Will a return to its roots keep RadioShack from short-circuiting?
RadioShack, which dropped to a penny stock in June, is banking on an uncharacteristically strong holiday season just to keep its doors open. One of the beleaguered electronics chain’s newest strategies to score an eleventh hour revival involves going retro to move forward. According to a Fast Company article, RadioShack has begun prominently promoting littleBits, a line of DIY electronics kits meant to appeal to a new generation of inventors and tinkerers.
"Our new leadership team is committed to embracing the parts of our heritage that allow us to differentiate RadioShack in a crowded market," CEO Joe Magnacca said in an interview with Fast Company.
RadioShack’s relationship with nostalgia is a double-edged one. The very name of the store conjures memories of tech hobbies past, from its early days as a source for HAM radio operators to its days selling parts for audiophiles and pre-cellular phone tinkerers. The company’s 2014 Super Bowl commercial features a store associate answering a phone and announcing, "the ’80s called, they want their store back." At that point, the store is ransacked by a slew of figures popular in the 1980s, including wrestler Hulk Hogan, gymnast Mary Lou Retton and alien from the planet Melmac, ALF.
The commercial seemed to make light of the store’s antiquated image, promising a more contemporary RadioShack. But now the chain appears to be looking for salvation in retro appeal.
In addition to its LittleBits announcement, the store has a few other strategies up its sleeve for the holiday season. According to a Star-Telegram article, RadioShack is rolling out ads in movie theaters that offer deals through Shazam or Soundhound apps, free shipping on products out of stock at one RadioShack but available at another, price-matching deals with major e-commerce sites, and a relaunched RadioShack credit card.
While RadioShack is airing a holiday ad featuring "Weird Al" Yankovic promoting their assortment of techie toys and running ads for littleBits as well, visibility has not yet appeared to translate into good news on the financial front.
![[Image: littleBits]](/public/images/discussions/17927/little-bits-still.jpg)
According to a Bloomberg News article from November 18th, "Monarch Alternative Capital LP abandoned negotiations to take over a $140 million loan to RadioShack Corp. (RSH) as the electronics retailer struggled to reach a deal with lenders on a turnaround plan."
Even in a culture more obsessed with gadgets than ever before, one wonders if littleBits, the self-aware, hip commercials and the price-matching promotions are coming too late to rescue retail’s original gadget outlet.
Discussion Questions
Can a strong holiday season, or anything else, save RadioShack? Which of RadioShack’s holiday strategies stands the best chance of making a difference in the company’s ultimate fate?
We all get it. RadioShack’s in trouble. Dire trouble.
But it did seem from the recent panic over opening hours on Thanksgiving, then the back track and employee revolt that there is no clear, concise leadership.
I think one of the most damning things they did was that Super Bowl commercial. It’s one thing when people talk about you, it’s another when you pointedly say how out of touch you are.
Best Buy’s announcement of an upswing in its sales suggests that the consumer electronics business is not dead after all, and the big box store might also be showing a pulse. It becomes more difficult for a company like RadioShack—saddled with an image that it tries to embrace one day and mock the next—to compete against the brick-and-mortar or e-commerce giants in its segment.
It’s probably too late in RadioShack’s history to consider a complete re-branding—including a new name—but it’s worth remembering that Best Buy originated many years ago as a Twin Cities-based audiophile store called “Sound of Music” and decided to walk away from its original brand identity.
Joe Magnacca has a good track record in retail turnarounds so I think he might help to give RadioShack a chance to survive and thrive, and I think the timing is right, because small consumer electronics have become a small store type of business once again. Let’s face it, consumers want to get in and out with some help and advice, and a short line to check out. But RadioShack needs to develop a consistency from one store to another, including even those that might be franchised.
In addition, RadioShack needs to be well-stocked even in small stores, with an assortment and variety of what the consumer wants to buy. And finally, RadioShack needs to make sure that it does indeed return to its roots by providing the consumer with someone in the store who has expertise about every space, and every product in the store. Consumers want personal assistance and advice in consumer electronics and that’s where RadioShack can thrive, if they chose to do so!
A strong holiday season might save RadioShack, but I’m not confident that any of their current strategies will do the trick. Reaching out to the growing “Makers” movement—inventors and tinkerers—is a good move, but RadioShack will have to compete with the limitless resources available online. Like all other retailers, RadioShack would be best served by skipping the gimmicks and focusing on providing their shoppers with a knowledgeable staff and stocking the items that tinkerers will be unwilling to wait two days to receive from Amazon.
A strong holiday season would, at a minimum, show that RadioShack still has a chance of revival. Without one it is likely RadioShack’s days are numbered.
Frankly, the Super Bowl and Weird Al commercials may have generated discussion, but I don’t believe they resulted in the expected sales lift. I admit the Little Bits ad reminded me of my early purchases from their stores and made me wonder if my grandsons might like to move from Legos to electronics. If so, it would be my first purchase from them in many years.
