Dell Eyes Retail Again, With Apple Stores as Model

Apple Computer (Nasdaq: AAPL) this past weekend made national news -- once again -- by opening another retail store, this one right in midtown Manhattan, on Fifth Avenue. Located next to Prada, Tiffany & Co. and Saks Fifth Avenue, the store will be open 24 hours a day, 365 days per year.

The Cupertino, Calif.-based company won't have the computer retail space all to itself for long, however. Rival Dell (Nasdaq: DELL) is planning retail ventures, based on the Apple model. Other computer companies may join Dell soon, too.

Hands-On Shopping

"Other retailers are also increasing the hands-on experience," said Mary Brett Whitfield, an analyst with Retail Forward.

Struggling to maintain its lead as the top personal PC maker, Dell plans to once again enter in the retail business when it launches two stores at shopping centers later this year.

In contradistinction to Apple, which stocks products on-hand for customers to carry out after purchase, Dell will maintain its direct model by having shoppers place orders online for later pick-up at the store.

Based in Round Rock, Texas, the PC maker plans to open its first store at the NorthPark Center in Dallas this summer and open a store at the popular Palisades Center in West Nyack, N.Y., this fall.

Fifth Avenue, Here We Come

The stores will reportedly span about 3,000 square feet -- and compete against Apple retail stores which currently operate out of both shopping plazas.

This won't be the first time Dell has lunged into the retail arena. Three years ago, the company ended an experiment with small outlets at a bevy of Sears department stores.

Yet, Dell currently operates 161 kiosks at malls across the United States, where customers can preview products and place orders.

The two full-size stores are part of a pilot program aimed at displaying more products and systems for customers. They will reportedly feature a home theater display designed around a personal computer as well as systems designed specifically for children.

Dell's stores will sell Dell services, such as home network installation. The company is still "working out how to handle tech support questions that existing customers might bring to the store," a spokesperson said.

Success Factors

The success of Apple's retail strategy is based on customer support offered through its "Genius Bars," which are in each of the company's 147 locations across the globe. Trained employees answer questions, offer solutions, handle repairs and provide technical and creative support on a one-on-one basis with Mac and iPod users.

A crowd of more than 3,000 enthused shoppers attended the Apple store opening this past weekend in New York City, and it's expected that the store will draw more than 10,000 visitors a week. Altogether, Apple's stores pulled in US$2.35 billion in sales in 2005.

The new Dell store is a pilot initiative to see whether it can spark interest in Dell's products while letting the company maintain its distinct business model, Dell spokesperson Venancio Figueroa said.

Dell has seen its stock price fall in the last year on Wall Street amidst a period of torpor in domestic sales. Speculation has been that the company could boost sales by selling its products through major retailers. Until now, Dell executives have insisted that their business model is more cost effective.

About one in three PCs sold in the U.S. is a Dell product, according to Figueroa. The company boasted an 18 percent worldwide market share last year, according to IDC, based in Framingham, Mass.