Dell to test retail stores in Texas, New York

Dell is testing full-sized retail stores that will stay true to its direct-sales business by only offering product demonstrations.

Dell Inc., the vendor that pioneered direct-sales in the computer industry, announced plans this week to test its first full-sized retail stores.

Continuing Dell's direct-sales structure, the stores will not actually stock Dell products. Instead, they will offer consumers an opportunity to test the company's wares, which include digital cameras, LCD (liquid crystal display) televisions and printers in addition to PCs. Customers can order merchandise from the stores, over the phone or from Dell's Web site.

This move is not Dell's first into the retail channel. The Round Rock, Texas, company operates 160 kiosks in U.S. malls and airports, a venture it started in 2002.

"The DNA of the business model stays the same for us," said Dell spokesperson Venancio Figueroa. "We see these as extensions of the kiosks. The kiosks have performed well over time and we want to experiment with a larger space."

The world's largest PC vendor will operate two 3,000 square-foot stores that feature separate living room and home office areas and a gaming space. The stores will allow Dell to show many more products than its smaller 120 square-foot kiosks. The first store will open in Dallas between July and September and the second location in West Nyack, New York, will come online between August and October.

Dell has not decided if the outlets will offer product support, like rival Apple Computer Inc. provides at its stores, Figueroa said.

The announcement comes as Hewlett-Packard Co. (HP), the number two PC manufacturer, challenges Dell's market supremacy. Dell claimed a 18.1 percent market share in 2006's first quarter, down from 18.9 percent during the same quarter of 2005. HP's market share was up 1 percent, however, totalling 16.4 percent during the quarter, according to research firm IDC.

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