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[32 comments]

Same-day fixit service could be a winner for RadioShack

June 11, 2014

Look out Geniuses and Geeks. RadioShack has decided that same-day in-store repairs of mobile phones and tablets no longer covered by a manufacturer warranty may be just the thing to mend its battered and bruised brand identity with consumers.

The small-format consumer electronics chain, which successfully tested 284 "Fix It Here!" stations in company-owned and franchised stores, has made the decision to expand the concept chain-wide to its 700 locations by the end of the year.

"We are seeing a positive influence on our business," RadioShack CEO Joe Magnacca told The Dallas Morning News. "It's a unique service and one that people consider us as a trustworthy source."

Mr. Magnacca is counting on RadioShack to convert a percentage of those seeking repairs into customers if a device can't be fixed or is too costly to make it worthwhile.

RadioShack is not the only retailer struggling in the consumer electronics category. Best Buy, Target, Walmart and others continue to search for the right mix of products and service offers to drive traffic and sales.

Walmart has begun what it calls a "reboot" of its consumer entertainment and electronics business. The retailer is adjusting space for gaming, mobile phones, tablets and wearable devices.

"What you'll see is a new set in our stores which better adjusts our space-to-sales ratio to make sure we're leaning in where the growth is," Walmart's executive VP and general manager Steve Bratspies told TWICE. "Connected businesses like wireless and tablets are going to have a more dominant presentation than they have in the past."

FINANCIALS:     [NYSE:RSH] [ NYSE:WMT] [ ]

Discussion Questions:

What will it take to succeed in consumer electronics retailing today? Is RadioShack on the right track with its "Fix It Here!" service?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How optimistic are you that RadioShack's "Fix It Here!" service will improve consumers' views of the consumer electronics chain?

Comments:

RadioShack is on to something, although it's hard to say whether it will save the company. It does provide a traffic draw, and capitalizes on the growth of mobile devices (and the challenge getting them working). The CEO's background at Walgreens is relevant here: The in-store clinics provide a platform to sell services, not just merchandise, and to draw health-related traffic.

Given RadioShack's struggles -- and the ongoing struggle of Walmart to fix its own electronics business -- is there any merit to the idea of a co-branded operation inside Walmart stores?

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Dick Seesel, Principal, Retailing In Focus LLC

Sales and service have been the twin pillars for electronics for some time. The balance between the two has shifted over time as more customers have elected to buy online rather than at a brick and mortar location. The reasons for the shift have been well documented.

During the good times we had become a "disposable" society. However the recession and the slow recovery from it have prompted more consumers to fix rather than replace. RadioShack's move into out-of-warranty repair is a good one as demonstrated by the success of its "Fix It Here" stations. I expect the rollout to the remaining locations to also be successful.

Those who must have the latest version of a phone or tablet are not, nor are they likely to become, RadioShack customers. However, I believe the convenience of their locations combined with same-day service will attract more traffic to their stores - much of which had never been in one. The ultimate measure of success will be if RadioShack can convert repairers to customers.

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Steve Montgomery, President, b2b Solutions, LLC

I really really hope this resuscitates RadioShack. There's no doubt that this corporation has done far more than their share of dumb things, but they do deserve a turnaround.

More and more I'm going to RadioShack and small hardware stores like ACE instead of the big box places. Yup, I spend about 25% more but I save enormous time and gas...and the most important thing is, I get immediate help from someone who knows exactly what they're doing. At ACE yesterday, the guy assembled the pvc to copper pipe/valve thing I needed right in front of my eyes. And a couple of days ago the guy at RadioShack saved me a second trip by checking the compatibility of some connecting things without my even thinking about it. In both situations I was in these respective stores for under ten minutes. Size is usually inversely correlated to service and expertise.

Now if they could change the sadly outdated name or rebrand it "RS" or something!

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Ian Percy, President, The Ian Percy Corporation

Low prices, wide selection, an educated sales staff, great customer service, etc. CE is a tough market to succeed in and one that is not for the faint of heart.

While the odds aren't good for RadioShack's survival, this article suggests the chain was at ~4000 stores, while the one above now states 700, at least they are going down fighting. Probably too little too late, but but better to try to find a way to survive than just accept their fate, IMO.

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Bill Davis, Director, MB&G Consulting

I like it! Until now, iPhone fixers have been a secret society whose names get passed from person to person.

This will definitely answer a need. Fixing it fast is absolutely key, but I think it's a great concept.

