Dick Smith lashes out as 100 stores face closure, sell-off looms
Australian entrepreneur Dick Smith has lashed out at Woolworths’ plan to sell the chain that bears his name and shut around a quarter of the chain's stores.
There are currently 386 Dick Smith outlets across Australia and New Zealand.
Woolworths will close about 100 under performing stores as the consumer electronics chain is prepared for possible sale.
The retail conglomerate reported its first earnings decline in 13 years yesterday.
The company said it would take a $A300 million charge on costs associated with getting out of Dick Smith leases, writing down the chain’s assets and redundancies.
The retail conglomerate said its Dick Smith business was still profitable – it made $A22 million last year - but would perform better under a new owner. It planned to focus on liquor and food, and competing with supermarket rival Coles.
Founder Dick Smith – who sold his majority stake in the chain to Woolworths in 1982 for $A20 million – said he would “rubbish” the chain if it was sold to a foreign buyer.
The “Buy Australia” campaigner said Woolworths' decision was a sign Australia was moving closer to the point when everything will be foreign owned.
Dick Smith recently rebranded and refurbished stores, in part to counter-attack fast-expanding JB Hi-Fi (whose shares surged yesterday. JB recently took the innovative step of announcing a music download store - though has not returned NBR queries about whether it will extend to this side of the Tasman).
But as it has swished up in a bid to match JB in consumer electronics, Dick Smith has also lost some of its traditional customers. On Twitter, several told NBR they now preferred the Jaycar chain, which sells more components and appeals to the hardcore geeks who used to form Dick Smith’s base.
The Dick Smith chain has a book value of around $A400 million. It is expected to fetch between $A175 million and $A190 million in a trade sale, assuming a multiple of eight times earnings.
On Twitter, one internet wag asked if Woolworths would attempt to talk the buyer into an extended warranty – a reference to a Dick Smith up-sell tactic that has annoyed many customers.
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Comments and questions19
I think DSE have their target market and stock all wrong. They are no-things to nobody.
They are too light on DVDs/games and can't compete with JB HiFi, they are too light on computers etc and can't compete with PB Tech/JBHiFi. They have gone away from the technical market, JayCar have taken that. TVs and large ticket items, again, can't compete - Harvey Norman and their GE Creditline deals.
They need to rethink their strategy. When people go to shops they want a wide selection or specialist advice, and either way it has to be cheap. DSE used to be specialists, perhaps they should go back to specialising.
I also wonder about their advertising, sterile is a word that comes to mind. Jaycar’s adverts on the other hand appeal to the ‘geek in you’ who is after a large selection. JB HiFi’s appeal to the ‘bargain hunter in you’ who is also after a large selection.
They can make a comeback, but they need to clearly consider who they are targeting.
remember the industrial and technological revolutions?
welcome to the global unification revolution.
It will be a bit regressive, what with the return to feudalism and such.
I think its a retail game - sure JB is doing well, but that'll only be until the next chain sets up and prices even more aggressively.
Comments about DSE losing their way are probably correct but strategising in todays retail market is at best a hairy proposition.
DSE used to sell the bits and bobs no one else did. Now they sell the same stuff as every one else does.
No good have a peeing contest with Harvey Nornam, JBHiFi and Noel Leeming...
And why bother selling apple macs, there's no profit there..
Perhaps Australian entrepreneur Dick Smith should buy out DSE from Woolworth, and, don't forget monies always talk....otherwise, shut up!
Went to Dick Smith on the weekend after being fobbed off by useless salesmen at Harvey Norman and the Sony Style store. Dick Smith guy knew exactly what I wanted (a non-Firewire adapter for converting DV tapes from an old camera and where to find it).
Unfortunately the demise of Dick means we'll likely lose this specialist retail knowledge - you don't really get it at JB or elsewhere and Jaycar is still pretty niche and stores and few and far between...
Hang tight on buying that new laptop/LCD TV....... looks like there'll be a BIG sale coming up???
Shame for the many good staff at DSE. Most are as good if not a step up to all the other options. Great product knowledge, but if the price sucks and management cant or wont compete then whose fault if we go next door.
This is the difference between an entrepreneur running the show and corporate monkeys. The first post is bang on.
Absolutely, and with $nz climbing against the $us (and pound, and euro) we can expect even sharper prices.
And as everyone works out that future prices will be lower, further pressure will be exerted on retail of consumer electronics, whiteware, cars, etc etc.
DSE sales won't be the only sales in 2012, expect further heartache, but on the flip side those of us with jobs will find we get a bigger bang for our buck should we decide to spend it.
DSE were once the best, since moving the NZ buying team to Australia they have totally lost touch with the NZ market. They do need to specialise in a new area, unfortunately this is easier said than done, as key categories are spoken for by the other players. They have become renowned within the industry as difficult to deal with as are woolworths.
DSE were once the best, since moving the NZ buying team to Australia they have totally lost touch with the NZ market. They do need to specialise in a new area, unfortunately this is easier said than done, as key categories are spoken for by the other players. They have become renowned within the industry as difficult to deal with as are woolworths.
Everything in Aust deserves to be foreign owned as the country is chocka with human imports, in fact if you go there you get to play a game called spot the Ausie, it's a bit like here where soon we will get to play spot the Maori, dammed sad aye!!
Items that are sold at both Dick Smith and Big W, Big W is cheaper. (isn't everyone cheaper than DSE on name brands).
From what I see, there is nothing special about DSE "techsperts" to justify the higher price.
DSE badged or exclusive products are also poor value most times compared to the previous home brand (Digitor).
Oh, and the extended warranty which they try and sell very hard (they don't like NO as a response)
Dick Smith management have lost the plot.Wrong mix of stock plus advertising not too sought after products at too high a price so customers are not bothering to even visit their store.Had a great U.S.P. with 14 days to return products for refund however they stopped offering this and this will have cost Dick Smiths dearly.Not easy to operate a N.Z.consumer products retail chain successfully from across the ditch. High churn rate of staff showing they have difficulty in retaining clued up staff. Shame as there was a time when it was worth walking through stores or viewing website to consider purchasing from them.
You're one in a million then. DSE are known for giving ill conceived advice and downright lying to their customers.
100 store closures. No excuses.
Dick Smith customers must give up the fight.
Dick's demise was assisted by online trading. I went into Dick Smiths last week to buy a HDMI cable, $26.90 please, no way. I bought the same thing off Trademe ( both made in China) for $4.95 plus $5.50 courier charge, from a guy who has sold over 12,000 electronic items , such as cables, connectors etc. Got to be hurting Dick, and other retailers.
peter is fat time wasting customer
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