Comments on: Private equity firm buys Dick Smith Electronics

By: iBretto

iBretto — Thu, 29 Nov 2012 09:53:12 +0000

I agree entirely with the comments from Jose re the importance of Private Equity players in the market. I agree to a point with just_a_bloke who seems to be a Jaycar electronics advocate as I was until recently when I realised that the staff there (becoming increasingly aware that they are maybe the last bastion for all those little specialist parts that we all crave to complete our precious projects) can be (generally – NOT ALL) opinionated, rude, sloppy, smarty pants individuals.

I am approaching now my senior years and I have a few Degrees; all of which I worked hard for over many years, albeit none of them (yet) are in electronics. However, unlike the management of the much revered and seemingly ONLY retail outlet for “bits and pieces” who apparenmtly can only source their staff form the GEN Y genetic stocks, I am not dumb and don’t appreciate being treated this way.

Jaycar will in my opinion (unfortunatley) fail because the management has no control over the imposters they employ at the coalface.

I now do all my business offshore via ebay at a fraction of the cost of AUS retail and as a Certified Property Valuer this goes against my very grain because I know this further contributes to the demise of the Australian Retail Property market now in it’s most significant downturn in 20 (TWENTY) years, but I am smart enough to know when I am throwing money down the toilet.

I ask you all one Question only; where can I spend my money with an Australian Electronics retailer that will give me value for money, good advice, no smart ar&e kids and the desire to form a long term buyer/seller relationship with me?

If that question can’t be answered then (IMHO) the Jaycars of the current world will go the way of their predescesors and everyone will do online trade with the US, China and Hong Kong.

By: just_a_bloke

just_a_bloke — Tue, 02 Oct 2012 00:51:30 +0000

PS, have you seen what DS charge for HDMI & Network cables!!! They make HN almost look good value!!!!

By: just_a_bloke

just_a_bloke — Tue, 02 Oct 2012 00:49:43 +0000

Im not sure why anyone would be worried, this mob is likely to have a pretty aggressive resurrection strategy already to go otherwise they wouldnt have wasted their money on DS.

Im personally very interested to see what they do – if they stop DS stores from being peddlers of over priced yum-cha brands, overpriced console games etc and pursue an aggressive online strategy then DS could have a very bright future.

Even if they fail I dont think that many folk will care, as anyone with fond memories of DS (and Tandy Electronics before it was borgified!) will have already taken their business to Jaycar Electronics.

By: Jose

Jose — Tue, 02 Oct 2012 00:40:53 +0000

For those worried about a ‘cut and burn’ strategy being imposed on Dick Smith once the sale is completed, well I can assure you this is what is needed. Woolworths is a traditional retail player and will use profits from one part of their business to prop up parts that are suffering or bleeding cash. Traditional retail players are known to sit around for a few years waiting for improvement despite all the warnign signs. Myer is a good example of that at the moment with it also being potentially up for sale with massive sotere closures. Private Equity groups are substantially different and take a more hardline approach to see that their investment pays off. Of course they are going to cull staff and cut costs to bring the business back to a sustainable point. You can’t expect someone to buy something and not have the right to make changes to realise a profit from their investment. Business is not charity and Private Equity generally represents hardline capitalism and you cant blame them for what they do …. it’s all about performance and profit, which I might add is essential in running any business regardless of the size. Add to that, under the Australian Corporations Act, a corporation (Company) must act in the best interests of its shareholders…. there is no reference in the Act to incubating failing and/or unprofitable and underperforming businesses.

I think you will find Anchorage will end up shutting down the majority of the stores if they are unable to be restructured and doing an online only pitch. Alternatively, you may find a drastic change in their retail strategy and them reposition to a JB HiFi style operation with greater focus on bare concrete and timber floors and low costs store fit outs, and again a big push into online.

AU$20M for the brand alone is a good deal. It would be interesting to see what the true debt liabilities are and how deep the rabbit hole goes, but I truly believe that the business can be effectively rebuilt as long as those inserted into it have the balls to make the tough decisions and implement a solid strategy while putting up with the criticism of the remain staff, soon to be ex staff, the general public and no doubt if job losses are incurred, unions and a Federal Government intent on destroying those in this country with the balls to get off their backsides and build a business.

Just remember that private equity money is the backbone to our economy and society in general , for both listed and unlisted companies. Without private equity many businesses would fail without a second, third or fourth chance and many more people would be out of work. Without private equity, we would not have many of our motorways, airports, airlines, retail players, technology firms etc. Private equity investment is good despite what some may think

/end_rant

By: Soth

Soth — Fri, 28 Sep 2012 05:04:58 +0000

I went to the one in Perth city only last week, tried to sell me an 8gb micro sd card for $48
went to office works and bought the Ultra 8gb version for $16.

By: Tom

Tom — Thu, 27 Sep 2012 07:39:17 +0000

Dick Smith started going downhill when they moved away from the Electronics market. I don’t see Jaycar going out of business any time soon…

By: Ben Zemm

Ben Zemm — Thu, 27 Sep 2012 07:23:31 +0000

Back in the day I spent all my pocket money at Dick Smith’s, buying the Funway Into Electronics kits and other components, playing with electronics, etc. But now everything has moved on and will probably just be in software now!

By: Ben Zemm

Ben Zemm — Thu, 27 Sep 2012 07:17:42 +0000

My printer is 10 years old and still does its job. And it wasn’t an expensive model either: just a standard mono laser printer. I bought it to print out uni assignments, but since I only print a few dozen sheets a year I’ve only gone through a handful of toners.

