The Concerning Return Of A New-Look Dick Smith

You may not have noticed from looking at its over 300 stores in the last year, but Dick Smith — Australia's perennial gadget retailer — has changed hands. It now belongs to a private investor firm after living under Woolworths for a spell, and the new head of the company is promising a new-look Dick Smith. Don't get your hopes up though: the new-look Dick Smith isn't all rainbows and hearts.

Nick Abboud is the name of the new retail ninja brought in to lead the business, and his promise for the new-look Dick Smith centres around a colourful new brand that keeps gadgets at the centre of its business, all the while advertising a colourful new identity to the claimed millions of people that filter through the doors every month.

It all sounds good on paper: a young executive with years of experience in operations with another big brand (Myer) spearheading a business that has just been passed over to a new owner after a period of relative decline promising to re-envigorate an Aussie favourite.

The promise is that Dick Smith will open around 40 new stores, taking the total number of Dick Smith outlets up to over 400 around Australia. Dick Smith wants to put new stores in high-traffic areas like food courts to capitalise on passers-by coming in to buy gadgets from informed staff parachuted in from bespoke brands like Apple and Samsung.

That's an interesting promise, considering that Woolworths — the previous owner of Dick Smith — shuttered 80 unprofitable stores.

There's also the question of whether or not Dick Smith can survive in an environment of creeping Apple Stores and Samsung Experience Stores dominating retail shopping strips all over the country. Abboud says yes, but in a world where retail is already losing margin to cheaper online goods, one wonders whether or not Dick Smith can survive as the old-fashioned middle-man of Australian gadgets. I think, when challenged, buyers would rather go to the source for their tech.

Dick Smith has a reputation of being an fairly expensive player when compared to online competitors, too: it hasn't been the stand-out favourite when it comes to retail pricing surveys.

As far as product is concerned, Dick Smith is promising to stock premium brands to be the one-stop shop for the best gadgets money can buy. The new CEO is also promising to take the brand up to 10,000 products on offer by Christmas. To help them get there, there's a sourcing office in Hong Kong that Dick Smith plans to bring $150 million worth of stock through every year. Dick Smith has even tapped a purchaser for video games harking from the world of EB Games, a retailer which currently dominates the Australian video game market with a 40 per cent market share. Even the old Tandy brand is being resurrected as a high-margin accessories product for the Dick Smith brand.

So, what does it all mean when you step back and look at the big picture?

New stores, new marketing, lots of stock coming through the door and elite staff in high-traffic areas. Remind you of anything? It should: it was one of the highest-profile retail closures in known memory.

It reminds us of the ill-fated retailer GAME, which closed its doors after a series of unfortunate events and a larger series of unfortunate business decisions in 2012.

GAME opened too many stores too quickly, focusing on pre-order sales from passer-by customers in high-traffic areas. Eventually, it had too much stock on order that fell victim to aggressive discounts and the brand started losing money hand over fist, eventually going the way of the dodo with liquidator PriceWaterHouseCoopers appointed to precede over the wreckage. Admittedly, GAME's marketing message was based on crass, headline-grabbing stunts, which absolutely is not what Dick Smith is promising to be about.

Please, retail gods: say it ain't so for Dick Smith. Australian retail has never been tougher, and Dick Smith is in the fight of its life both for consumer sentiment, market relevance against customers who love to purchase stuff internationally and, ultimately, profitability.

Will you shop at the new-look Dick Smith?

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