Dick Smith (retailer)

This article is about the electronics retailer. For the company's founder, see Dick Smith (entrepreneur). For other uses, see Dick Smith.
Dick Smith Holdings Limited
Formerly called
 Dick Smith Electronics
Subsidiary
Traded as ASX: DSH
ASX: KGN
Industry Retail
Fate In liquidation, as of 25 July 2016
• Online assets acquired by Kogan.com
Founded 1968 (1968) in Sydney, Australia
Founder Dick Smith
Defunct 3 May 2016 (2016-05-03)
(store operations only)
Headquarters Chullora, Australia
Areas served
 Australia and New Zealand
Products Consumer electronics
Brands
  • Dick Smith (Australia)
  • Dick Smith (New Zealand)
  • Electronics powered by Dick Smith
  • Move
Number of employees
 3,300 (2015)
Website www.dicksmith.com.au (Australia)
www.dicksmith.co.nz (New Zealand)

Dick Smith Holdings Limited (formerly Dick Smith, Dick Smith Electronics or DSE) was, until 2016, an Australia-wide chain of retail stores that sold consumer electronics goods, hobbyist electronic components, and electronic project kits. The chain expanded successfully into New Zealand and not so successfully into several other countries.

Since 2016, online retailer Kogan.com has traded under the Dick Smith brand name in an online-only format, with Australian and New Zealand websites.

The company was founded in Sydney in 1968 by Dick Smith and owned by him and his wife until 1982.

Woolworths Limited purchased Dick Smith Electronics in 1982, and in 2012 sold the company to Anchorage Capital Partners, who floated it on the Australian Securities Exchange (ASX) in 2013. By December 2015, the share price had fallen 80% and in January 2016, a halt in trading was requested. On 5 January 2016, Dick Smith Holdings Limited (and associated entities) was placed into administration by its creditors.[1] On 25 February 2016, a statement released by the receivers detailed the closure of all Dick Smith stores due to failed attempts to sell the company.[2] Approximately 2,460 staff in Australia and 430 in New Zealand were made redundant as a result of store closures.[3] The last Dick Smith stores closed on 3 May 2016.[4]

In May 2016, online retailer Kogan.com purchased the Dick Smith brand, trademarks, intellectual property, and its online business in Australia and New Zealand, for an undisclosed sum. On 4 May 2016, Kogan.com relaunched the Dick Smith brand-name as an online-only technology retailer in Australia and New Zealand.

On 25 July 2016 Dick Smith's creditors placed the remainder of the company in liquidation.

History

Early years

The business started in 1968 in a small rented premises in a car park in the Sydney suburb of Neutral Bay with a total capital of only AU$610. Initially, the business focused on installing and servicing car radios. In 1969, the business's success required it to move to bigger premises, first Atkinson Street, St Leonards, later Carlotta Street, Artarmon with flagship store nearby on the Pacific Highway, Gore Hill.

Alongside the car radio business, Dick opened "Dick Smith Wholesale". The business catered to electronics hobbyists, meeting a need Smith (himself a keen hobbyist) had felt. In those days, hobbyists could only buy components from larger wholesale companies better setup for dealing with commercial customers. After touring overseas electronic stores to study modern merchandising methods, Smith introduced self-serve shopping, a breakaway from the longstanding counter-sales setup found in component sales at the time, and produced an annual mail-order catalogue with a substantial data section.

Publicity Stunts

External video
Dick Smith Electronics past ads

The company promoted itself with wacky-style and Smith's own publicity stunts. For example, Smith claimed that he would tow an iceberg from Antarctica to Sydney Harbour, cut it up into small bits and sell it for 10 cents a cube. On the morning of April 1, it appeared as if he had succeeded as hundreds of phone calls began flooding into local radio, television stations, and newspapers reporting the iceberg, most of which were from Dick Smith employees. However, he instead towed a man-made iceberg, constructed on a barge, with a big sheet of white plastic and firefighting foam as an April Fool's joke.[5]

Expansion

A Dick Smith Wizzard – a combination computer/video game console that was rebranded and sold through the stores

The company profited from the CB radio boom of the 1970s[6] and by the end of the decade had stores in all mainland states. Though many CB radio stores closed when interest waned at the end of the 70s, Dick Smith Electronics thrived on exploding PC sales and its established electronic components and kit lines.

To ensure almost every electronic enthusiast in Australia had one of his catalogues, it was included free in the popular electronics magazines Electronics Australia and Electronics Today International. The catalogues included ever-increasing amounts of data on electronic components, which helped make it an essential reference for anyone involved in electronics professionally or as a hobby.

