ReFocusing RadioShack

With all the recent RadioShack chatter here (and here), Kevin from Mine the Data blog wants to know what I advocate RadioShack doing to remain relevant. Let’s begin answering this by pointing out something Adelino said in the comments, “Cost cutting is not a sustainable strategy for growth.” Well said Adelino.

At some point, RadioShack needs to focus on its strengths and not its weaknesses to grow sales. RadioShack should stop trying to sell Plasma TVs and start focusing more efforts on being the “eclectic electric hardware store.” Their strengths are being known for selling most any electrical do-hickey needed to make something work.

I advocate RadioShack refocusing its efforts to become a convenience store version of Fry’s Electronics. They should sell only the most-popular, most-obscure, and most-needed electrical gadgets/gear to make our stuff work.

Would you buy a Plasma TV at RadioShack? Would you buy a Cell Phone package at RadioShack? I wouldn’t. I would buy those somewhere else like Costco for the TV and the Sprint store for the cell phone.

However, I would buy USB 2.0 cords, blank DVDs, replacement power cords for my Laptop and Digital Video Camera, etc. at RadioShack. Not sexy stuff but stuff we consumers need in order to make our gadgets work today.

In a way, this strategy of focusing on being a convenience store version of Fry’s is like going back to the future for RadioShack. Will this strategy drive mondo sales? Maybe not mondo … but it is sure to drive consistent sales and make RadioShack relevant again.

That's my quick take ... what's yours????

Comments

[Lewis Green]

John,

Your advice applies to most if not all businesses--focus on your strengths, your core purpose, and invest in your business instead of cutting costs.

I once couldn't pass a Radio Shack without stopping in. It was my version of an electronics hardware store. Now I seldom venture into one.

[RC Hale]

Take care of the inside first...stop trying to be everything to everyone...hard lessons most brands all go through. The question I would have is can they be profitable going back to the weird parts and R/C car store? I would venture guess the answer is no..with the number of locations they have and the amount of dollars they spend on mass media..they would need to sell a huge amount of "stereo parts".

[Amber]

I completely agree. Focus starts to blur when the big picture becomes too large. Cramming too many products into the mix creates a loss of credibility for a business (in my humble opinion). Unless, of course, you're the walmarts of the world.

[Mario Vellandi]

I agree that big ticket items may not be worth it, unless the store location and relative competitive offering suggests otherwise.

The convenience store positioning is good, because the total perceived transaction time (parking, amount of walking, customer service [shopping assistance & returns processing], checkout) will be less than that of a big box store.

[Matt Steele in the Hour of Chaos]

I think that the Radio Shack of today is a reflection of what they want to be, not what they are good at.

Plasma TV's have better profit margins than that thing that you put on the end of your three-pronged electric cord to make it into a two-pronged cord.

I am not sure that they can survive by doing what they are good at.

[Marc]

Ok well i just wanted to be sure but on www.radioshack.com there is not a single "plasma tv" on there website and when i called a store they do not sell plasma tvs. You got me all excited. Radioshack has always sold tvs. Think back when small portable tvs where the rage.. where did you buy them. RadioShack. If they did sell plasma tvs it would be nice because i did not have to drive an hour to best buy to buy one. I could drive about 3 min and get to my local shack. I agree they need to do more to radioshack then cost cut. However look at Kmart and Sears. Kmart was going bankrupt. Radioshacks new CEO Julian Day took kmart and bought sears. Now he has Radioshack. Stock went from 12 bucks a share to 17 the day he took over now its 32 a couple months later. Look out DELL maybe radioshack will buy you... I don't know why but i see great things comming for radioshack.

[Kevin Hillstrom]

Thanks for the explanation, you did a nice job of outlining reasonable steps.

Thanks,
Kevin

[johnmoore (from Brand Autopsy)]

Marc ... first, that says a lot if you are getting excited about RadioShack selling Plasma TVs. Not sure what it says, but it says something. So they don't sell Plasma TVs but they do sell LCD TVs. My point still stands, if I am getting an HDTV of any variety the last place I would get it at is RadioShack. I would be more confident in my purchase of an HDTV from somewhere else.

And since we are getting granular, not sure you got your facts right with Julian Day and the Sears acquisition of Kmart. It was Sears Holding Co. that bought Kmart just as it was emerging from bankruptcy. That deal was driven by Edward Lampert and not Julian Day.

[johnmoore (from Brand Autopsy)]

Matt ... totally agree with ya on doubting that RadioShack can survive just by doing what they are good at. No business lasts forever. None.

[Jason Moore]

I remember when I was a kid, Radio Shack was a cool store because it was like a Hobby Shop Plus. You could get the best widely available R/C car or some of the first models of computers.

Now, I think it's almost embarrassing to be seen near a Radio Shack. That being said, I don't really know why I would go to Radio Shack. That is terrible news for a company with a marketing budget the size of theirs.

If they still focused on R/C cars, other hobby shop items PLUS those hard-to-find electronic components, there is a good chance my son and I would make regular visits on Saturday mornings.

[Adelino de Almeida]

Woohoo, great post.
You're pointing towards a classic "brand realignment" case: this is not about Radio Shack cutting costs, or streamlining the product line, this starts with Radio Shack defining what it wants to be as a brand. Literally.
I am not a "brand guy" in most cases, but this is one that - I feel, needs to start with some serious brand work; product rationalization, store profitability, service and all that should come second and as a consequence of the brand positioning.
But given that the sector is so crowded this is one of those exercises that will require them to find "white space" - a niche that is not explored - and claim it.
Less will not do and Radio Shack will keep limping along.

