HomeNEWSDick Smith’s online arm resurrected with below-RRP pricing model

Dick Smith’s online arm resurrected with below-RRP pricing model

The relaunch of the Australian and New Zealand Dick Smith websites was slated for June 1, but both sites went live yesterday.

The launch on the New Zealand website has kicked off with a sale that declared the retailer was ‘Back & better than ever!’

It also made the bold promise of ‘the best prices in New Zealand’.

The online store is using the same supplier arrangements and back-end technology as Kogan.com, as well as a fairly similar look.

Koglan’s site

Dick Smith’s site

This has led to many items being cheaper than the recommended retail price (RRP).

These include:

  • A Fujifilm Instax mini camera 50s in black: $119 on Dick Smith’s site, $245+ elsewhere
  • A Breville the Kitchen Wizz food processor $122 on Dick Smith’s site, $149+ elsewhere
  • A Philips 5W stereo with bluetooth speaker, $59 on Dick Smith’s site, $99+ elsewhere
  • A Lavazza coffee machine with 12 capsules and a recipe book, $314 on Dick Smith’s site, $399 elsewhere

The big question is whether these savings will be enough to encourage customers back to the formerly troubled retailer, which still bears the Dick Smith name and branding.

Dick Smith severely damaged its reputation with customers when it refused to honour customers’ gift vouchers or credit notes during the receivership process.

It also lost consumers’ goodwill when its customer database was advertised for sale by its receivers.

Massey University associate professor of retail management Jonathan Elms said last week this move lost any remaining reputation the business had and recovery would be difficult.

Speaking to Elms today, he said it’s an interesting move.

“Kiwi shoppers, given my observations, are very much price driven and always look for a bargain,” he says.

“It’s almost taken as a given that Kiwis will go into a store and ask for discounts. That’s a very different mindset to what my experience in the UK and places like Singapore is. There, the ticket item price is the standard price you will play.”

Despite Kiwis’ love of a bargain, Elms says he isn’t one hundred percent convinced that this sales-driven approach is going to work.

“I think what they’re trying to do is promote that they’re still around but in a different format and try leverage that as much as possible,” he says.

“The other retailers in this particular space are competing on service, value and other attributes that Dick Smith can’t necessarily offer via this [online] channel, and I’m not convinced discounts will be a viable long-term strategy.”

He said a lot of trust building is in order to repair its damaged reputation, so a sales-focused approach could be problematic.

There’s also the risk of consumers not being able to distinguish between the sales Dick Smith was holding towards the end of its receivership where consumers had problems with gift vouchers and credit notes and the sales on now, he says.

“It could be the case that consumers perceive the inherent problems are still there if they’re tinkering along with the same tactics or strategy.”

However, the site also quotes CEO Ruslan Kogan as saying it would be “investing in building and nurturing the Dick Smith community”.

Elms says the brand investing and contributing to community groups would be a more effective way to restore customers’ goodwill.

“I think they need to do something more long-sighted and if that’s investment in communities, that’s a better way to try maintain or re-establish trust in the brand,” he says.

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