DSE's own-brand System 80 computer, which was a clone of the Tandy TRS-80 Model I,[7] led a highly successful line, including the Dick Smith Cat (an Apple II clone), the VZ-200 and VZ-300. The company also sold brand name personal computers such as the Commodore VIC-20 and Commodore 64. In 1981, the Super-80 kit computer was developed as a joint venture between the company and Electronics Australia magazine.[8]

The company expanded its product range, especially during the 1970s and 1980s, and stocked items such as the Heathkit electronic kits, satellite TV receiving stations, Beeple pagers and the Dick Smith Wizzard computer game. The company was an early seller of telephone equipment including answering machines, cordless and novelty phones.

Woolworths takeover

In 1980, the company had grown to 20 stores and the founder sold 60% of the company's working share to Woolworths Limited. Smith sold the balance to Woolworths in 1982 and it took full ownership of the company, having paid a total of A$25million.[9] The company continued to add to its network of small "main street" stores in suburbs and regional cities across Australia.

Powerhouse

The logo used for Dick Smith Powerhouse stores before the branding was discontinued in 2009

The late 1990s saw the company establish "Dick Smith Electronics Powerhouse" super-stores across the east coast of Australia. The first Powerhouse store was opened in Bankstown, New South Wales in 1996.[10] These were several times bigger than regular stores at approximately 2,000 square metres (22,000 sq ft) and contained departments for the main product categories and supermarket-style checkouts. The "Powerhouses", as they were known, carried a wider range of products than the smaller DSE stores, especially in the computing, audio-visual and amateur radio areas, and introduced Music to the range. Some installation services were also introduced as well as Computer repairs and upgrading.

In 2002–2003, the Powerhouse concept changed to focus on a broader consumer market and less towards electronics enthusiasts. Component ranges shrank and general electronics books ceased to be stocked. The Yaesu dealership was relinquished, ending a 27-year partnership. Electronic kits were transferred to the smaller DSE stores and were replaced by small appliances such as kettles, coffee makers, toasters and frypans which were removed in late 2008. In late 2007, Powerhouse stores also transferred many other small components, tools, leads and connectors, continuing to distance the super-stores from the company's roots.

In 2007, Dick Smith Powerhouse stores introduced a home installation service known as "PowerSquad" to install major items such as TVs and computer systems or to provide set-up and training on smaller items such as wireless networking and MP3 players.[11] The Powerhouse name was retired in 2009 as part of the company's re-branding. These stores are now known internally as Dick Smith "Large Format". The home installation service was relaunched in 2009 as "Mobile Techxpert Services" and again as "Clever Dick" in 2012, in line with the company's new branding.[12]

2008 rebranding

Hornsby DSE, housed inside Westfield Hornsby, was the first store to be renovated under the new concept

In early 2008, following Woolworths' review of its consumer electronics division, Dick Smith Electronics renovated its flagship store in Hornsby, New South Wales, as a "concept" under the branding "Dick Smith Technology". The store's design and product range was completely reworked incorporating a more modern feel while removing all electrical componentry and much of its tools. These products were replaced with a larger range of computers, gaming, televisions and Macintosh computers, much of which had previously been only sold in Powerhouse stores.

Inside the first Dick Smith concept store Hornsby DSE following its rebranding as Dick Smith Technology

Following further strategic review, the company decided to push forward with the new concept under the reworked "Dick Smith – Talk to the Techxperts" branding, merging all existing Dick Smith Electronics and Powerhouse stores under the same banner. In late 2008 the new Dick Smith logo (designed by Hoyne Design) and format was rolled out with many Powerhouse stores such as Macquarie Centre and Auburn being rebranded to fit the new unified company logo.[13]

The mail-order catalogue so central to the company's success from the early days was last published in 2009, giving way to the online sales platform.

Newly branded Dick Smith outlet in the Sturt Mall, Wagga Wagga

As of 2012 Powerhouse style stores, now "Large Format Stores", opened in Chadstone Shopping Centre and Bendigo in Victoria, Marion, South Australia, Perth central business district, Innaloo and Rockingham in Western Australia, Hobart in Tasmania, and Stockland Rockhampton in Queensland, under new "Dick Smith – Talk to the Techxperts" branding. The new format stores had a refreshed look and logo, carried a similar range as all other Powerhouse stores minus the electrical components, plugs and sockets, with more of a focus on technology such as computers, entertainment and communications. In March 2009, Woolworths Limited CEO Michael Luscombe confirmed the end of Powerhouse as a separate entity, also adding that the company's third consumer electronics brand Tandy would be gradually phased out over the next three years as the stores' leases ended. This phase left "Dick Smith" as the sole brand in the parent company's consumer electronics division.[14]