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Paula Rosenblum, Managing Partner, RSR Research

The consumer electronics segment is ultra-competitive with highly transparent pricing. That leaves retailers in this segment with the soft side of the value equation: trust, expertise, associate knowledge, AND opportunity to complement and infuse assortments with new services to make up the full customer experience.

For RadioShack, adding "Fix It Here!" makes sense and plays on that company's long history of hands-on practical knowledge of electronic gadgets. The volume may not be sufficient to significantly move the needle, but the indirect benefits of bringing more shoppers to the stores and/or more frequently can help both top and bottom lines for RadioSchack.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

At first, this sounds like a winner in the race to get shoes on the showroom floor for RadioShack. A closer look at the problem might reveal otherwise, however. The problem is sales - as in too few. A look at inventory and pricing relevance would be a priority for anyone with the intention of mending the bottom line issues they are having.

'gjarnoldjr'

There are many niches in this space. The innovators want the newest, latest product. Early adopters want the new product that is getting great reviews. Brand loyal early adopters want the new product with great reviews of their favorite brand. All of these groups are likely to be fine with the warranty offered by the company that sells the product or manufacturer because they do not keep the products long. However, these people need training on how to use the features of the new product and great service related to the warranty.

There are other groups of people - those who keep their product for awhile and do not get the longer warranty and those who keep their product after the warranty expires. These last two groups are a great niche for RadioShack's new service. Identifying the people in each niche, as well as determining the products and services they want is critical for success.

Determining which of those consumers are your customers and how best to have the right products and right service package is key to success.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

In general, services are smart. Service revenue supplements product revenue and creates differentiation. RadioShack will need to accommodate same-day turnaround, ensure they have on-hand expertise, and have a well-thought revenue model.

How might they do this?

  • Extending the kiosk. They can use on-call experts centrally located for problems that can't be solved by in-store expect. They can tap into larger e-commerce inventory to convert more sales.
  • Offering some level of "free" service. Customers will shun this if they are nickeled and dimed. As part of a free or paid service plan, customers will feel more comfortable buying.
  • Fixing software, not just hardware. Most smartphone problems are "how to" rather than "fix it" problems. I'm a bit surprised by the break-fix positioning, but it's still early. Knowledge is more important than tools.

RadioShack has been piloting and iterating. If they execute this well, they will not only generate cross-sales, but make shoppers more likely to choose RadioShack over other second tier mobile shops because they take a lifetime view.

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Dan Frechtling, Vice President, Global Product Management, hibu, PLC

Consumer electronics are as perishable as tomatoes. Most customers don't hang on to their devices long enough for them to get out of warranty.

So, the "top" of the market is gone leaving the middle (hang on to a device until it and/or you die) and the bottom (but used, possibly damaged technology since that's all you can afford).

As to whether or not RadioShack's approach will work, look at the lines at a Best Buy register and then compare it to the line in front of (and often wrapped around) a Geek Squad counter.

Folks need plenty of help. The real issue isn't whether or not "Fix It Here" is a good idea, but rather if it might be a good idea that's arrived too late.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

Hold that thought. I am confused. I just read where RadioShack's losses are widening and 200 stores are being closed by the end of the year. Now they are trying a same-day repair service? It might work; but it could be too little too late.

RadioShack needs to hit a grand slam home run just to be considered a player in the electronics field again. This could lead to more store traffic. But will it lead to a significant increase in same store sales? Probably not.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

The fix it service is nice. The DIY service is nice. The startup product section is nice. The college bookstore placements are nice.

Nice is not good enough here. None of these initiatives address the core problems which are so acute that playing around the edges is a formula for failure. These are extremely limited niches compared to what is driving their business; mobile. They need to have a model that lives within the available margin, not dream of it returning.

This is not the current CEO's fault as the long term lack of investment put them here. However, despite all the problems, the hesitance of lenders to close stores unless something more drastic is done, we are likely to lose this chain before these efforts make enough of a move.

Robert Heiblim, Principal, RH Associates

To succeed in consumer electronics today, a retailer must have a sharp sense of the customer segments that they are targeting and the ability to deliver "under pressure." The aging baby boomer population is the most likely to want new consumer electronics and the most likely at the same time to need tech support. This psychographic (of high-tech interest and low-tech capability) is where top retailers can really shine if they focus on them. The key is the word "focus."

RadioShack is on the right track, although they only have one piece of the puzzle. If consumers purchase their electronics elsewhere, it will be hard to convince them to move to a retailer with an aging brand for their service.

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Mark Price, Managing Partner, M Squared Group, Inc.

