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Can consumers embrace an online-only Dick Smith?

  • News
  • March 23, 2016
  • Sarah Dunn
Can consumers embrace an online-only Dick Smith?

Dick Smith’s receivers, Ferrier Hodgson, have been seeking expressions of interest in the troubled electronics company since January 12. Earlier this month, the owner of Australian online marketplace Kogan.com, Ruslan Kogan, announced his company had acquired it for an undislosed sum. He plans to transition Dick Smith into an online-only model.

While Kogan.com isn’t a household name in New Zealand, it is Australia’s largest online retailer. It launched in New Zealand two years ago. Goodale feels Dick Smith’s strong brand made it particularly attractive to Kogan.com, which took 10 years to develop its profile from scratch in Australia.

Dick Smith used to be well-known for its broad offering of cables, plugs and other specialist IT equipment. Goodale says these low-priced items were likely to have fairly low turnover, meaning the cost of stocking them in stores was relatively high. He believes the market for these items is also unlikely to have grown: “Modern electronics is all about simplification – that market could be shrinking.”

By contrast, the market for high-turnover items such as mobile phones and televisions is currently highly competitive. Goodale rates Dick Smith as fourth in line after JB Hi-Fi, Noel Leeming and Harvey Norman.

“I think they have slightly lost their way about what you come to Dick Smith for.”

Found this at #dicksmith sales haha clearly the staff are ready to leave #meme

A photo posted by Alaisdair Leith (@alaisdair) on

Goodale feels the switch to pureplay ecommerce makes sense for Dick Smith, as it still has cut-through but its high-street iteration no longer stacks up. He says Dick Smith’s existing customer base is likely to be open to shopping online.

“Online retail gives you bags of opportunity to do things you can’t do in the real world.”

He doesn’t believe a retailer in New Zealand has taken a chain of physical stores online in a big way before, but hopes it will not happen again anytime soon: “We don’t want the high street to die.”

Reduced to making 'dick' jokes. #dicksmith #firesale

A photo posted by Ryan Chase (@cuttothe) on

Goodale says consumers are likely to get over Dick Smith’s rocky start to the year and embrace its new incarnation as part of Kogan.com.

“I reckon they can overcome any damage that’s been done,” he says. “People are pretty forgiving if you’re offering something that they want to buy.”

The company is now in the final 24 hours of its closing-down sale online. Store fixtures and fittings are for sale alongside its stock.

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