"We believe there is a high-level belief at Dell that customers in the consumer market need to experience (i.e. touch and feel) the products more than in the business segment. Retail is the next logical step," wrote Sam Bhavnani, a research director at Current Analysis, in a recent report.
A retail presence would allow consumers to gain hands-on experience with Dell computers and flat panel TVs, the analyst suggested.
Such a move could also help polish up the company's tarnished customer service image by serving as a drop-off location for products that need servicing.
Bhavnani warned, however, that shareholders could undermine a move into retail because of the costs and the fact that the investments could take several years to show a pay-off.
Michael Dell was reappointed as the company's chief executive last week, after standing down in July 2004. The move followed declining revenues and a drop in overall market share.
Dell currently operates so-called Dell Direct Stores where consumers can test drive select computer models and talk with company representatives.
The kiosks do not sell any merchandise, however, and still require buyers to place orders through the company's website.
Under previous chief executive Kevin Rollins, Dell focused largely on improving its supply chain but allowed research and development to fall by the wayside.
The company fell behind in the industrial design and customer experience of its computers.
"Dell seemed to lack the intangibles that work in a Web 2.0 world," noted Bhavnani.
The analyst now expects Michael Dell to put more emphasis on product innovation.
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