had another strong quarter with worldwide PC shipments increasing 21.9 per cent in the second quarter of 2008 and its market share reaching 15.6 per cent. The company's growth was fueled by its expansion into retail and other indirect channels. Preliminary results show Dell achieved over 40 percent year-over-year growth in mobile shipments for two consecutive quarters."

Courtesy Gartner image:41925:0::0

"We are positioned very well," said Bryant. "We've had a very strong brand and as we've moved into retail we've learned a great number of things. We've learned how to compete on the shelf."

Dell told DigitalJournal.com consumer units grew at more than two times the industry rate and the company increased its global share by 1.2 points to 8.8 percent during Q1. The company also says revenue grew 20 per cent driven by a 47 per cent increase in shipments in Q1.

Dell says its improvements with PC design and focus on aesthetics have been driving forces for sales, both online and in bricks and mortar retail.

Dell's Growth Online

Dell says its focus on customization through its website has created a very positive consumer experience.

"If you look at it from perspective of products in combination with our website, the last couple of years have seen significant migration to customizing products to yourself," Anwar Sumar head of Dell's e-commerce team, told DigitalJournal.com. "Consumer electronics have really come a long way over the last few years -- design, how you use it, and how your lifestyle pertains to that product have become a big part of that. It's not just about the product, but also how you go on the website and interact with that product."

Sumar says Dell's online business is biggest with consumers (rather than B2B) and the company has been allocating more media spending to social networking and interactivity online, running campaigns like sweepstakes, contests and games. Dell's says online initiatives like games have helped a great deal with the company's viral marketing and branding efforts.

"Over time, we've continued to build out interactive games and interactive game campaigns," said Sumar. "We launch a game once a quarter and [they have been] so successful that the worldwide marketing team decided to develop a worldwide road map for interactive marketing."

Dell says its email and Web campaigns have been a big part of its online growth and the company tracks and measures statistics on an ongoing basis, including how long a customer spends on its website, where they clicked and what they viewed.

Photo by sean dreilinger A woman tests out a Dell laptop image:41928:0::0

Investing in Retail

In addition to its website business, Bryant told DigitalJournal.com the company has invested a lot in moving to the retail space, and they are seeing a return on that investment.

"The move into retail improved our brand," said Bryant. "U.S. specific data [from Frost & Sullivan’s independent research] shows Dell is the most desired brand in the U.S., even more than HP and Apple."

Bryant says Dell's retail business is actually making the brand more desirable, and despite the industry's concerns about the company abandoning its direct model, Dell has a good foothold.

"The way we like to look at it is we have a multi-channel business model," said Bryant. "We want to be where customers want us to be. One of the things we were hearing was that customers wanted to see us in a retail environment. [Retailers told us] that 30 per cent of people who come into retail ask for Dell. We were restricting ourselves from a lot of growth and meeting customers needs by not being there."

Dell says its business is growing because many customers will go into a store and test out a product, then go home and buy from the Web. The company, Bryant says, is well positioned competitively because it has multiple channels through which customers can interact with their brand and products.

Photo by code poet Wal-Mart image:41929:0::0

Dell Testing New Waters

In looking at the future of Dell's business and how it plans to evolve over the next few years, DigitalJournal.com has also learned more about Dell pilot programs:

For example, Dell is testing out an "assisted sales model" in stores, allowing a customer to go into any retail store and see and touch Dell products. Once they have tried them out, they can buy directly from that retailer's website. The retailer's site allows customers to customize and build a PC just like would on Dell's website. Dell says it's testing this strategy with various partners in an effort to expand its retail footprint.

Dell is also testing potential growth as a service and support company; the company told DigitalJournal.com it's supporting a Wal-Mart project where customers can come into 12 stores near Dallas, TX, and speak to representatives at in-store service stations. The service is very similar to Best Buy's Geek Squad where customers can purchase à la carte products and services. Dell will provide help in areas such as home television installation, PC setup, wireless network set-up and computer upgrades.

"This was first step in trying out this assisted sales and service models within a retail environment," said Bryant. "A customer can go into one of these Wal-Mart stores and go up to one of our solution stations and ask for a home TV install package, or for help setting up a PC or help with a wireless network."

Dell will then dispatch a technician to the customer's home to assist with product installation or support. "We had a generic announcement a few months back, but we actually launched on July 14," said Bryant. Dell emphasized this project is a Wal-Mart initiative and that it is strictly in test phase.