Acquisition by Anchorage Capital

On 31 January 2012, after nearly 30 years of ownership, Woolworths announced that after the results of a strategic review and a $300 million restructuring, it would close up to 100 Dick Smith stores and sell the business.[15] The company was sold to Australian investment firm Anchorage Capital Partners in September 2012, for the sum of A$20 million in cash.[16][17][18] Although the sale of Dick Smiths totalled some $115 million, it has been argued that Anchorage only committed $10 million in funds due to the manner which they purchased the company, and the remainder of the funds were in fact sourced from the business itself through liquidation of inventory and plant equipment, and taking provision for future onerous lease payments.[19][20] In November 2012, Nick Abboud was appointed CEO.

In December 2013, Dick Smith was floated by Anchorage, becoming a public company.[21] At the time of the listing, the market capitalisation of the company was valued at A$520 million, less than two years after Anchorage had purchased the company for A$20 million.[22][23] Anchorage initially retained 20% of the shares in the new company, selling their stake in the company altogether in September 2014.[24]

Alliance with David Jones

From 1 October 2013, Dick Smith took over the operation of the home entertainment department in 30 David Jones retail stores in Australia and online. The venture was created by the use of a Retail Brand Management Agreement (RBMA). The RBMA allowed Dick Smith to economically extend its network of stores and operate under the banner "David Jones Electronics Powered by Dick Smith". The agreement includes televisions, computers, tablets, home office, audio-visual and other digital products, but not white goods or small appliances, which will continue to be sold by David Jones, with employees and inventory transferred over to Dick Smith.[25] In 2014, following the first anniversary of the opening of the first store, in response to high sales, Dick Smith planned to expand the offerings available to include more high-end items such as 4K UHD TVs and premium audio brands such as Bose.[26]

Purchase of MAC1

In September 2014, DSE announced the purchase of MAC1, an authorised Apple Service Centre and reseller for $1. It was planned to open MAC1 Store In Store (SIS) locations within selected DSE stores, increasing traffic and improving service. It was thought that MAC1, one of the largest Apple sales and service providers in Australia, would improve DSE's education market presence. By January 2016, MAC1 had two retail stores, in Wollongong and Canberra, and nine SIS locations, including four in New South Wales, two in Western Australia and one each in South Australia, Victoria and Tasmania.[27]

Trade Me alliance

In December 2014, DSE announced the launch of the Dick Smith Trade Me store (not to be confused with New Zealand's online auction site of the same name). Trade Me's 3.5 million members would then be able to purchase directly from Dick Smith through their existing Trade Me on-line marketplace accounts.[28]

Private-label products

Dick Smith Electronics introduced private-branding ("Dick Smith" and "DSE") on a large range of products from the late-70s. By 2007, the DSE brand could be seen on products including portable DVD players, set-top boxes, TV aerials, AV receivers and amplifiers, NiCd and NiMH rechargeable batteries as well as alkaline and lithium batteries, digital cameras, speakers, flash memory devices, UHF radios, webcams and Ethernet, crossover, USB, composite analog, component analog and 240V power cords.[29] Many DSE-brand products were re-branded versions of the same or similar products sold in parallel by their manufacturers.

Sponsorships

DSE sponsored the Melbourne Stars in the T20 Big Bash League cricket, a number of tennis tournaments including the Hopman Cup (Western Australia), the World Tennis Challenge (South Australia), the Brisbane International (Queensland) and the The Apia International (Sydney).[30]

The company was a sponsor of the National Rugby League nine-a-side tournament, the Auckland Nines[30] and of the AFL club Richmond from 2008 until the end of 2011.[31]

Outside Australia

Hong Kong

DSE's first foray offshore was the establishment Dick Smith Electronics (HK) Limited in Hong Kong in 1978. It operated a small buying office and one retail store, at two locations in Ashley Road, Tsim Sha Tsui, Hong Kong. The store targeted tourists generally and Australians, in particular, looking for tax-free DSE products. An international edition of the flagship catalogue was published in support of the operation. In the face of fierce competition from established local retailers and disappointing sales, the business closed in June 1980.

New Zealand

Dick Smith Electronics registered for business in New Zealand in 1981[32] and is believed to have opened a store the same year.[33] In 1992, the company acquired and rebranded the retail business of David Reid Electronics, a similar chain that at one time consisted of about 30 stores.[34] In some cases, this meant that for a time two Dick Smith stores operated in the same suburb.

