Retail roundtable: What could Radio Shack have done differently?

March 20, 2014

Earlier this month, Radio Shack announced that it would be closing 1,100 locations, thanks in part to a weak holiday sales period. In an investor call, CFO John Feray said the retailer is "over-stored"; according to the company, 90 percent of the population of the U.S. has a store within easy reach.

The electronics retailer is nearing its 100th birthday, but losing nearly 20 percent of your retail footprint is nothing to celebrate. We asked our RCE bloggers this: Is this once-great retailer going to go the way of Circuit City? Should it return to its roots of serving a more niche, hobbyist/enthusiast audience, rather than trying to be more general?

Here's what our retail experts had to say:

Dr. Chris Petersen: I worked for over two years on the Circuit City turn around. Few remember that Circuit also came up with some concept stores called "The City." These stores were very innovative in terms of fixtures, process, consumer engagement and inventory management. The City stores were approximately 25 percent smaller and generated about 30 percent more revenue than a typical Circuit City store. Only one major problem: there were 600-plus Circuit City stores in poor locations, with declining traffic, and the banks simply did not want to extend credit to a high-risk retailer. When a large retailer like Circuit City loses letters of credit to finance inventory, it does not stay in business for long.

My assessment is that Radio Shack is going down the same road as Circuit City. Too little too late in terms of strategic turn around for its stores, and woeful supply chain and inventory management resulting in extremely low inventory turns. Most importantly, Radio Shack has not evolved to engage today's savvy, omni-channel consumers.

Doug Stephens: In my opinion, RadioShack's potential turnaround couldn't begin with a decision about a product, a logo, a name or a store design. None of this would help. It starts with questions. Why does the world need us? What can we provide consumers that no one is currently providing? And why should the world (care) if we exist or not? Until you answer these questions, you really can't embark holistically on the other stuff, the easy stuff.

Without the clear and galvanizing belief about your brand's purpose and rightful place on earth, everything else will ring false to the consumer, much the way the Microsoft store concept has. You have to build everything around the brand's central belief. Once you've identified that galvanizing belief, you can begin to design the experiences and choose the products that will animate the brand and give it deep meaning for specific customers. Until then, the business is just blowing in the wind.

Andrew Sharpe: When the world changes, to survive, you need to adjust. And it does not seem like Radio Shack had adjusted or evolved. Making drastic, reactive changes is not adjusting or evolving, it's "doing whatever you need to do to survive."

In the press release it states: "Even in this environment, we're continuing to make progress on the five pillars of our turnaround plan: repositioning the brand, revamping the product assortment, reinvigorating the stores, operational efficiency and financial flexibility. The in-store experience has been unfolding in parallel with a strategic review of our store footprint."

In my opinion, it's good to see reinvigorating the stores is on their mantra, but it depends on what level this reinvigoration is (i.e. cosmetic design overhaul or more extensive attempt to create a more relevant and engaging experience). They need to be wary about doing too little too late.

Shep Hyken: Back in college, my business courses taught me that most business go through four phases: start-up, growth, maturity and decline. The press will have you believe that Radio Shack is in the fourth phase. However, it appears as if Radio Shack is trying to redefine itself. To do so, they must find their lane and stay in it. Some consumers (not all) may be confused as to exactly what Radio Shack sells. Getting rid of poor performing stores is what any smart and tough retailer must do at some point. That's just good business sense. As Radio Shack does so, they will still have to be strongly branded, compete on-site and online, re-educate customers as to why they should do business with them, and deliver an amazing customer experience.

Bob Phibbs: The biggest challenge for Radio shack is their customers and niche have moved on. Originally a mail order place for electronics hobbyists, they opened stores and aggressively found ways to get customers to give them all their contact information to grow their catalog business. Again, it was for hobbyists. They got a big jump when CB was big one summer … remember "Convoy," anyone?

Nowadays, who takes pride in building their own tablet? The brand is a solution waiting for a need. Most everything they carry can be found at a big box like Home Depot or Lowes. And who wants to go out of their way to have the experience I did recently with their aggressive protection plan selling — for an iPhone cable?

Frankly I have no idea why they exist and doubt seriously if they would be missed. Blowing up a store is easy, but creating a brand customers want and need can't be found with a name — radio — that speaks to a time long ago and a far-off technology

Mike Wittenstein: People used to shop Radio Shack not just because they had the products people wanted, but because their staff could help people use those products successfully. Building on that idea, Radio Shack could introduce tablet, mobile, kiosk, on-line, and smartphone apps backed by knowledgeable and helpful people who would let the company and its white-label service licensees serve consumers better by provisioning pre-sales, installation, and post-sales support anywhere and anytime.

In simple terms, Radio Shack could invent a new "tech enablement" category and be number one in it. Imagine turning on your new digital television and being able to communicate with a warm and competent rep right on the screen who can offer branded support, get you connected, sell you add-on services, and help turn a product purchase into a product experience. Or, imagine getting a new Samsung5 and having someone (think Mayday) walk you through the update process and help you review and install new features. What about non-consumer tech items like milling machines, repair parts for expensive equipment, or repair instructions for a wind turbine, etc. There are unmet needs in all of these industries just waiting for a smart company who is "wired" properly to help them create more value for their customers.

Jeff Weidauer: Does anyone go to RadioShack to buy a laptop or mobile phone? If so, why? What is unique about the RadioShack experience that would compel a shopper to go there instead of Best Buy, or even Walmart, for those basic electronic commodities?

More important, what else could RadioShack offer to stand out? The "award-winning" TV spot referenced by RadioShack focuses on service — not just a friendly smile, but expertise. That is where RadioShack could add value. There is definitely a need for a PC/Windows version of the Apple Genius Bar, someplace to go with experts in not just PCs but all things electronic. Problem solvers. Yes, Best Buy has the Geek Squad, but that is a more formal engagement for the shopper.

There are myriad examples for (CEO Joe) Magnacca to study as he works to define the future of RadioShack. JC Penney is the poster child for doing too much, too quickly and too late, while ignoring one's loyal shopper base. Blockbuster exemplifies what happens if you do nothing at all. The right answer is somewhere in between. Mr. Magnacca is to be commended for knowing when to break some eggs; let's hope he can recognize when the omelet is done.

What do you think? What could Radio Shack do to turn things around? Talk about it in the comments!

Topics: Customer Experience , Customer Service , Marketing , Merchandising , Specialty Stores , Store Design & Layout

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