[Glenn]

I've heard RS announcing you can drop off used batteries there to be recycled. Sounds like they're doing a little "green" marketing.

I've gone to Best Buy looking for stuff and have been referred to Radio Shack. The one in Oak Hill has great customer service.

John, be careful with the comparison to Frye's. They have a much different customer service philosopny than other retailers including RS.

Regards,

Glenn

[Valeria Maltoni]

John:

I don't think I ever walked into a RadioShack store. Having said that, it seems to me that being the "chain" convenience store makes more sense than trying to beat the big box stores. Recently, I suggested that Best Buy become a customer hang out in my post at FC Experts [http://blog.fastcompany.com/experts/vmaltoni/2007/05/what_if_customers_were_the_ser.html]. So RadioShack could be the service from the company vs. the service from other customers as in my scenario.

[Jay Ehret]

John,

Your points are right on. Just yesterday I needed a lapel mic and the first place I thought might have one was Radio Shack. Sure enough, they did.

One other long-term problem they have is their name: it's generic, it's boring, it doesn't illustrate the concept you laid out. In addition, it doesn't have the same connotation for younger generations that it does for people my age.

[Jason]

John,

I put Radio Shack in the same situation as Hallmark -- struggling to define the brand and be relevant to consumers in order to turn sales around. Would love to get your perspective on Hallmark some day.

Love your blog.

[Stephanie Weaver]

John,
I agree with you, AND they could create a niche by doing a Geek Squad type of thing... providing guys (or gals) who really know how to set up a computer or stereo or wall-o-tv, who would come to your house with a truck packed with wiring and do it for you, leaving you a working electronic whatsit, cords neatly coiled, etc. That's the stuff we don't know how to do, and you can't get that kind of help from any big box store.
Stephanie Weaver
www.experienceology.com

[Nick]

As Doug Rushkoff would say, Radio Shack needs to "Get Back in the Box" by following the strategy you suggest, John. My friend and I were just talking about this very thing the other day. Radio Shack wants to get away from selling electronic components (capacitors, resistors, transistors, pots, LEDs) when that is exactly the opposite of what they should do and stop trying to compete with CC and BB.

[Mark Ramsey]

Just a story about the fundamental stuff that needs to change there:

Yesterday I went looking for a firewire cable for my Mac. First (and most convenient) stop: Radio Shack.

Can't find it in stock, so I wait in line (you ALWAYS wait in line at Radio Shack) for help. The guy barely knows what I'm talking about but his computer research indicates that Radio Shack has what I want...

...online.

Great. So I went down to the store only to discover that they had exactly what I needed online - as if I needed their assistance to figure that out.

Second stop: Ritz Camera.

Problem solved.

Now where will my first stop be next time?

[Christine L Lukasik]

Radio Shack could team up with O'Reilly - publisher of Make magazine - the readers of which are squarely their target - to supply parts, kits, and add-ons for all the wickedly cool projects Make features. It seriously should be the geek equivalent to Home Depot.

[Dana Sion]

In a nutshell, I agree with so many of you
and I hope some day RadioShack will "GET IT" and become a more modern refined version of what it was in the 1980s when it was a "cool" place to go as so many have said on here and I agree. I really was like going to a neat place that you could check out all the dodads and gizmos along with picking up some parts to make something at home work.
They even had people back then who knew what the stuff did, how it worked and why.
-Dana (NH)

[Dana Sion]

WOW
You all think RS has issues in the USA check out what happen in Canada under what was International Tandy (InterTan).
http://en.wikipedia.org/wiki/InterTAN

What a mess that was. I remember going to a InterTan Radio Shack in Montreal Canada and found it was closer to what RS in the US once was(this was in 2002 when I was last there).

[John]

As an employee of Radioshack, I can only say that moral at the store level is incredibly low.

The pay is horrendous and the reason none of us employees know anything about the stuff we sell is because the turnaround rate is so high. All seasoned knowledgeable employees and are being replaced with part time teenagers who don't mind making minimum wage. Any full time employees (including managers) are leaving because they can no longer live off of the money they make.

I am a store manager and the pressure to cut hours is so high that the only associates we can hire are part timers. We work about 60hrs a week because we cannot go over budget with hours for hourly employees. No overtime and a salary that is far below standard.

The stock holders like the cost cutting that Julian Day has done, but the fact is Radioshack is shooting themselves in the foot.
The consensus i get from every person I talk to is that Julian Day is going to get his money, make his bonus, and leave.

From what I have been told, this used to a great company to work for. Now, I only hear from the old timers that they have never seen it this bad. The general feeling amongst the associates is that Radioshack is going under.. and we are all kind of happy.

The higher ups have stomped on the people who make them money, and most people think that it come back to bite them in the butt.

[James]

Kevin... it wasn't Sears Holding Co., it WAS K-Mart Holding Co. that started the merger with Sears, Roebuck & Co. The acquisition was started by Lampert as you said, but it was due to his controlling shares of stock in Sears.

Now onto Julian Day. I firmly believe that Day is shaving overhead costs by getting rid of the excess. RadioShack is, as others have stated, a convenience store for electronics. But that doesn't mean it's bad to purchase an HDTV, an iPod, a laptop or anything else from them. The truth of the matter is, the more tenured associates that work for RadioShack are more knowledgeable and trained far better than an entire district of Best Buy employees.