Lost Shack

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\"RRThe good news is that Radio Shack has opened five high-profile remodeled stores featuring its “Let’s Play” strategy that sports a cleaner, pared-down assortment dolled up with electronic merchandising wizardry like video screens and audio plug-in stations.

The bad news is that this leaves 4,306 Radio Shack stores in the country that need to be remodeled.

Welcome to yet another chapter in the ongoing retail soap opera that Radio Shack has become over the past few years. The company is on its fourth CEO in three years, has seen its market cap drop to 2% of what it was at around the start of the century, and it has not made money in at least the past four quarters. All the while, it has seemingly had more merchandising solutions than the number of batteries in its ubiquitous signature department.

When does a store become retail-irrelevant? When does a format—be it the five-and-dime, the catalog showroom, or the CD/record superstore—become a shopping anachronism, a relic from another era no longer important to the purchasing needs of America’s consuming public?

When In Doubt, Do a New Prototype

As retailing entities gradually approach the end of their life cycles, the new prototype store is invariably the instrument of triage used to put on a good face. I remember when Woolworth was in the last gasps of its death spiral. Under a smart CEO named Paul Davies, it opened a totally reformatted store outside Philadelphia. The store was perhaps one of the best individual retailing formats I’ve ever seen: fresh, intelligently merchandised, nicely fixtured and competitively priced; it had everything going for it. Everything except that Woolworth had 399 other stores that were the old, tired format with neither the cash nor the shareholder patience to make the necessary investment in its business.

Radio Shack is in a similar position. This new format store—in full disclosure I have not seen one of the five remodels, only read about them—may be the greatest thing since the eight-track tape. And Radio Shack says it expects to have 15 more stores in place by the end of the year. But company statements announcing that it plans to roll out elements of the new format to 2000 stores is just a whole lot of retailspeak. How much of whatever good ideas come out of these new test stores actually trickles down to the rest of the chain is something that is highly suspect.

Five Not-So-Easy Pieces

So the overall strategy plan the company has announced is reading like a cross between the Boy Scout oath and a Soviet five-year industrial redevelopment plan. It mentions five elements:

  1. Reposition the brand
  2. Revamp product assortment
  3. Reinvigorate the stores
  4. Achieve operating efficiency
  5. Attain financial flexibility.

If you’re saying to yourself, “Hey, this retail CEO stuff doesn’t look so hard,” join the club. Is there a retail operation in America that doesn’t have basically the same game plan? But it’s all in the details and execution. Let’s look at that plan:

1. Reposition the brand. This is a store that began life in the 1920s as a mail-order resource for amateur and ham radio fans. It has evolved ever since, constantly repositioning itself to suit the times—and that’s to its credit. But it’s a very tired brand name that has no meaning to its potential customer base whatsoever. One of its last rebranding efforts created a logo with a big “R” in a circle. Why the company would choose to highlight the “Radio” portion of its name vs. the “Shack” portion is beyond me. It’s hard to see any real repositioning of the brand going on today, at least from the website or the stores I visited.

2. Revamp product assortment. Is there life beyond batteries? Revamping product has always been a strong suit of the company, which has managed to go with the consumer electronics flow as well as anybody. It got into personal computers very early on and in fact, had one of the best selling models, the TRS, well before IBM brought the PC to the marketplace. But right now it gets about half of its sales from cell phones, a dangerous spot to be in what is rapidly becoming a saturated, mature market segment. In a way Radio Shack is a victim of the absence of a killer consumer electronic product over the past few years after flat-panel TVs and cell phones. But why isn’t it more aggressive in tablets? Or satellite and Internet radio? It carries one 3D printer on its website; should it have more and be the pioneer in this category? A couple of strategies ago, Radio Shack tried to be the go-to retailer for repairs and service. It’s something that Best Buy is trying to work up with its Geek Squad, but is there anyone among us beyond the age of 23 who doesn’t need help with their consumer electronics devices? Why was this approach largely abandoned?

3. Reinvigorate stores. If you want to see a vintage consumer electronics store from the 1990s, you don’t have to go visit a museum. Just head over to the nearest strip center and look for the Radio Shack sign. These are among the most tired looking, antiquated and out of fashion stores that exist in American retailing today. We’re not talking paint and light bulbs here folks. Is it any coincidence that the longest serving CEO in recent Radio Shack history was Julian Day, who learned the art of retail uninvestment while running Sears and Kmart under Eddie Lampert? And where is any mention of online in this strategy? If there was ever a merchandise mix ideally suited for the Internet it’s the Radio Shack collection of cables, batteries and electronic widgets. Imagine if the stores were freed from carrying all of that inventory, and all of that business could be serviced online, either though web ordering and in-store fulfillment or direct sales. It’s probably too late to make this model work, Amazon has cornered the market for online commodities, but Radio Shack clearly missed a once-in-a-business-lifetime opportunity. And we won’t even speak about the salespeople in the stores. They may be the most intimidating, least-female-shopper-friendly and all-in-all scary collection of people ever assembled by one corporate entity.

4. Achieve operational efficiency. Duh, isn’t that sort of a given in business?

5. Attain financial flexibility. I have absolutely no idea what that means, I thought the whole idea was to make money, not get flexible. If this is corporate doubletalk for being able to flip this sucker maybe they just need to come out and say that so we all know what endgame is. Sadly, if you’ve been around this retail racket long enough, it’s not all that hard to see what the endgame will be for Radio Shack. It’s a store that has been passed by, with a format, merchandise mix and physical presence that no longer registers with the American consuming public. There just aren’t enough batteries in the world to recharge Radio Shack.

Warren Shoulberg is editorial director for several Progressive Business Media home furnishings business publications and never understood why Radio Shack always asked for your phone number when you bought batteries.



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