Dell has opened up distribution to Wal-Mart Stores in a dramatic expansion of its retail strategy.
Beginning June 10, over 3,000 Wal-Mart and Sam's Club stores in the United States, Canada and Puerto Rico will carry up to two Dimension desktop SKUs. The multi-media models are being built exclusively for Wal-Mart, and will be sold in brick-and-mortar stores only in package bundles for less than $700.
According to Gary Severson, Wal-Mart's home entertainment senior VP, "Both companies will evaluate the success of these products at launch, and will make changes accordingly in distribution or product based on consumer feedback and purchase response." Demand, he said in a statement, is already anticipated to be high.
Wal-Mart will be the third retailer to sell Dell products, following Costco and QVC. It is unclear whether the new distribution deal will affect Dell's current channel partnerships.
According to a Dell spokesperson, the agreement with Wal-Mart represents the first step in a new, overarching global retail strategy. The new plan follows a and CEO Michael Dell's declaration that the company must look beyond its traditional consumer-direct model, as it endeavors to restore its marketplace dominance. Dell continues to sell its custom-configured PCs direct through its Web site, catalog, kiosks and lone retail store in Dallas.
The Dell deal also dovetails with Wal-Mart's announcement earlier this month that it is entering "the next stage" of within its newly remodeled and expanded electronics departments. According to a Wal-Mart spokesperson, the Dell SKUs will initially appear within a dedicated display, and will later be integrated into the stores' larger PC presentation. The retailer's flagship discount stores will carry two exclusively configured models, and Sam's Club will carry one SKU that may differ from Wal-Mart's desktops.
None of the Dell models will be available online, the Wal-Mart spokesperson said, and no other changes have been made in Wal-Mart's current PC assortment, which includes desktops and notebooks from Acer, eMachine, HP and Toshiba.
At least one industry analyst was skeptical of Dell's change in direction.
"It is a relatively low-risk tactical maneuver, but strategically Dell doesn't belong in retail. It should concentrate on its strengths," said Steve Baker, The NPD Group's industry analysis VP, adding the volume Dell is able to push through Wal-Mart will not be enough to significantly make up for its recent market share shortfalls.
"Our customers trust in Wal-Mart and Sam's Club to provide the most convenience and best value on today's top products and services," Severson said. "Dell is a proven electronics brand and adds a new compliment to our other high-quality desktop selections, and we're very excited to now bring our customers new access to a product they want, with the ability to purchase a Dell right away."