RadioShack May Disconnect Mobile Kiosks in Target
Back in 2010 when Target launched full-service mobile phone centers operated by RadioShack in some of its stores, the deal was billed as a win-win. Now, just a couple of years later, RadioShack’s interim CEO has let the world know that there appears to be only one winner in the Target Mobile initiative and his company is not it.
Dorvin Lively, who took over when Jim Gooch was dismissed by RadioShack’s board last month, told analysts on the company’s third quarter conference call that the chain was writing off $25 million on the Target Mobile joint venture and that it would walk away in April if a new deal could not be hammered out.
“If we can’t make any money in that, we should get out of it,” Mr. Lively said on the call.
RadioShack operates Target Mobile kiosks in 1,500 Target locations across the U.S. It is not the only technology company, however, that is currently partnering with Target. Both Apple (store-within-a-store) and Best Buy (Geek Squad technical support) are currently testing concepts inside a small number of Target stores.
- RadioShack Reports Financial Results for Third Quarter 2012 – RadioShack Corporation
- RadioShack discloses $47 million loss in third quarter – Fort Worth Star-Telegram
- As RadioShack’s losses mount, it may stop running Target’s mobile centers – The Dallas Morning News (sub. required)
- RadioShack reports dismal third-quarter results, may pull out of Target stores – The Dallas Morning News (sub. required)
- Target Announces Expansion of Target Mobile Centers in Target Stores – Target Corporation
- Best Buy Sending ‘Agents’ Into Target Stores – RetailWire
Discussion Questions
If the RadioShack/Target mobile kiosk deal falls through, do you expect to see Target turn to another partner, perhaps Best Buy? Do you think Target stores are a good environment for selling mobile phones and services?
I’m not sure the problem is with Target. The problem might be more with RadioShack, and their tired image. If I were Target, I’d look at going with a partner more focused on their demographic, maybe a Virgin Mobile.
I can’t help but believe that the right partner can truly make this a win-win for both partners.
If having a technology partner was a win for Target, then certainly they will seek another partner. Best Buy is definitely looking for wins wherever they can find them and they already have a business relationship with Target, so it would seem a natural fit.
The underlying issue will remain the same. Can both parties make money under the business model agreed to? Part of this may be what products Best Buy is allowed to sell, both by its agreement with Target and the amount of space target is willing to allocate.
I assume Target will re-evaluate the overall validity of the mobile phone kiosks before deciding whether or not to invest in a new partnership. I think the purchase of a mobile phone often requires interaction between the customer and a store associate. So, while an Apple or Best Buy kiosk may perform better than a RadioShack kiosk today, is the entire concept worth the investment? I’ll be anxious to learn the answer to that question.
I think it is sad that so many retailers depend on cell phone sales to drive revenue. It seems like a short sited effort that does very little to differentiate you from your competitors.
Mr. Lively is making a smart move. RadioShack has a huge base of locations and they need to find ways to drive customers to their stores. Private Label items, unique hard-to-find technology focused supplies and kits as well as exceptional technical support are the areas RadioShack are known for and should focus on. Cell phones and accessories can certainly be part of the mix as long as it is not the area they focus on as a competitive advantage.
Yes, I believe Best Buy or someone else will try to enter the space at Target. The outcome, in my opinion, will be the same as RadioShack, so I would suggest Best Buy and others look for ways to drastically change the current model.
We’ve seen Target successfully invite retailers under the tent…and I think that Best Buy may certainly be on deck. The mobile and CE offering is important to Target’s ability to continue to compete against Walmart. So, it is in Target’s best interests to bring in that core competency. From Best Buy’s perspective, another outlet is more traffic. Why not?
I would question why Target needs a partner at all. They are big enough to do this themselves and have full control. I would imagine any partnership means giving up margin — why do that? Deals can be struck with vendors to mitigate any risk and they have the space. Is the partner driving traffic to the store? I doubt it. So why do it?
I don’t know if Millennials know what a “radio” or a “shack” is….
I like the kiosk idea for Target and feel they can do better with another partner. If I were RadioShack, I would make this deal happen.