Dick Smith: a brand battered one too many times
As retailer Dick Smith hunts for a white knight to rescue the brand, Simon Canning sees real parallels with the death of Ansett more than a decade ago.
There is something about the events that have surrounded Dick Smith over the past few months that screams Ansett.
It is a tale of a brand smashed from pillar to post, reinvented, reimagined, reinvested and finally, retired ignominiously. A historical case study already being cited as one not to repeat even before the life support has been turned off.
As news of the company going into receivership reverberated around the nation, receivers Ferrier Hodgson made sure that any consumer confidence in Dick Smith that remained was completely undermined by announcing that gift cards would not be honoured and people who had paid deposits for lay-bys would not get refunds. The social media reaction has been predictable.
The Forager Fund kids have a different take on this: “Dick Smith is the Greatest Private Equity Heist of All Time”. Incredible read: https://foragerfunds.com/bristlemouth/dick-smith-is-the-greatest-private-equity-heist-of-all-time/
As a DSE veteran, I’ve sat through several reinvention attempts. PowerHouse was obviously Woolworths attempt to turn the company into something they could understand (high volume big outlets).
In the end, its a bit sad because JB ran around them. The JB store in Bourke St has all the electronics at the front and DVDs at the back – they became the new Dick Smith without the legacy (niche gadgets, CB radios etc). DSE just moved too late on dumping the old stuff.
Now if people would just stop quoting Gerry Harvey, I could move on from this sad saga.
They never made up their mind if they wanted to be a competitor to JB HiFi or Jaycar. In not defining a specific segment of the market they became neither fish nor fowl. And subsequently failed to make an impact in either space.
This is a classic trick – write down the value of your assets (stock, fixed assets mainly), create some provisions (doubtful debts, leases) – this will boost your post acquisition earnings through lower charges going through the p&l.
Then create forecast 3 to 5 years) projections off these new p&l’s and suddenly you have created value.
As always, buyer beware. If you don’t understand how a business makes money and there is no medium term track record of sustainable growth, then best to walk away.
Perhaps the seeds of destruction for the Electronic Dick were sown back in 1982
Go to:https://www.youtube.com/watch?v=JbCr15KkBxY … Hands up who the agency of record was back in the day
All the cheesy kids must be those ‘older shoppers’ you mentioned Simon !
https://www.youtube.com/watch?v=JbCr15KkBxY
Being Jaycar comes with its own risks – low customer levels, limited growth, need to lease low cost locations. It would never survive as a publicly listed company.
I miss the old Dick Smith Electronic stores where you could buy individual components such as resistors, capacitors, LEDs, etc and build devices from assembly kits with a soldering iron. Call me old fashioned but you actually learnt how the device worked while building it. Kids today just buy everything off-the-shelf without learning anything.
Product mix was changed, overpriced cables and things which people could buy at Kmart for $9.95 were $29.95 for the same thing at Dick Smith. Not carrying the things people wanted and what they did carry was overpriced. I would say that they have the people at the top to blame. As per usual, people at the top do not talk to the people at the forefront..the sales staff…..what would they know. I have seen in the public service also……………….the managers are promoted for how good they do their job…..not how good they are at managing people. These people who are good managers have the ability to talk to their sales staff, they know what the ordinary customer is saying and they know how many times people walk out of the shop after declaring things are too expensive. These good managers are able to convey the messages to people who are their superiors……………now do they listen………no so the chain continues. Jaycar would not want to get any larger but maybe a mix of good products, good prices and welcoming staff, staff who were into their stock, knew what the products could do instead of just reading off the side of the box.
Jaycar makes more money than God, don’t worry about them
Not everything is marketing. This was a shameless pump and dump scheme, plain and simple. A flock of vultures descending on a still-breathing target until it’s not worth Dick.
Cue the man with a hammer, “Oh look it’s a nail!”
As a veteran of Tandy Electronics, this is very familiar. A sad attempt by the folks at the top to compete in a market far too saturated rather than the niche it had almost to itself. Jaycar is the new Tandy / DSE.
Tandy’s death was by a double edged sword though. In one blade was IBM who killed the very lucrative computer biz and the other was the likes of the the electronic appliance stores where Tandy tried to compete also believing it had the footfall.
Anonymous nailed it, just another heist. When you steal $100 you go to court, when you steal $100 million, you go to the Bahamas.
The investment bankers don’t seem to mind: con artists defrauding shareholders… money makes the world go around, afterall. Epilepsy Action Australia, voucher holders, etc… who cares about them, we say http://www.anchoragecapital.com.au/team/
I worked in the industry for almost a decade and everybody hated Dick Smith. Too cheap, too crappy, bringing down prices in the industry and eroding customers’ mindsets about technology. Just let it die!