Woolies to review ailing Dick Smith business

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Woolies to review ailing Dick Smith business

Woolworths CEO Grant O'Brien today revealed the supermarket giant was concerned about its underperforming Dick Smith business which he said would be the subject of a “strategic review” over the next few months.

O'Brien cited several challenges facing the business - including lower discretionary spending by consumers - and said the company needed to make sure it derived "the best possible value from the business".

Dick Smith operates 386 stores in Australia and New Zealand. In the 2011 financial year they achieved sales of $1.856 million, a 4.2 percent increase on the previous year and EBIT (earnings before interest and tax of $26.8 million) a 14.9 percent decline over the prior year.  

But despite the lacklustre result, O'Brien declined to second guess the outcome of the review in terms of what options might be at Woolworths' disposal.

"There are several options in front of us for the future of Dick Smith Electronics," he said.

"We will wait for the strategic review process to be completed before moving forward."

The first results from the strategic review are expected to be made public in February next year.

More iPads to grace Big W shelves

In what may well prove to be a portent for the future of the Dick Smith business, Big W also announced today that it would expand the number of stores to offer Apple's iPad tablet to 160 by Christmas.

Director Julie Coates told investors that the retail giant was also becoming known "as a destination for accessories" for Apple devices.

"What's important to remember here is the experience our customers are looking at when you shop in this department," she said.

"A mum with kids is different to what you might expect for a geek."

Coates also trumpeted Big W as "the only department store to offer the Kindle e-reader" in its physical stores.

She said that Woolworths' buying power with Amazon has allowed it to carry the e-reader hardware.

Coates talked up Big W's push into online. She said that online sales now were at the revenue level taken from "a big store" but that she hoped online could grow to represent 5 percent of total sales in five years' time.

Big W launched an iPhone app today that allows customers to scan the barcode of a product - in a Big W store or that of a retail competitor - to get the "Big W price".

"You have to be confident about price to implement that and we are confident about price," Coates said.

"We've launched this [app] today so customers can see us as their champion of price."

Griffith-based Clickstart IT recently became an approved iPad reseller, in the last six weeks adding the tablet to its range of Apple products and accessories. Owner Tegan Le Page told CRN she was not concerned should her local Big W begin selling iPads.

“Big W are really just box movers, they don’t provide the experience that we provide,” she said. “We have staff trained up in Apple demonstrations, Apple technology, we don’t just give them the box and send them on their way. We give them the whole experience, and I find customers love that, especially in a small rural area like ours.”

Apple products currently account for 15 per cent of Clickstart IT’s overall product porfolio, and 30 per cent of sales. Le Page said customers aren’t interested in cheap prices with no service. 

“They can’t compete with us in that way,” she said. “I really don’t think their staff are trained to provide the whole experience, they’re not trained to recommend accessories. We can provide solutions for customers.”

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