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Dell To Cut Back Retail Sales, Push Direct-Mail Sales

July 11, 1994

AUSTIN, Texas (AP) _ Dell Computer Corp. said Monday it will stop selling its products in retail outlets in the United States, Canada and Europe and focus on direct sales and a few wholesalers.

While Dell, the nation’s sixth-largest maker of personal computers, has stopped shipping products to retailers, it will support retail outlets until their inventory of Dell products is depleted, said spokeswoman Michele Moore.

The retail chains affected by Dell’s move are CompUSA, Best Buy, Price- CostCo, Sam’s Clubs and British-based PC World.

Moore said retail sales are expected to make up less than 2 percent of Del’s revenues in the company’s second fiscal quarter, which ends July 31. The company reported first-quarter revenues of $767 million.

Retail sales have never reached 10 percent of Dell’s revenues, she added.

″The strength we are seeing in our own direct business to consumers has convinced us that focusing on this business will be far more valuable to our organization than traditional retail expansion,″ said Michael Dell, chairman and chief executive officer.

In a talk to reporters at an industry trade show last month, Dell indicated it was hard to make a profit by selling through stores. Other major PC makers crowd the limited space retailers have for selling computers.

Moore said Dell ″is very committed to the retail consumer, but we are looking to experiment with some new and emerging marketing techniques.″

They include computer programs that consumers can access to look through catalogues and order products directly, she said.

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