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The Dell in the Mall

Apple opened stores and has become one of the most sought-after tenants, and it has seen use of its computers rise, after being left for dead by Windows-based PCs. Gateway 2000, on the other hand, tried its hand in the brick-and-mortar business with Gateway Country, but saw that concept go down in flames.

Now Dell Inc. — which has built its success through online sales — is throwing its hat in the ring, opening its first two full-fledged mall stores this year. It is opening locations at the NorthPark Center in Dallas and Palisades Center in West Nyack, N.Y. There's a hitch, though. Customers won't be able to walk into a Dell store and walk out with a computer. Instead, the 3,000-square-foot stores will function much as the mall-based kiosks Dell has been operating since 2002: Customers can come in and test-drive equipment and then place online orders.

Company executives admit that they have taken note of Apple's innovative approach to rolling out its line of stores. But officials maintain that the launch of stores is mostly a response to customer demand; some of Dell's less tech-savvy buyers have expressed a need to see and touch its products before they commit to a purchase.

The stores will allow the company to showcase more merchandise and will feature faux living room and home office areas “enhanced” with Dell equipment.

Still, some retail brokers believe that Dell is facing an uphill battle if it's hoping to increase sales volume this way. The problem is not that customers can't see what they are buying, but that Dell products may be so cookie-cutter that their only appeal is their price value, according to Richard B. Hodos, president of Madison HGCD, LLC.

“I think it's not even fair to compare them with Apple,” Hodos says. “Apple has almost a cult-like following and their stores do an incredible amount of volume. They have a store in Los Angeles that does in excess of $70 million, their SoHo store does $100 million. The [new Fifth Ave.] store is just on fire. Dell can basically only distinguish itself with price and promotion. It's probably more fair to compare them with Gateway.”

Others believe Dell is on the right path. According to Jeffrey Roseman, executive vice president and principal with Newmark Knight Frank Retail, a brand of Dell's significance has to develop a retail presence.

“My question is what took them so long?” he says. “The best way to communicate a message right now is through retail, whether it's in the electronics industry or in [confections].”

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