In a word, no. RadioShack has been in decline so long, with ineffective leadership, that one holiday season is not going to save it. The brand and their business has lost relevance and “Weird Al” and company are not going to change that.
A strong holiday season will give RadioShack some breathing room to evaluate what worked and what didn’t in the quest to re-merchandise the stores while tapping back to their heritage of DIY electronic gizmos. Whether that segment is large enough to support their number of stores will be much clearer come January. Additionally, the physical and the online presence need to complement and reinforce each other and the brand strategy.
The company’s future is not about going back to the ’80s as much as it is about bringing their winning formula of DIY for the maker crowd forward and redefining it for the 2010s. Their current tack is directionally correct, but might be too late for the chain’s survival.
… And why should we go to RadioShack?
They better find a reason for being, and it isn’t retro.
There is a bit of sadness reading this. My business relationship with RadioShack goes back many years. During this time I have met and am friendly with many people who have made a strong commitment to keeping them afloat. My hope is that RadioShack is a positive point of conversation this time next year. But I have doubts using Weird Al is the way to make it happen.
An eight-bit Z-80 processor stuffed and soldered into a bread board with a pile of other components from a list printed in an electronics magazine was then connected to a power supply and a serial port or two and you had the latest in digital micro-computing. This pile of components could be attached to an old TV and a printer and a month of spare time work was now a working device. Later the owner could build or add other input/output devices with some bootlegged software and have the makings of an Apple II or an Osborne.
Today’s technology and user wants are light years from the 1980s and will continue to distance themselves for the foreseeable future. RadioShack had many an opportunity to stay current and is still refusing to do so. The task at hand for the new CEO and turnaround expert is re-purposing and not turning around or back.
RadioShack is a classic example of what can happen when you alienate the majority of the customer base through myopic retail store procedures in the face of growing multi-channel competition.
RadioShack should have rebranded years ago. One of the things holding them back is their name. It’s really a shame, because the stores have knowledgeable people who are immensely helpful to customers.
Identify core competencies and build your competitive advantage on those competencies—what strategic consultant does not say this? In this day and age young kids are not as busy buying old cars and fixing them up as in the past. Today young kids are busy building technology tools (even rebuilding that old car requires computer skills now). Taking a core competency and working with the increased emphasis on STEM programs to make RadioShack the place to go when building and tinkering makes a lot of sense. Is it enough to save RadioShack? It may be a great idea that is too late. We shall see.
I love the littleBits idea, especially since other retailers have been slow to address the maker movement/next wave of DIY. If Radio Shack continues to identify and pursue niche opportunities, Best Buy’s recent rebound should help things along. The two retailers could operate quite synergistically with Best Buy selling the space hogs and total solutions and RadioShack taking on more of those supporting littleBits.
If their target market is people in their 30s and early 40s, this would be awesome. I want to buy one!
Unfortunately, technology has moved on, and this may be a little late. The integration of mobile and other new technology is cool, but may not be enough.
In the 80s when you wanted to tinker, it was with low level hardware components like the stuff they used to sell. Now if you want to tinker, it’s mostly in software, or hardware components are more sophisticated, modular hardware. For example, if they have a modular mobile app that allowed control of a lego robot. They can sell the lego robot kits.
Will this revive them? I hope it will. As a tech kid and an engineer now, I love RadioShack!
The way this question was phrased, inevitably leads to a “no.” If you’re counting on something “uncharacteristic,” then by definition, it’s unlikely; similarly, even with a strong holiday season, what would happen after? On the other hand, if the question is “can RS come up with a strategy to make itself relevant?” there’s something to think about…though even after the thinking you’ll probably end up at “no” anyway.
I have long been a RadioShack lover. I was a computer hobbyist back in the day and RadioShack was the go-to store.
As much as I would love to see them creating technology hobbyist opportunities for the next generation, they just haven’t been able to do it in the last few years. This new concept sounds great but, it may be a day late and a dollar short.
Hate to be a nay-sayer, but that’s my 2 cents.
A great holiday season may delay the inevitable, but the inevitable is … well … inevitable.
I’m not sure I have much faith in any of their strategies (tactics). The company can’t be saved by boomer nostalgia. It’s been allowed to get too far gone for that.
RadioShack can be saved by embracing the Maker Culture. There are many dimensions to this and they include the hacker ethic (embodied in the hobby cultures of RadioShack past) that is now spreading into a education.
If you are from RadioShack reading this: contact Tim O’Reilly from Maker Magazine and ask him how he would use physical stores to help advance the maker mission. Then ask him how the network of social media that surrounds the maker culture could be used to help RadioShack, the original hacker store, become relevant again.
These suggestions, while they don’t seem “corporate,” are consistent with the powerful culture in which RadioShack is fortunate to have deep-cred (think: millions in free advertising).