RadioShack: Relevant or Not

Jul 27, 2012

Back in August 2009, RetailWire reported on RadioShack’s plan to remake its image with its "The Shack" campaign. The company, rightfully so, came to the conclusion that it needed to do a better job of relating to modern consumers. In short, it needed to find a way to become relevant, even if becoming cool was probably out of the question.

Nearly three years later, it’s safe to say that RadioShack is still trying to find that connection with consumers. The company has just suspended its dividend on the heels of posting its biggest quarterly loss going back to 1996.

Fitch Ratings downgraded RadioShack’s credit rating, as well. According to a Wall Street Journal report, Fitch concluded, "There is a lack of stability in the business and no apparent catalyst to stabilize or improve operations."

RadioShack CEO Jim Gooch expressed disappointment in the company’s ability to maintain better margins but said the company was pleased with sales in the mobility category.

"We saw incremental improvement throughout the quarter as we successfully connected with our customer base and drove sales growth in this key category through effective promotions and the expansion of our Target Mobile centers," Mr. Gooch said in a statement.

A MarketWatch piece by Angela Moore summed up RadioShack "as a great place to buy cords and cables of all stripes, batteries and various adapters and odds and ends — but not exactly the go-to place for a large purchase. Service is considered to be indifferent at best." Ultimately, Ms. Moore concluded, the chain has "done a poor job of giving customers a compelling reason to come to stores."

Discussion Question: Are RadioShack’s problems of its own making or are they symptomatic of the challenges facing all retailers in the consumer electronics space today? What will it take to improve RadioShack’s sales and profits?

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15 Comments on "RadioShack: Relevant or Not"

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David Livingston
5 years 2 months ago

I think RadioShack’s problem is Walmart. What does RadioShack have that you can’t get at Walmart? It’s a convenience store of electronic goods. People associate it with high prices. In my mind, it’s still the place you go to buy CB radios, 8 Track tape players, TRS 80 computers, and get a free 9V battery in their Battery of the Month club. I’m sure that is ancient history by now.

Ken Lonyai

Both. True – they seem to have largely indifferent or short attention span employees. The stores are often a mess with restocking going on in the middle of the sales hours, cluttering the floors. Mostly though, in an era of oppressive competition in a heavily commoditized category (“electronics”) they seem to have lost brand identity. I believe consumers aren’t quite sure what they sell and often shoppers may go there under an assumption that they offer something, only to be disappointed and effectively pointed towards a competitor.

Their best chance at improving their future is twofold:

1) Develop a brand identity and merchandise that reflects a niche in the market that they can be competitive in.

2) Redevelop their stores and practices – if ever there was a brand that should have had the “Apple model” decades before Apple, it was RadioShack. If I were advising them, I would push for less merchandise, much more interactivity, and a mobile app to interact with the retail environment and make products come alive.

Robert DiPietro

Most of the problems that THE SHACK faces are problems of their own making. They haven’t answered the basic question of “who is my customer and why do they shop here?”

They need to pick a identity. Are they for the DIYer and have kits and supplies on how to make a speaker out of a plastic cup, or are they the destination for boomers to buy a mobile device?

Rick Moss

David, in answer to your question, I think what RadioShack has that Walmart doesn’t is a. convenience and b. (the potential to provide) purchasing guidance. I think, for what they are, their selection is fine. I believe their #1 problem is failure to hire and train capable store managers and associates. They’ve been in a downward spiral in that department for years: poor brand image and performance leading to inability to attract smart workers leading to declining customer experiences.

(The manager at my local Shack is an unkempt, paunchy, middle-age guy who can be seen most days smoking cigarettes outside the front door while he awaits customers. He’s eager enough to offer help, but he’s off-putting enough that you’re not sure if you want it. Relevant to today’s customers?)

Roger Saunders

Perhaps the largest internal hurdle that electronics, as well as other retailers are facing is the focus of addressing “customer collaboration and influence.” We have been living in an intense consumer-centric marketplace for the past 10 years. Gone are the days that electronics firms, or other retailers, can place the latest and greatest product on the shelf, and use pull marketing to fully execute their plans. While the consumer might not be fully attuned to the latest technology offerings, they can quickly come up to speed via digital and social media.

RadioShack has to develop a strategy to guides all of their associates to think of the consumer as the center of the equation. That is not an easy task, given RadioShack’s 3,000+ stores to merchandise, allocate, and service. Without bringing the organization to this view, it is a continued spiral down for this venerable retailer.

Dan Raftery

During its heyday, RadioShack catered to electronic hobbyists and knew it. Their store personnel were pretty much the same as their customer base. Today, the same match can be found in Apple and Best Buy stores, but it’s a different type of geek.