In New Zealand, Dick Smith Electronics had over 75 locations.[35] They included the "Powerhouse" stores, the first of which opened in Hamilton, followed by Manukau, Sylvia Park in Auckland, and Palmerston North. A third brand "Dick Smith Technology" store opened in Lower Hutt, following the same Powerhouse product range. Its e-commerce website had been using a search engine by SLI Systems that learns from what the users search for.[36]

United States

From 1980, DSE operated a small number of stores in the United States, in Northern California and Los Angeles, but had closed by the end of the decade.

Failure

A Dick Smith Electronics store in Melbourne, Victoria during the liquidation sale

On 4 January 2016, with the value of shares in Dick Smith Holdings having fallen by more than 80% since they were listed on the ASX in December 2013, a trading halt was requested.[37] The following day, the retailer collapsed and was placed into receivership. McGrathNicol were appointed as administrators by the company's board and Ferrier Hodgson appointed by the company's major creditors National Australia Bank (NAB) and HSBC Bank Australia.[38] CEO Nick Abboud stepped down on January 12.[39]

Having failed to secure a buyer for the stores, receivers Ferrier Hodgson announced, on 25 February 2016, that all 363 DSE stores in Australia and New Zealand would be closed, with the loss of 2,460 jobs.[40][41][42]

On 15 March 2016 it was revealed that Kogan.com, the online retailer founded by Ruslan Kogan, had acquired Dick Smith’s online business for an undisclosed price.[43]

The last stores closed on 3 May 2016.

On 25 July 2016 Dick Smith Electronics' creditors placed the company in liquidation.[44] Creditors were expected to lose up to A$260 million.[45]

Though unconnected with the company for 34 years, its founder Dick Smith expressed dismay at the closure and put it down to the "utter greed of modern capitalism"[46]

