Dude, That’s Wal-Mart

Dell Inc. (Round Rock, Texas) announced it will begin selling some of its computer merchandise at Wal-Mart stores, starting in June.

The foundering computer company that has traditionally sold only direct to consumers for made-to-order electronics will sell only two models of multimedia computers, from its low-end Dimension line, at more than 3000 Wal-Mart stores in the United States and Puerto Rico, for less than $700. The retailer said the two models would also be available in its Sam’s Club stores and outlets in Canada.

Michael Dell, the company’s founder who returned in January as ceo, had said he would rethink the direct sales strategy he had pioneered. The deal with Wal-Mart is the first step in that process, said a Dell spokesman. “The direct model has been a revolution, but it is not a religion,” Dell wrote in an employee memo last month.

The strategy has faltered in recent years with the rise in popularity of notebook PCs, which are challenging to customize and which customers like to touch and feel before buying.

Dell has experimented with retail before. In the early 1990s, it sold through a number of mass merchants like Best Buy, Costco and Sam’s Club, but it ended that practice in 1994 because of the low profit margins it was getting. In May 2006, it said it would open two mall stores as a test, making them a hybrid of Dell’s direct strategy and a conventional electronics store. It displayed Dell products, but customers ordered a PC, television or printer online from the store. Products were delivered to the customer as if they had ordered from a PC at home, as most of its customers do. The company opened only one store, in a Dallas mall.

Earlier this month, Wal-Mart announced that it had expanded its electronics areas as a part of the company's strategy to continue to provide more value on the top brands that consumers are seeking today in electronics. “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,” said Gary Severson, senior vp of home entertainment for Wal-Mart. “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.”