By Claire Reilly
Earlier this year, Woolworths Limited, the owner of Dick Smith, announced it was planning a divestment of the troubled consumer electronics retailer. Woolworths’ CEO Grant O’Brien said the company would be closing up to 100 Dick Smith shopfronts in order to make the business more profitable, before selling off the retailer to a suitable buyer.
Three months later, although a buyer has still not been announced, the planned store closures are going ahead. But questions still remain. What will happen to Dick Smith in the future? How can the retailer negotiate its way through the current difficulties of the retail industry while such a cloud hangs over its head? And finally, will Dick Smith survive this upheaval?
Current.com.au spoke exclusively to Dick Smith’s national operations manager, Armando Pedruco, to talk about the future of this famous Australian brand and icon.
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Current.com.au: What is the strategy behind the extensive store closures planned for Dick Smith?
Armando Pedruco: The stores that we’re choosing to close are stores that for several reasons haven’t performed. In this environment, with profit being hard to come by in all retail, you can’t sustain having stores that aren’t making money. We open every store with the ambition of making it a profitable store, and looking after the surrounding area. But the reality is that a lot of these stores haven’t lived up to expectation, or we’ve had some problems with them.
We are tactically looking at our stores and asking, ‘Does it cover the area that we’re trying to achieve?’. If we’re closing one store, we absolutely have another store nearby that we believe can capture that market.
We don’t need the overkill of three stores in an area of ten kilometres. That’s really hard to do now – rents aren’t getting any lower, and there’s a real challenge around productivity and how much that costs us these days.
C: What are you hoping to achieve with the closures?
AP: There are a lot of changes for retailers, and for us, our goal is to be around for the next 20 years. Though some of these decisions seem from an external view to be harsh, for us it’s all about making sure we survive this really tough period that retail is going through, and come out of it at the other end really strong. We’ll continue to have a sustainable business in the future, which is what we’re all aiming for.
C: Is it hard to plan for the future of Dick Smith when so much is up in the air?
A: I think it is, but most of us retailers have been around for a while – we’ve probably gone through some tough times in the last 15 years and this is similar. The challenge for us in Australia is probably with the online space – Australia really doesn’t know where that could lead. I think if you visit Europe or the US, they have very developed online business. We’re probably not there yet, but we’re heading that way.
But it’s important from the point of view of a bricks and mortar retailer that we don’t jump ship either, because there are still people, like myself for one, who love going out on the weekend and having a shop around. People still expect to come in and see a great range in our stores, as well as good prices and good service.
Dick Smith national operations manager, Armando Pedruco.
Tomorrow: The future of Dick Smith: Exclusive Interview (Part 2).