See also

References

  1. ↑ "Dick Smith fears turn true". Sky News. Australian News Channel Pty Ltd. 5 January 2015. Retrieved 26 July 2016.
  2. ↑ "Ferrier Hodgson - Press Release: Dick Smith group to close". www.ferrierhodgson.com. Retrieved 25 February 2016.
  3. ↑ "Dick Smith Group to Close" (pdf) (Press release). Ferrier Hodgson. 25 February 2016.
  4. ↑ Paynter, Jack. "Bargain hunters grab last minute bargains Dick Smith closes for the final time". Herald Sun. Retrieved 3 May 2016.
  5. ↑ "The Sydney Iceberg". The Museum of Hoaxes. Alex Boese. Retrieved 12 February 2015.
  6. ↑ "The CB Boom". OzCBRadios.com. Retrieved 11 February 2015.
  7. ↑ "At last a computer for those who know NOTHING about computers!" (PDF). ELECTRONICS Australia: 10. March 1978. Retrieved 11 February 2015.
  8. ↑ "The Super 80 Computer—at last" (PDF). ELECTRONICS Australia. 43 (6-8). 1981. Retrieved 11 February 2015.
  9. ↑ Nigel Moll (September 1992). "Logbook - Lindy's legacy". Flying Magazine. Sportsman's Market, Inc. 119 (9): 46. ISSN 0015-4806. Retrieved 11 February 2015.
  10. ↑ Banks, Terry (4 September 1996). "Retailing Supernova: Dick Smith's new PowerHouse". ARN. IDG Communications. Retrieved 11 February 2015.
  11. ↑ Mcentee, Claire (27 April 2009). "Dick Smith to offer home tech help". Stuff NZ. Fairfax New Zealand Limited. Retrieved 11 February 2015.
  12. ↑ "Clever Dick". Dick Smith. Retrieved 11 February 2015.
  13. ↑ Chris Thorpe (3 April 2009). "You Don't Know Dick". Brand New. UnderConsideration. Retrieved 11 February 2015.
  14. ↑ "Woolies sets deadline for Powerhouse and Tandy brands". Connected Australia. 9 March 2009. Retrieved 2009-04-07.
  15. ↑ Gannon, Genevieve (31 January 2012). "Woolworths to sell Dick Smith Electronics". The Sydney Morning Herald. Fairfax Media. Retrieved 9 February 2015.
  16. ↑ Janda, Michael (27 September 2012). "Woolworths sells Dick Smith to private equity". Australian Broadcasting Corp. Retrieved 9 February 2015.
  17. ↑ Woolworths sells Dick Smith chain to buyout firm for $A20m - National Business Review. 27 September 2012
  18. ↑ Dick Smith’s $400m fall: how a retail icon stumbled - Crikey.com.au, 28 September 2012
  19. ↑ Ryan, Matt Ryan. "Dick Smith is the Greatest Private Equity Heist of All Time". Retrieved 3 December 2015.
  20. ↑ "Dick Smith blames company's previous private equity owners' 'greed' for collapse; employees wait to hear fate". ABC News. Retrieved 26 February 2016.
  21. ↑ Mason, Max (5 December 2013). "Dick Smith flat after underwhelming debut". The Age - Business Day. Fairfax Media. Retrieved 9 February 2015.
  22. ↑ The agony and the agony: Dick Smith's journey from private equity plaything to IPO - National Business Review, 5 January 2016
  23. ↑ Fickling, David (5 January 2016) Who Killed Dick Smith? - Bloomberg, Retrieved 5 January 2016
  24. ↑ Investments-Dick Smith Holdings Limited - Anchorage Capital, retrieved 5 January 2016
  25. ↑ Speedy, Blair (12 August 2013). "David Jones in electronics retail deal with Dick Smith". The Australian. News Corp. Retrieved 9 February 2015.
  26. ↑ Greenblat, Eli (13 October 2014). "Dick Smith shifts most of its high-end electronics through David Jones". The Australian. News Corp. Retrieved 9 February 2015.
  27. ↑ "Dick Smith Electronics acquires Mac1 for one dollar". 12 March 2015. Retrieved 3 January 2016.
  28. ↑ "Press Release - DICK SMITH'S GROWTH CONTINUES, NOW THROUGH TRADE ME" (PDF). Dick Smith. 10 December 2014. Archived from the original (PDF) on 9 February 2015. Retrieved 9 February 2015.
  29. ↑ "DSE Brand Range Search". DSE Ltd. Retrieved 2007-12-19.
  30. 1 2 "Sponsorships". Dick Smith Holdings. Archived from the original on 9 February 2015. Retrieved 9 February 2015.
  31. ↑ Wilson, Caroline (24 February 2011). "Tigers still searching for major guernsey sponsor". The Age - Real Footy. Fairfax Media. Retrieved 9 February 2015.
  32. ↑ "DSHNZ Limited (37602) In Receivership and in Liquidation". New Zealand Companies Office. 2016. Retrieved 2 September 2016.
  33. ↑ "Dick Smith to be put out of its misery". wares.co.nz. 26 February 2016. Retrieved 2 September 2016.
  34. ↑ "Company History". Reid Technology. 2016. Retrieved 2 September 2016.
  35. ↑ "Store Locations". DSE (NZ) Ltd. Retrieved 2013-09-24.
  36. ↑ Koutsonikolas, Athena (1 August 2014). "Dick Smith Reports Strong Growth Online with Enhanced Search Technology". Power Retail. The Media Pad. Retrieved 12 February 2015.
  37. ↑ Eloise Keating (4 January 2016). "Dick Smith collapses into voluntary administration". SmartCompany.com.au.
  38. ↑ Dick Smith fears turn true skynews.com.au, AAP. 5 January 2016, Retrieved 6 January 2015
  39. ↑ Janda, Michael Janda (12 January 2016). "Dick Smith CEO Abboud resigns, Grover to take over". ABC News. Australian Broadcasting Corporation. Retrieved 20 January 2016.
  40. ↑ "Dick Smith stores to close after receivers fail to find buyer; almost 3,000 jobs lost". ABC News. Retrieved 26 February 2016.
  41. ↑ "Dick Smith to close: Chain to shut down after receivers fail to win 'acceptable' offers". Herald Sun. Retrieved 25 February 2016.
  42. ↑ Tucker, Harry (30 March 2016). "All Dick Smith stores will close by April 30". Business Insider Australia. Retrieved 30 March 2016.
  43. ↑ Mitchell, Sue (15 March 2016). "Dick Smith brand to be resurrected by Ruslan Kogan". Fairfax Media Publications PTY LTD. Retrieved 26 March 2016.
  44. ↑ Pash, Chris (25 July 2016). "Dick Smith creditors have put the electronics retailer into liquidation". businessinsider.com.au. Retrieved 25 July 2016.
  45. ↑ Pash, Chris (13 July 2016). "DICK SMITH: A $260 million shortfall". businessinsider.com.au. Retrieved 25 July 2016.
  46. ↑ Ong, Thuy (25 February 2016). "Dick Smith stores to close after receivers fail to find buyer; almost 3,000 jobs lost". ABC News. Retrieved 15 November 2016.

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