There is not an electronics retailerby Role Models rolemodels
There is not an electronics retailer
The new Dick Smith has arrived. After 8 months in the business, the successful buy out from Woolworths and the opening of a new retail store in Sydney, the newly-minted CEO of Dick Smith, Nick Abboud, has finally broken his silence on his plans for one of Australia’s most famous retail brands.
At the opening of the retailer’s new “flagship” store in Sydney’s Pitt Street Mall last night, Abboud spoke candidly about Dick Smith’s transformation in the retail space. He spoke about the path taken by Anchorage Capital Partners to turn around a business that was deemed “underperforming” by its previous owner, as well as his hopes for the future of a brand with a 44-year legacy and 323 stores across Australia and New Zealand.
After buying the brand, Abboud admitted that Dick Smith’s new management had to “get the house in order” before it was ready to reveal a roadmap for the business. But last night, the new CEO was ready to open the doors.
“I describe it as a house of brands,” said Abboud. “Whether you’re buying a computer, a tablet or the latest television, Dick Smith has all the brands you want in one location.
“We’ve talked to our consumers about how they shop in this category and we’ve also looked at our own internal DNA. Dick Smith...has always been famous for computing, mobility and accessories. So as you walk through, you’ll see the dominance in those categories in range and price. And especially in the accessories category, you’ll see a lot of colour and fashionability to go with the product.”
That focus on colour and fashion is clear in the lower price-point products, with branded headphones, portable speakers and colourful smartphone and tablet cases scattered through the store. Dick Smith also has plans to introduce “lower spec” accessories under the Tandy brand and, from September, the retailer will also be moving into the post-paid mobile phone space.
Although accessories and fast-moving products are a focus, the retailer has also included 'store-within-a-store' concept spaces from the likes of Samsung and Sony, with the goal of bringing a premium feel to the retail space.
As a ‘house of brands’, Abboud said Dick Smith was not just focusing on international names but also its own eponymous private brand, which he said accounted for 10 to 12 per cent of the retailer’s turnover. In a move that will no doubt affect the ranging of product from other suppliers, Abboud said the retailer wanted to increase the presence of Dick Smith’s private label over the coming years.
“It’s important to be proud of our brand and we want to move our brand up to 15 to 20 per cent over the next 5 years,” he said. “We’ve just opened up a sourcing office in Hong Kong where we procure that brand — all that has happened in the last 7 months — and we’ll bring in about $150 million worth of product through that sourcing office.”
By comparison, Dick Smith currently buys $1.1 billion worth of stock from its partners, according to figures cited by Abboud.
Along with growing the Dick Smith private label, the retailer is hoping to increase its clout in the gaming category, hiring a former buyer from EB Games to guide them in this space, and to increase its “share of voice” with a targeted marketing campaign.
“We spend millions on marketing every year,” said Abboud. “We’ve restructured our whole media campaign and you’ll see evidence of that as we launch a catalogue to 6 million customers every week. There is not an electronics retailer that is focused on mobility, computing and accessories that is doing that today every week.”
With strong marketing targets and the expansion of product range Dick Smith also has plans to grow to 400 stores over the next three years. The company has signed off on seven leases with Westfield, all of which are set to open by March 2014, and Anchorage Capital Partners has committed “a large percentage” of its capital to new stores, with a road map of “20 to 25 stores a year”.
“We believe we can get the best return through the growth of new stores and we can fractionalise our costs at the same time,” said Abboud. “All stores are profitable, which is great. Woolworths did a very good job of closing the 80 that were unprofitable.
“We were very fortunate to pick up a store fleet that has investment already across 75 per cent of the footprint. As we open stores to get over 400, [the Sydney store layout] is the look and feel that you will see, and then we will pick select stores that we will refurbish going forward.”
Those new openings are planned for “high traffic” locations as well as more premium spaces such as those occupied by the likes of Apple’s higher-end stores.
“We’ve got a number of stores located near food courts, and they’re our best trading stores because of the foot traffic. If you come down here at 12 o’clock, I don’t think there are more people you could fit into one location. So we will look at high traffic locations, but we’ll also find that Apple type location as well.”
The doors are opening on a new 600-square-metre store in Melbourne’s Chadstone shopping centre within the month, as well as other “A Centre” locations such as Westfield Southlands in Cheltenham, Victoria. There is also a store in the works for the Emporium shopping centre, set to open in March on the site of the old Myer building on Lonsdale and Little Bourke Streets in Melbourne. Alongside these shopfronts, Dick Smith will still focus on its footprint in regional towns, which Abboud said were “some of our most profitable stores”.
Though Abboud admitted there had been confusion in the past about just what Dick Smith could offer consumers, he said the retailer had a clear strategy moving forward.
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