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Dell to try branded stores--sans inventory

Company wants to show off more products in a larger space, but you won't be able to walk out with an Inspiron notebook. Photos: Tomorrow's Dell store

Dell plans to open two stores this year, but has no plans to abandon its direct-sales model, a company representative said Tuesday.

The first store will open in Dallas' NorthPark Center, while the second is destined for the Palisades Center in West Nyack, N.Y. Neither store will carry inventory. Rather, the shops will allow customers to order products through Dell's Web site after trying out the display models, said Venancio Figueroa, a Dell spokesman.

Prototype of Dell store

Dell has been experimenting with kiosks inside retail shopping malls, and within Sears stores, for a few years. One of the problems with Dell's famous direct-sales model is that consumers don't get to see and handle products before they buy. The kiosks provided a partial solution to that problem, but the kiosks can't hold much more than a few items.

The 3,000-square-foot stores will allow Dell to set up a mock living room full of its products, where customers can learn more about PCs, digital televisions and other electronic equipment, Figueroa said.

Dell says it's making money from its kiosks, so extending the concept to larger stores makes sense, said Stephen Baker, an analyst with NPD Techworld. "They still control everything. The essence of being direct is that I control the entire transaction set with the customer," he said.

Dell's stores should do better than Gateway's defunct retail operations, because Dell is focusing on high-traffic upscale shopping malls, whereas Gateway built its many of its stores in strip malls. Dell, however, will be going head-to-head with Apple Computer stores in the same facilities in both Texas and New York. "It has to be a real high-quality experience in there" to compete against the meticulously planned Apple shops, Baker said.

The Dallas store is expected to open in July, according to NorthPark Center's Web site. The New York store will be the second to open, Figueroa said.

Dell's once-rapid growth has slowed in recent quarters, especially among U.S. consumers. Last week the company said it plans to spend $100 million to improve the service and support of its products.