RadioShack used to be known for something different. Their model can't compete with the electronics box stores. That has been proven as of late with store closings and financial struggles. They have to differentiate. They can do this through amazing customer service and programs like "Fix It Here."

What they can't do is decide they want to go head to head on merchandise that the box stores sell.

Look at retailers like Ace Hardware. They go up against the box stores in their industry and survive - and thrive. They stay in their lane and sell many items the other retailers don't. And, they deliver amazing service - helpful service.

RadioShack can be the Ace Hardware of the electronics industry, but they have to make some changes to do so.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

I think it is a smart way to drive incremental traffic and sales, and seems to fall right into RS's wheelhouse. Same day fix it service is something that online competitors can't do.

The downside is many of their deeper pocket competitors can also do it and promote it much better. We shall see, but I like that they're trying to carve out a point of differentiation. If they don't, they'll be no more.

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Doug Fleener, President and Managing Partner, Dynamic Experiences Group

This fills a much needed service void. People would rather give up food for the day than to part with their phones for 24 hours. This will no doubt draw a new set of consumers to RadioShack and give their brand a much needed boost.

I don't know what type of cost overhead this incurs, but the increased traffic has to benefit the top line.

Lewis Olishansky, Principal, Retailmatics

RadioShack's "Fix It Here" is a good way to balance higher margin service SKUs with low to no margin CE SKUs. You not only need the ability to service what you sell in CE, but you need the ability to show the customer how the devices work together. That "connected" aspect of CE today: phone, TV, appliances, thermostat, watches, etc. is what the consumer wants help with.

I'm not sure who is fixing these things in the store, but based on the traffic I've seen, the labor model will be difficult to sustain.

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Robert DiPietro, GVP Product Strategy & Business Development, Affinion Group

It's a step in the right direction, as would be more of a "genius bar" concept to help consumers struggling to use their new smartphones, tablets, or general consumer electronics. RadioShack still has a footprint across America that is ideal for consumers to easily and quickly shop at if they can get service for broken items, or general help for items they own, but can't use.

Whether the margins on such offerings are enough to offset declining sales (in-store sales were down 19% in their latest earnings!), remains to be seen.

It may be time for a complete rebrand and retooling to save this iconic brand. It may also be too little too late for a company which has lost its way, lots its voice, and frankly lost the consumer to many other consumer online and retail outlets.

Gary Lee, President & CEO, InReality

 
15

One of the main reasons I switched to Apple from Windows PCs was that it would take at least a week to get the PC fixed. If RadioShack can spread the word on this new service, and if it really works, I'm guessing that there will be people lined up outside the door each morning....

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Cathy Hotka, Principal, Cathy Hotka & Associates

I love love love seeing RadioShack go back to its roots. This concept speaks to the day of the hobbyist. Those of us who were hobbyists back in the day are still those folks who "broke" our first iPhone on day 2. We aren't afraid to tinker and great to know there is somewhere that we can go to talk to someone about it.

Now, enter the non-hobbyist. They just want their phone fixed and Apple says, nope, can't help you if the ringer has stopped working. Out of warranty.

This is so great and I wish them all the best. Now, let me see if there is a reason I need to go to RadioShack today. Hmmmm....

And that's my 2 cents!

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

RadioShack owned the "do-it-yourself" CE market. This pivot to let us do it for you would work if we trusted the brand. I'm not sure they have any trust left to bank on so adoption could take awhile.

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Bob Phibbs, President/CEO, The Retail Doctor

A great idea, but where is RadioShack going to get this expertise? None of the RadioShacks I am familiar with have anyone on staff capable of replacing the battery on an iPhone. This kind of work requires some skill, especially when one considers how many different devices are out there. It's a great idea but I don't think RadioShack has the ability to implement it.

I have long contended that RadioShack should concentrate on the home entertainment opportunity. Everyone who has bought plasma, or LED televisions has discovered the sound is not anywhere near the quality of the picture. An opportunity exist to help consumers bridge this gap. I think it is a BIG opportunity, but only time will tell. It should be possible to collect TV specs and print out connection instructions in store or on line. A real opportunity to solve consumer problems and up-sell. No one knows how to hide wires, program universal remotes, etc. Lots of opportunity here!

Ed Dennis, Sales, Dennis Enterprises

In a vacuum, RadioShack's "Fix It Here" service is a welcome innovation, and an opportunity to break free of the commoditized business of selling electronic devices at near-zero margin.

But the the company's financial story is not looking too good. Today's Wall Street Journal reports a share price decline that I doubt will be countered by this nice-to-do innovation.

