When I was much younger, Dick Smith was where you went to buy electronic kits to make various projects and learn about physics. The LED lights, diodes, wire and pin bits were all purchased from there. Either my brother or myself got an electronics kit for Christmas from Dick Smith once. That would have been in the early 1990s. Since then, much has changed with the digital age and as the types of electronics in demand changed, Dick Smith had to adapt to consumer preferences. The rise of of bigger players and the diversification of the range of electronics meant that Dick Smith had to make a choice between sticking with its niche market and developing that or diversifying its range and trying to attract new customers.
Yesterday Dick Smith Electronics was put into receivership and its stock frozen on the sharemarket. Since those days that are described above, in order to compete with other players such as Harvey Norman and Power Store, it diversified its range of products. Some people have told me that it would have up to a years worth of stock that it was probably aware it would not be able to realistically sell. At Christmas time in 2015 it overestimated the value of its stock, meaning it was not worth nearly as much as claimed.
I wonder what the future holds for Dick Smith, as probably significantly more than 100 jobs are on the line here if it collapses and potentially thousands are on the line in Australia. The future does not seem promising if the refusal to honour customer coupons, is anything to go by. It is perhaps notable that Dick Smith himself actually sold the company that bears his name in 1988 for a total of $25 million. The company was relatively small then. The range of devices that includes iPods, iPads, iPhones was some distance in the future and cellphones were still big bulky things far too big for ones pocket. The digital cameras, weather stations and other specialist items that might have been symbols of Dick Smith’s attempts to become something it was not – an everything for everyone type chain – were also some way off.
Fast forward to December 2013. Dick Smith is floated on the Stock Exchanges, starting at $2.20 a share. It peaked a month later at $2.40 a share before going into what some speculate now could be a terminal decline. Terminal, not least because in Australia it’s shares had more than half their value wiped off in a single day on Monday. Horrified at its losses, Dick Smith asked for trading to be suspended in its shares so it could buy time to fix its money woes. But will this be enough for a chain with 395 stores across Australia and New Zealand, with plans to add another 25-35 over time?
Time will tell.