Competitive Watch: Radio Shackles

Retailer’s major remodel, downsizing raise a critical question: Can the Shack come back?

Angel Abcede, Senior Editor/Tobacco, CSP

Article Preview: 

For c-store operators tuning into the struggles of electronics retailer RadioShack and scanning for lessons learned, the message may lie in its rebirth—and whether the course correction proves too little too late.

While analysts and observers wonder if the company’s turnaround strategy will succeed, some are taking note of RadioShack’s strides to transform an iconic yet outdated 20th century small-box format into a do-it-yourself variation. Flagship locations in Boston and New York are serving as high-profile models of where the chain is headed. Specifically, Ft. Worth, Texas-based RadioShack is:

Delivering a more open retail environment by removing clutter, lowering center shelves and pushing merchandise to the walls of the store.

Organizing items based on association and compatibility.

Building “experiential zones” so customers can test headsets or listen to different speakers using their own devices.

“Our brand equity remains strong, reflected in the sales growth we’re seeing in our new concept stores, which redefine the RadioShack store experience,” said Joseph Magnacca, CEO of RadioShack, in a release. “Without minimizing the challenges ahead, we have a detailed strategic path to profitability.” Those steps include improvements in brand image, product assortment, store design, customer service and financial strategies.

But the road to recovery is formidable. Reeling from a net loss last quarter of $191.4 million—triple the loss of a year earlier—the retailer of devices and related parts such as cables, transistors and batteries this spring announced it sought to close 1,100 stores, or about a fifth of its network, leaving just more than 4,000 locations and 900 franchisees.

RadioShack’s latest woes stem from a weak Christmas season; inability to outpace competitors’ promotions, especially in consumer electronics; a soft mobile market; and “a few operational issues,” according to Magnacca. Company execs hope shuttering underperforming stores while continuing brand-repositioning efforts, including a memorable Super Bowl ad featuring iconic ’80s faces taking their store back, will put the almost 100-yearold chain back on strong financial footing.

Those observing the company’s efforts have expressed doubts. “They lost their unique selling proposition,” says Terry Monroe, president of American Business Brokers, Ft. Meyers, Fla. At one point in his business career, Monroe owned two RadioShack stores. “They’re searching. They’ve lost their hook.”

Others agree that the chain’s problems run deep. “With RadioShack, it’s not about righting the ship,” says Jim Fisher, CEO of IMST Corp., Houston. “The ship’s in dry dock. It needs a total reoutfitting.”

Fisher, a c-store site consultant, believes the chain’s business model is flawed, hyperfocused to appeal to techies and geeks. “If you’ve ever seen the TV show ‘Big Bang Theory’ ... they go to the classic magazine comic store and … RadioShack,” Fisher says. “[The chain] has really targeted themselves, reducing their potential customer base to a finite size.”

NEXT PAGE: How Is RadioShack Growing Its Appeal?


Click here to download full article