Fixing broken electronics and software glitches is not enough of a niche, and as others here observe, it appeals to the "drive-it-till-it dies" mentality of a less profitable slice of the market.

Now I do believe there's a great service value in "Make My Devices Work Together." This could have huge appeal for small business owners like me who want to connect Microsoft, Android, personal cloud, home network and online accounts in a seamless personal ecosystem. Moderately priced service contracts could do wonders for the company and its customers.

Whether services can save RadioShack from its inevitable fate seems questionable, however. As its stock declines in value and poor-performing stores are shed, it may become a more attractive target for a player like Amazon, Walmart, Google or Alibaba. The payoff for the acquirer: 3,000 instant strip center and mall locations with some knowledgeable staff who need their jobs.

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James Tenser, Principal, VSN Strategies

"Fix it here!" is probably a good concept ... in higher volume stores. Another opportunity to take a good idea and lose the benefit through knee-jerk implementation.

There is a break-even point where the fixed cost of the repair function is above the benefit (parts, labor, additional spend).

I believe RS has done that math and hopefully they will be selective in their rollout.

'vgallese'

I think this is a great idea! But here is the problem ... When you walk into a RadioShack and talk to the service folks there, do you get the impression they could fix your phone or computer? If they can address that issue, I think there is a very disruptive idea here.

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Joel Rubinson, President, Rubinson Partners, Inc.

Brilliant! RadioShack has seen the need -- and is fulfilling it -- with the bonus of more sales from happy customers. Just getting people into the stores is a large part of the battle because we know that people spend more money when they go into a physical store to pick something up. Fight on, RadioShack!

Naomi K Shapiro, Market Communications Manager, Upstream Commerce

Funny how Walmart realize they need to go with microformats, Toys "R" Us realize they need microformat pop-ups, but RadioShack haven't figured out they are already a microformat electronics store but are still selling 1980s transistor parts and RCA jacks.

Ed Dunn, Founder, (Stealth Operation)

Success begins with a differentiated offer that is valued by the consumer. With fierce price competition from online retailers, RadioShack and other bricks retailers likely need to differentiate on assortment, experience, and services. The "Fix It Here!" service is a logical step towards a differentiated, a potentially valuable, service. I especially like that it leverages the advantage of small stores in highly populated areas.

As others have mentioned, one service, which may only be relevant to a subset of customers, will be too little on its own to change the trajectory of RadioShack. On the other hand, if RadioShack delivers on their promise to improve the store experience and assortment quality, then every customer that walks in for a fix it service may be converted to a repeat customer and potentially an advocate for the brand. In this way, a combination of niche services with an improved shopping experience could eventually right the ship.

To me, the largest opportunity for RadioShack is becoming identified as the "Neighborhood Pantry" of consumer electronics. They would be wise to take lessons from successful small format grocers. A large step in this direction would be highly relevant product assortments customized at the store level.

Jacob Suher, PhD Student, UT-Austin

If "Fix It Here!" can successfully be executed as a same-day service, it could be a significant point of differentiation from the Geek Squad (where the perception is it will take days or longer to have a product fixed) and result in positive consumer perception of the brand. The key will be staffing every location with sufficiently skilled associates and maintaining adequate inventory of repair and replacement parts.

RadioShack has definitely been challenged in figuring out how to remain relevant ... while "Fix It Here" won't fix all of the brand's woes, it could be a boost as a great customer draw translating into additional sales.

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Jeff Hall, President, Second To None

It's a start in their quest to evolve their image and increasing store traffic. The consumer's emotional connection to these devices will drive them to a quick fix, so this may be a positive revenue driver for their stores.

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Larry Negrich, Vice President, Marketing, nGage Labs

There has been a void for quite a long time in brand name repair services. Consumers need more choices than manufacturer directed private servicers, mail service, or the Best Buy black-hole send out servicing. Give it a shot RadioShack; advertise and promote it. Best of luck creating value for the consumer and building back a customer base.

Alan Cooper, Contract Trainer/Training Consultant, Independent/Freelance

The CE industry is tricky. Retailers in the CE business depend on the latest technology trends—not only in terms of product, but in terms of mastering their market. CE is such a rapidly changing industry. It seems as though no longer than a week after buying the latest phone or tablet, a newer version is released and your new slice of technology is already stale.

This will definitely get RadioShack some attention, as there is a large market for this type of service. My concern, however, is how scalable this service will be, and to what extent it is preferable to the other options—higher and lower end—that consumers have at their disposal. I look forward to seeing what comes of this initiative by RadioShack.

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Alexander Rink, CEO, 360pi

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