How Does RadioShack Still Make Money?

RadioShack is a $4.5 billion-dollar business with over 6,000 locations world-wide. The company’s heritage is rich but recently, RadioShack CEO Julian Day admitted he has “no idea” how the company makes money.

After assuming the CEO role at Radio Shack nine-months ago, Day initiated a comprehensive audit to better understand the company’s operational infrastructure, its financial drivers, its marketing strategies, and its customer base. Despite the research, Day is still unclear about the company’s allure.

Julian Day’s theories as to why RadioShack still makes money include: consistently exceeding the needs of Wedding DJs around the globe and the multiplier effect of unredeemed RadioShack Gift Cards stored away in people’s wallets.

In a revealing interview with The Onion, Day confided, "I'd like to capitalize on the store's strong points, but I honestly don't know what they are."

As Day continues to search for the answers to why RadioShack still makes money, he only uncovers more questions. Added Day, "I may never know the answer. No matter how many times I punch the sales figures into this crappy Tandy desk calculator, it just doesn't add up."

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Mucho kudos to BusinessPundit for the hook-up. This satirical piece from The Onion is a hoot! (I loves me some business satire.)

Comments

[Stephen]

Great Post! Sounds a bit like the Captain of the ship I am currently a passenger onboard. No Leadership and less direction on where we are headed or how we make money...

[Eric Strauss]

indeed funny.

[Stephane]

Extended Warranties ?

[mvellandi]

Isn't it just due to a large number of stores in small towns without a best buy or circuit city, but for which people would rather purchase there instead of a small dept. store or the drug stores? How about the fact that Radio Shack also carry unique wires, batteries, hobbyist electro supplies...something not necessarily easy to find...yet for which many, the name "Radio Shack" would seem a logical place to go.
Lastly, how about that RS also often sells cell phones, gear, and plans as well; Sprint I believe. The small square footage to rent isn't such a a big burden either.

It is my belief a unique combination of all these factors help contribute to their sales and maintaining reasonable operating costs. Just some ideas to throw around...

[Dan]

I've wondered that about Radio Shack whenever I'm in the store. But that's the point, I'm IN THE STORE! I've been to Radio Shack (to make purchases) four times this year already. I haven't been to Best Buy since Christmas.

This is a hilarious spoof, but it really hits a chord. What the heck is Radio Shack's brand? I can't quite define it except for the very vague "eclectic, but not interesting, electronics."

Let's see here:

Their best known product is the cultural myth that Teri Hatcher and Howie Long are married.

Their employees are mildly helpful, but not outstanding.

My last four purchases have averaged $15 a trip.

They have the absolute worst chain name in the history of chain names. Until someone franchises "Stuff and More Outlet," they will remain so.

But again, I've been there, four times in four months. There is something they are doing right. The only thing I can put my finger on is that if I have a weird electronic need that Radio Shack will likely have it or know what I need to do to get it. I'm equally assured that if I go to Circuit City or Best Buy, that they won't be able to meet that need and will instead waste a lot of time trying to shoehorn me into buying what they are told to sell.

Viva la Shack!

[NW Guy]

The trick is that they are more ubiqituous than Starbucks - almost the entire population is less than 3 miles from a store. The other thing is that the US is more digital/electronic than ever and Radio Shack is like a new age hardware store; you're not sure exactly what the part is that you need...but where else would you look? Along that same thought process (think Graduate/plastics scene)...the key is batteries ;)

[johnmoore (from Brand Autopsy)]

NW Guy ... "Radio Shack is like a new age hardware store." Brilliant positioning. I hope someone from Tandy reads it.

Dan ... nice riff! It would be interesting if RadioShack decided to accentuate its weird eclectic electric-ness.

[Ryan Karpeles]

Could it be that people go to Radio Shack because they DON'T know exactly what they'll find?

In other words, it's almost like going on an electrical scavenger hunt. You're almost positive that they'll have what you need, but you just have to discover it on your own.

The thrill of the chase makes the whole experience worthwhile.

(Disclaimer: I could be way wrong on all of this.)

[Scogs]

I can assure you this will NEVER happen. I worked in the marketing department at RadioShack up until about 7 months ago. We tried and tried and tried to convince upper management to change from an electronics retailer to a hobby-type electronics hardware store. That's where the money is. You buy a case of 1000 transistors for $1.28 (no kidding) and sell them for $3 each. That is insanity. But instead they decided to waste shelf space with LCD tvs....razor thin margins. Even the CMO at the time pondered allowed who would buy a flat-screen TV from a RadioShack...

[Bill]

Is there some financial realization from vendor slot fees, and maybe co-op/co-brand funds?

[Norman Hopkins]

Maybe the answer is people trust a company they know. A company that had in the past earned the trust of both the employees and the public. Has Radio Shack kept up in the times, I think not. Does their advertising centered around the people who know them and like them (the baby boomers with disposable income). Is it a fun place to work? I worked for Radio Shack for many years and thought about what Charles Tandy said to us young store managers in the 70's "My goal is to make as many of my employees as rich as I can" As you can see new management want to make themselves as rich as they can. The key factor is you must stock what people want and never forget "you must have gross profit going in to have net profit coming out".

[johnmoore (from Brand Autopsy)]

Norman ... thanks for adding your insider perspective. Your line where you share something Charles Tandy said is brilliant:

"I worked for Radio Shack for many years and thought about what Charles Tandy said to us young store managers in the 70's, 'My goal is to make as many of my employees as rich as I can.' As you can see new management want to make themselves as rich as they can."