By: just_a_bloke

just_a_bloke — Thu, 27 Sep 2012 07:02:02 +0000

Dick Smith lost me as a customer when they started selling expensive crap and left the “real” electronics market to Jaycar!

they also killed off Tandy Electronics and that annoyed me too. :-(

By: den

den — Thu, 27 Sep 2012 06:42:46 +0000

I agree, DSE has lost its way and it’s not in any way competitive either.
I see stickers on video games still at $99 that are at least 1 year old and there is very little stock.
JB on the other hand discounts old games, sells their new games for $79.

Limited range, out pricing the competitors and generally it isn’t all that enjoyable to shop there.

By: Poo2

Poo2 — Thu, 27 Sep 2012 06:24:33 +0000

I am so old that when I was a kid ? – I used to shop at THE first Dick Smith store in Richmond (Abbotsford?), that Dick Smith used to run.

I used to buy electronic bits and pieces and kits and all that.

As technology changed from electrical gear having hand installed components, to prefab circuits, and then onto all surface mount – non replaceable // disposable gear, then the home repair / creation enthusiast / kit builder market slowly went with it.

Thus Dick Smith Electronics – at whatever the sale time to Woolworths came and went, and the people who manage Woolworths, decided to dump the electronic parts and spares and kits, and turned it into a white goods store – with a little area with the resistors, LED’s and a FEW other things off in the far back corner.

And now…..

The only people into electronics are people who know how to fix up their stereos from the 70′s and 80′s and who can repair or make things – they stopped shopping at Woolw.. I mean Dick Smiths ages ago.

Don’t much care any more.

Corporations – and the people running them, have that effect.

By: Paul Thompson

Paul Thompson — Thu, 27 Sep 2012 05:03:36 +0000

I agree that Dick Smith stores seem to be suffering an identitiy crisis.
They dont know if they are a Harvery-Norman style store. They don’t know if they are a Jaycar. They don’t know if they are a toy shop. They don’t know if they are a Crazy John’s. They don’t know if they are a computer shop.
This generally means that they have a poor selection of anything, and that the prices are not very good either.
“Dick Smith” as a brand is extremely recognisable, the problem is that it is hard to bring to mind exactly what is stands for these days. When I have a need, whether it is for a phone, a television, a computer, or a length of cabling – Dick Smith simply doesn’t come to my mind.
A strong online store would be a great idea, although I think that they need to re-establish what the Dick Smith brand even means anymore.

By: LetsBeOpenAboutThis

LetsBeOpenAboutThis — Thu, 27 Sep 2012 04:57:00 +0000

I miss the old store chain, Where you could build exciting kits to do with computers or ham radio and where you could get everything you needed to make your own projects, They also used to be the sole Yaesu dealer in Australia, Don’t know what happened there?
But when Woolworths took over they changed it into just another home electrical (small W).
I guess there is always Altronics!

By: NBNAccuracy

NBNAccuracy — Thu, 27 Sep 2012 04:42:38 +0000

I assume when they aquire the business though it comes with a lot of liabilities. Just the employee entitlements, holidays, long service leave, etc, can be massive. Let’s hope for the employee’s sake they can do something with them. Being bought out may not be in their best interests. If they close down the stores under Woolworths they have a large company their that pay out those entitlements plus redundancy, etc. If this firm that bought them can’t make it work they are unlikely to have to money to pay out those entitlements.

By: Geoff

Geoff — Thu, 27 Sep 2012 04:05:42 +0000

$61,538 per store is pretty amazing. With such a low acquisition cost just about anything they do is going to give them an upside when they sell it. Then again retail might completely implode between then and now so who knows :)

By: Bob.H

Bob.H — Thu, 27 Sep 2012 03:53:55 +0000

@ Matthew Jones @ James

Thanks for the pointers. Appreciated. :-)

By: James

James — Thu, 27 Sep 2012 03:48:29 +0000

“While I can appreciate the commercial expediency of getting away from the electronics side of the business I am a bit sad that I can’t just nip down the street and pick up a length of cable or plug that I need to do a quick repair job at home.”

Give Jaycar a try if there’s one near you. They have ridiculous amounts of everything I used to go to Dick Smith for.

By: NBNAccuracy

NBNAccuracy — Thu, 27 Sep 2012 03:29:20 +0000

I am not sure what they can do with Dick Smith. The stores are a long way from their roots as an enthusiast electronics store. At some point it seems they tried to become Harvey Norman in some sort of half arsed fashion. What they sell now is just a small collection of crap.
Where they come from has had it’s nitch filled by stores such as Jaycar. A Dick Smith store is really pretty small compared to something like a HN. Maybe rather than trying to sell everything they specialise more and reduce themselves to doing one thing very well. As to what, I have no idea. Whatever they are doing now on a small scale everyone else is already doing better.

By: Matthew Jones

Matthew Jones — Thu, 27 Sep 2012 03:28:17 +0000

I’ve found (strangely enough) that *Bunnings* of all places is excellent for that sort of thing. Well priced, cables/connectors/plugs of all sorts.

By: Ron

Ron — Thu, 27 Sep 2012 03:05:17 +0000

I’m not a business person but whenever I hear ‘private equity buyer’ I think of the old ‘bottom of the harbour scheme’ from the 70s (or was it the 80s ?) where a company was bought then assets were stripped which caused the company to go into bankruptcy.

Perhaps what’s happening to CH9 at the moment is an example?