Today’s hobbyist doesn’t do much soldering or build things from kits, for example. Heck, when personal computers first came on the scene, you could build one from RadioShack components. Who can do that now? Who wants to?

In the effort to remain relevant, I think this retailer changed too little too late. They’re hanging on because many of the big electronics retailers that ate them for lunch are gone and you can still find a RadioShack nearby when you need an electronic peripheral item.

Brian Numainville

While I still have the RadioShack shortwave radio I purchased at about 12 (and it works great!) I agree that there is a distinct lack of identity today. I always considered RadioShack the place to go to get all the obscure parts or pieces I needed for an electronics project or repair. But consumers today are so time pressed that I am sure there is far less of this happening. And it shows in the lack of business at the local RadioShack near me. But when I have been in, most of the time the shoppers were focused only on cell phones. I think RadioShack needs to clearly assess what they are, what they want to be and how to get there. It may already be too late.

Zel Bianco

RadioShack faces the same dilemma other retailers face: adapt to the current consumer electronics technology, consumer desires, and the economic climate. The consumer electronics that are available today have changed quite a bit over the years. RadioShack needs to take a look at the change and find a niche that they can fit.

Michelle Fenstermaker
Michelle Fenstermaker
5 years 2 months ago

We actually just completed a study “The Continuum of Cool: Navigating the Millennials-Boomer Divide” which measured the attitudes and emotional needs of specialty store customers and how these two groups differ. We included RadioShack as one of the brands we measured on appeal. RadioShack’s biggest issue is one of maintaining relevance with this next generation of shoppers — Millennials. It’s not that this younger demographic scores RadioShack super low on appeal but a brand can be appealing and non relevant at the same time. We know the importance of creating an “experience” when it comes to shopping for electronics and RadioShack has done little to innovate their in store experience. With so many online options, RadioShack should be instituting an Apple-like customer service experience in their stores. They desperately need a point of difference and it seems like service may give them that edge!

Doug Stephens
Doug Stephens
5 years 2 months ago

RadioShack’s apex was back in the “olden days” when you needed that tough-to-find circuit or tube amp. Today I can find any niche product and have it shipped across the world in a couple of days. I’d say RadioShack’s ship has sailed.

Doug Fleener

I think RadioShack could carve out a unique spot in consumer electronics, but it would require a major overhaul of their brand, staff and stores. Okay, not so easy. I think they should rebrand themselves as The Shack, position themselves as the Genius Bar for all home and mobile electronics, and move into DIY home automation.

Tony Orlando

RadioShack is the past; they haven’t grasped the future very well. I used to like going in there when my boys were little. Now they go online for their stuff, and micro-center as well. RadioShack is going to struggle, and I don’t see them as a major player going forward.

Bill Hanifin

RadioShack seems to be “almost there” but never quite arriving. There are reasons to visit a RadioShack. The store is not just for electronics geeks and offers cell phones and services as well as some products which are not easily found in other retailer locations. Don’t laugh, but Magic Jack is one of those products.

RadioShack has a visible relationship with Livestrong and sponsors the RadioShack cycling team. Maybe that is a “ho hum” for Americans who are iffy on the sport of cycling, but the Livestrong message to fight cancer is appealing to a broad audience.

If RadioShack were to look at a brand in another category for inspiration, it might be Ace Hardware. Ace has done a good job presenting itself as an alternative to the big box stores for reasons of service and convenience. It has introduced a rewards program to help stimulate repeat sales.

Could RadioShack take a few lessons from Ace and steal some business from big electronics retailers in the process?

Kenneth Leung

RadioShack for me is the 7-Eleven convenience store for consumer electronics. I admit the last time I went to RadioShack is for obscure batteries and chords. For RadioShack to move forward, they need to have some sort of differentiated identity/offering and store format. Perhaps one way is to emphasize the speed of checkout and the “we are there when you need that now” convenience.

Ed Dennis
Ed Dennis
5 years 2 months ago

RadioShack is suffering from a change in consumer wants and needs. This chain was built to service hobbyists following WWII. No one builds anything anymore unless it’s speakers and systems for cars, but I don’t see RadioShack getting into that.

However, it is possible that RadioShack could become the “go to” location for home entertainment. They have the size to have a premium quality TV display with component tuners, networking, and etc. There is a market for great quality home entertainment at better-than-internet pricing. RadioShack should be able to deliver this and carve a spot in the market.

The other area for exploration is the smart phone and tablet. With some work they can develop their own hardware and offer consumers their choice of software (e.g. Android, Windows) and choice of carrier. One killer phone and killer tablet should be possible. This is going to require some smarts and some work, but I think it is the difference between surviving and thriving!


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