Early years
The business started in 1968 in a small $15-rent-per-week premises in a car park in the Sydney suburb of Neutral Bay[5] with a total capital of $610. Initially, the business focused on installing and servicing car radios. In 1969, the business's success required it to move to bigger premises, first Atchison Street, St Leonards, later Carlotta Street, Artarmon with flagship store nearby, on the Pacific Highway, Gore Hill.
When the entire electronics business landscape was remodelled by the Whitlam government's across-the-board 25% tariff cut in 1973, for the loss of 138,000 manufacturing jobs,[6] Smith moved with the market and met the competition with a re-emphasis on imported electronic components and finished products. Alongside the car radio business, he opened "Dick Smith Wholesale". The business catered to electronics hobbyists, meeting a need Smith had felt. In those days, hobbyists could buy components only from larger wholesale companies better set up for dealing with commercial customers. After touring overseas electronic stores to study modern merchandising methods, Smith introduced self-serve shopping, a breakaway from the longstanding counter-sales setup found in component sales at the time, and produced an annual mail-order catalogue with a substantial data section.[5]
Publicity stunts
The company promoted itself with wacky-style and Smith's own publicity stunts. For example, Smith claimed that he would tow an iceberg from Antarctica to Sydney Harbour, cut it up into small bits and sell it for 10 cents a cube. On the morning of 1 April 1978, it appeared as if he had succeeded as hundreds of phone calls reporting the iceberg began flooding into local newspapers and radio and television stations, most of which were from Dick Smith employees. The "iceberg" turned out to be a barge cloaked in white plastic sheeting and topped with firefighting foam, an April Fool's joke.[7]
Expansion
The company profited from the CB radio boom of the 1970s[8] and by the end of the decade had stores in all mainland states. Though many CB radio stores closed when interest waned at the end of the 1970s, Dick Smith Electronics thrived on exploding PC sales and its established electronic components and kit lines.
To ensure almost every electronic enthusiast in Australia had one of his catalogues, it was included free in the popular electronics magazines Electronics Australia and Electronics Today International. The catalogues included ever-increasing amounts of data on electronic components, which helped make it an essential reference for anyone involved in electronics professionally or as a hobby.
Private-branding (as "Dick Smith" or "DSE") was introduced on a large range of products from the late-70s.[9] Many DSE-brand products were re-branded versions of the same or similar products sold in parallel by their manufacturers.
Dick Smith Electronics own-brand System 80 computer, which was a clone of the Tandy TRS-80 Model I,[10] led a highly successful line, including the Dick Smith Cat (an Apple II
Woolworths takeover
In 1980, the company had grown to 20 stores and the founder and his wife sold 60% of the company's shares to large general retailer Woolworths. The Smiths sold the balance of the company's capital to Woolworths in 1982, the total transfer price coming to $25million.[12] The company continued to add to its network of small "main street" stores in suburbs and regional cities across Australia.
Powerhouse
The late 1990s saw the company establish "Dick Smith Powerhouse" super-stores across the east coast of Australia. The first Powerhouse store was opened in Bankstown in 1996.[13] These were several times bigger than regular stores at approximately 2000 m2 and contained departments for the main product categories and supermarket-style checkouts. The "Powerhouses", as they were known, carried a wider range of products than the smaller DSE stores, especially in the computing, audio-visual and amateur radio areas, and introduced Music to the range. Some installation services were also introduced as well as Computer repairs and upgrading.
Powerhouse
The late 1990s saw the company establish "Dick Smith Powerhouse" super-stores across the east coast of Australia. The first Powerhouse store was opened in Bankstown in 1996.[13] These were several times bigger than regular stores at approximately 2000 m2 and contained departments for the main product categories and supermarket-style checkouts. The "Powerhouses", as they were known, carried a wider range of products than the smaller DSE stores, especially in the computing, audio-visual and amateur radio areas, and introduced Music to the range. Some installation services were also introduced as well as Computer repairs and upgrading.
