Woolworths to Reduce Dick Smith Stores

• Tweet

At a time when the outlook of the domestic retail industry is bleak, one Australian retail giant appears set to slash bricks and mortar stores in favour of strengthening its e-commerce strategy.

Experts are tipping Woolworths Ltd will cut the number of Dick Smith stores by almost half, as it concentrates its energies on developing an online strategy, reports The Australian newspaper.

CLSA analysts believe Woolworth will likely close 189 stores of the 386 existing electronics stores, and channel the funds saved into significantly expanding Dick Smith’s online presence. The Australian states that a CLSA report said the “shrink and trim” option was the most likely outcome of Woolworth’s current strategic review of Dick Smith.

“While some may see this as a band-aid measure, we believe it will give Woolworths an ability to improve profitability, continue to be a relevant player in consumer electronics and allow it to minimise the initial liability-writedown,” the report said.

“If Woolies follows this strategy, it can nearly double Dick Smith profitability in the short term to $40 million.”

This is definitely an interesting time for Australian retail.  It remains to be seen if Woolworths do act upon the Dick Smith strategic review in this way, and it’s likely many other Australian retailers will be monitoring the situation closely, potentially adjusting their strategies as a result.

Article by Elisabeth Lambert

Elisabeth is an editor and content creator for The Media Pad, publishers of Power Retail. As a writer and blogger, she is rapt that she is able to channel her passion for online retailing into Power Retail. She also loves writing about rugby, pop culture, travel and anything baby related. Having spent most of the last decade in Japan, Elisabeth still immerses herself in as much Japanese crazy as possible, and when she has time, Elisabeth likes to cook, ski and train for triathlons.

3 Comments

• • 
  • MadMax
  • 23rd January

  Oh I bet stores like Jaycar and other electronics retailers couldn’t be happier about this news.

  Why is it that Jaycar is strong and going well opening up new stores all the time, yet the old electronics giant which was Dick Smith Electronics has been ruined by the current owners and operators.

  Anyway thankfully Jaycar still caters for the electronics enthusiasts out there.

  Goodbye Dick Smith Electonics.

  This store should have stayed original and stuck to selling components and tools for the enthusiasts. When Woolworths decided that it should just become another “JBHiFI” style outlet, that was the end of the Dick Smith Electronics as we all knew it.

  Reply
• • 
  • Paul Warren
  • 26th January

  The problem with Dick Smith is simple. They don’t have any ‘edgy niches’

  For example, they sell their own brand of TV’s, yet they’re not price competitive against JB’s sonic brand or Big W’s AWA brand or heck even
  Kogan.

  Dick Smith obviously have massive buying power, so why not use this, race these other players ‘out of the market’ by pricing them out of the market.

  Then rinse & re-use this model with other brand lines. This is at least one business stream that will breath some life into Dead Smith.

  Paul.

  Reply
• • 
  • Gary Watton
  • 1st February

  I may be seeing windmills here, but I think there is a bigger picture. Dick Smith is a staunch advocate of Australian owned. He has recently voiced a strong opinion on ‘Bright Foods, the Chinese state owned (government owned) food company that has just bought a long term Australian food company , Sunbeam- Angus. Bright foods also wishes to import through this company products from china, as well as export to china. Also, dairy products, wine products and others are part of the company structure/portfolio. The company is also has strong wishes for ‘mergers’ with other Australian companies. I think there is something more here afoot than just a mere restructure. Woolworths pacifying the chinese government in the hope of future business by getting rid of Dick Smith, an outspoken advocate of Australian made?

  Reply