This Graph May Help To Explain Why Dick Smith Went Belly Up

Yesterday, Dick Smith's receivers announced that all 363 stores across Australia and New Zealand will be closing down over the next eight weeks. It was a sad and ignoble end to one of Australia's most beloved tech retailers...Except it wasn't actually that beloved at all. As this graph from Roy Morgan Research points out, customer satisfaction with the franchise was significantly lower than any of its competitors and had been spiraling downward for years.

The above chart looks at how the major players in the electronics retail space have fared with customers over the past five years. Roy Morgan found that customer satisfaction and store attendance both dropped at Dick Smith between 2011 and 2015.

Dick Smith wasn't the only retailer to shed customers over the last few years — we can thank online shopping for that — but all of its competitors managed to raise satisfaction levels over the same time period. Betta Electrical was particularly successful, jumping from 83 per cent to 93 per cent.

It's rather telling that Dick Smith’s customer satisfaction rating was the lowest of all the retailers in Roy Morgan's report. In the words of Roy Morgan Research CEO Michele Levine:

"While our data cannot shed any light on the company’s business practices, their consequences can certainly be seen in Dick Smith’s below-average customer satisfaction rating and shrinking customer base.   "Many businesses operating in this field could learn a lesson or two from Dick Smith’s downfall, starting with the importance of always ensuring the customer is happy."

As the next lowest performing retailer in Roy Morgan's poll, Harvey Norman may want to sink some money into improving its customer-facing operations and retraining staff. Dick Smith was the first to go, but we have a feeling it won't be the last.

[Via Roy Morgan]


Comments

    It's because Dick Smith's domain used to be electronics components and kits. That's what they were known for, and what people went to them for. When they switched to consumer electronics, they should've completely rebranded. It's not like it actually belonged to Dick Smith any more by that point anyway.

      Exactly.. They went from THE go-to place for components and DIY with a little bit of consumer electronics thrown in, to the complete opposite - but lacking the store sizes of places like Harvey Norman so having a rubbish selection in small stores with jacked up prices. I'm surprised that they lasted as long as they did.

      Yes, they started moving away from the electronic parts trade years ago. Jaycar seem to be about the only major player left in that space now.

      I haven't been inside a DSE store for years. I rarely need the parts, and everything else is cheaper elsewhere. There's not much in a DSE store - except for the capacitors and such - that you can't find in a Harvey Norman store, typically for less.

      It's a pity; my first computer was a Dick Smith VZ-200. It's been a long downhill slope since DIck Smith sold the franchise.

        There's a few other smaller chains still, such as altronics whose kit range is even bigger than jaycar. Jaycar did try go more the consumer electrical at one stage about 10 years ago and then back flipped. I've still got the old catalog some where from the year after where there is an apology.

          There used to be a stretch on York St in the Sydney CBD which had Tandy, Dick Smith, Jaycar, David Reid Electronics, plus a couple of computer specialty stores (CX Computers and Adelong) all within a one-block stretch. I think David Reid resold the Altronics stuff. Most of them shut down years ago, unfortunately.

            I'd forgotten about that stretch. Was behind QVB wasnt it? Or next block up?

              Behind the QVB, yes.

              I always privately called it "electronics alley." Best place in Sydney to shop for computer parts, cables and electronic components. With Jaycar and CX computers (and to a lesser extent, Adelong) there it's still a decent place for cables and some other computer equipment. Nowhere near as good as in its heyday, however.

    Betta Electrical and Retravision still exist?

    Dick Smith had nice, gleaming stores on main street and in shopping malls, but those resulting overheads meant that even their "hot" deals were still 10-15% more than an online supplier at their regular price, often with free postage. I'm left with the impression they ended up selling to customers who didn't know any better or were desperate for a quick replacement cable or charger.

    Hopefully the brand can come back as an outer suburbs warehouser, offering a greater range of electronics and electrical than the others, with a better online presence and next day delivery.

    As this graph from Roy Morgan Research points out, customer satisfaction with the franchise was significantly lower than any of its competitors...2% is not significantly lower.

    Google the article 'Dick Smith is the Greatest Private Equity Heist of All Time' - Fascinating article on how the business was ruined and investors were screwed over.

    A bit late on this comment, but to echo the words of others - last year I tried to buy a soldering iron from my local DSE. They didn't have any. Used to be, they'd be the go-to guys for that sort of stuff.

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