In 2002 and 2003, the Powerhouse concept changed to focus on a broader consumer market and less towards electronics enthusiasts. Component ranges shrank and general electronics books ceased to be stocked. The Yaesu amateur radio dealership was relinquished, ending a 27-year partnership. Electronic kits were transferred to the smaller DSE stores and were replaced by the short-lived appearance of small appliances such as kettles, coffee makers, toasters and frypans. A home installation service known as "PowerSquad" to install major items such as TVs and computer systems or to provide set-up and training on smaller items such as wireless networking, MP3 players and iPods was offered.[14]
Major changes
In early 2008, following Woolworths' review of its consumer electronics division, Dick Smith Electronics renovated its flagship store at Westfield Hornsby, as a "concept" under the branding "Dick Smith Technology". The store's design and product range was completely reworked incorporating a more modern feel while removing all electrical componentry and much of its tools. These products were replaced with a larger range of Windows computers, gaming, televisions and Mac computers, much of which had previously been only sold in Powerhouse stores.
Following further strategic review, the company decided to push forward with the new concept under the reworked "Dick Smith – Talk to the Techxperts" branding, merging all existing Dick Smith Electronics and Powerhouse stores under the same banner. In late 2008 the new Dick Smith logo and format was rolled out with many Powerhouse stores such as Macquarie Centre and Auburn being rebranded to fit the new unified company logo.[15]
"Large Format Stores" opened in Chadstone Shopping Centre and Bendigo, Marion, Perth, Innaloo, Rockingham, Hobart and Stockland Rockhampton under new "Dick Smith – Talk to the Techxperts" branding.
In March 2009, Woolworths CEO Michael Luscombe confirmed the end of Powerhouse as a separate entity, also adding that the company's third consumer electronics brand
Acquisition by Anchorage Capital
On 31 January 2012, after nearly 30 years of ownership, Woolworths announced that after the results of a strategic review and a $300 million restructuring, it would close up to 100 Dick Smith stores and sell the business.[17] The company was sold to Anchorage Capital Partners in September 2012, for an initial cash payment of $20 million[18][19][20] and ultimate total price of some $115 million. It has been argued that Anchorage only put up $10 million in cash, the remainder of the funds being sourced from the business itself through liquidation of inventory, plant and equipment, and taking provision for future onerous lease payments, a process described as "the greatest private equity heist of all time".[21][22] In November 2012, Nick Abboud was appointed
Alliance with David Jones
From 1 October 2013, Dick Smith took over the operation of the home entertainment department in 30 David Jones retail stores in Australia and online. The venture traded under the banner "David Jones Electronics Powered by Dick Smith" and promoted televisions, computers, tablets, home office, audio-visual and other digital products, with employees and inventory transferred over to Dick Smith.[27]
By the second half of 2014, sales were running at $1.4 billion per annum.[28]
Fraud
Prior to bankruptcy, management used fraudulent accounting methods to acquire $125 million in loans falsely alleging it was needed to purchase stock for boxing day sales. CFO Michael Potts was found guilty and ordered to repay $43 million to the National Australia Bank in June 2021.[29] Around the time of closing, it was widely considered one of the largest private-equity heists of all time, with Anchorage Capital ultimately turning $10m in to $520m in less than two years.[30] (They added $10M from the Dick Smith business itself in order to pay the $20M purchase price). Multiple court cases and class actions resulted.[31] The Australian Securities & Investments Commission was accused of failing to act, and chose not to publish their post mortem investigations.[32]
Closure
On 4 January 2016, with the value of shares in Dick Smith Holdings having fallen by more than 80% since they were listed on the ASX in December 2013, a halt in trading was requested.[33] The following day, Dick Smith Holdings Limited (and associated entities) was placed into administration by its major creditors National Australia Bank (NAB) and HSBC Bank Australia.[34] McGrathNicol were appointed as administrators by the company's board but receivers Ferrier Hodgson were appointed by the creditors.[35] CEO Nick Abboud stepped down on 12 January.[36]
