Dicker to put bite on retail market

Dicker to put bite on retail market

NSW-based distributor, Dicker Data, is planning to take a bite out of the retail market by launching a chain of consumer electronics outlets in conjunction with its resellers.

Branded as 'Digital Dog', the kiosks will offer consumers a wide range of digital gadgets and gizmos including MP3 players, cameras, notebook PCs and consumables.

Initially, the plan is to carry fast-moving products worth between $50 and $2000.

Managing director, David Dicker, has already contacted existing vendor partners to propose carrying their stock in the kiosks. These include HP, Toshiba, NEC, Epson, Canon, Kingston, Targus and Panasonic.

Each kiosk, measuring about 15sqm, will be offered to resellers as a franchise. Dicker will own the kiosks, pay the rent, supply stock and manage marketing for the whole concept.

Marketing would include a large plasma screen mounted at each site putting out a constant stream of adverts and special promotions.

Resellers that sign up for the program would provide staff to manage a kiosk and split profit margins equally with the distributor.

By selecting mostly high-margin stock, and selling it in a kiosk with lower rents than a shop front, the target would be for both parties to hit average net margins of 10 per cent.

"It's basically the McDonald's model but this is real value-added distribution," Dicker said.

"All the kiosks will have the same look, we will cherry-pick products that are selling well and ordering will be done every day to keep stock fresh.

"The product range will be in a state of constant flux. The key to success will be identifying resellers that will work with us rather than wanting to do it their own way."

A Digital Dog website is also planned, with half the margin from online sales spread between all outlets.

IDC analyst, Mike Sager, said it was an interesting concept and a little different to the existing approaches of leading vendors.

The likes of Toshiba and Apple, for example, had been successful with 'store within a store' concepts in partnership with mass merchant retailers like Harvey Norman, he said.

Dell had also hit the shopping malls - operating standalone kiosks where consumers could handle products before deciding whether to buy online.

"Dicker's approach hasn't been done before and, if it is done right, it could work well," he said. "There's a severe lack of education among consumers so staff must be knowledgeable and able to communicate the digital lifestyle message."

As for the reaction of the dist­ributor's vendor partners, Sager predicted most would embrace the addition of another outlet to push their products although some would be cautious.

A testing booth, run by Dicker Data, is due to open at Westfield's Miranda Fair shopping mall in suburban Sydney next month.

Dicker estimated about 250,000 people walk through the shopping centre every week.

The distributor has set an aggressive target of opening 100 of the kiosks across Australia within the next two years. Sager said it should work hard to get as many as possible open in time for the consumer rush between November and February, particularly as the market was predicted to be a little slower in 2006 than it has been this year.

If successful, the Digital Dog scheme would also further the distributor's plans to issue an initial public offering on the Australian Stock Exchange. Ironically, the business model is similar to the Rodin Store venture Dicker launched back in the mid-90s.

"It's funny to think about it now but we decided to close the Rodin Stores because average margins had fallen from 15 per cent to 10 per cent," he recalled.

"That was a mistake. If we had persevered we could have built something similar to what Leading Edge is today."

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