RadioShack Bankruptcy: Not Gone but Nearly Forgotten

By Stephen Lepitak | -

February 6, 2015 | 5 min read

The announcement that RadioShack had filed for Chapter 11 bankruptcy was a particularly unsurprising development for retailers in the US who have long marked the electronics chain as a dead duck in the water.

The 94-year-old franchise may have continued to keep up with the times in terms of nationwide brand recognition, but not with the industry selling them. Bricks and mortar are no longer enough for national retailers who are learning the hard way the power of mobile eCommerce and it's ease of research and purchase to consumers.

While up to 2,400 US stores could be saved following a purchase deal made ahead of the bankruptcy, the embattled RadioShack brand itself is tainted even further.

'These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders,' Joseph Magnacca, RadioShack chief said in a statement.

Data compiled by GfK MRI, which surveys around 25,000 US adults each year in person, found that just under three quarters of all people it spoke to who attended a RadioSack said they had received "great service", however less than a third (29 per cent) said they shopped there often.

However, it seemed as though the brand had begun to understand those problems and indeed poked fun at its lack of 21st Century relevance when it released an advert for the Super Bowl featuring heroes from the 80s such ad Eric Estrada, John Ratzenberger and Hulk Hogan visiting one of its newly updated stores (see below). As it turned out, however, it was too late and the virtual world of the internet was too much competition for RadioShack to ward off.

Justin Tobin, founder of advisory firm, DDG says that the brand attempted to reinvent itself but limited itself to the space it had already grown within, electronics retailing.

"We view business transformation inside brands as having three stages: product optimization, product extension and brand extension," explains Tobin who continues by citing Apple's brand extension of the iPhone as as a successful example of taking a company forward.

"The computer company [Apple] extended into an area it had never been involved in previously — phones. At the time when RadioShack needed to be thinking about product extension and brand extension, it was focused just on product optimization, upgrading its stores and changing its product suite; clearly that wasn’t enough to create innovation and sustainable growth. RadioShack should have been thinking about ways to evolve the business for customers beyond the brick and mortar store," added Tobin who also said that he viewed the brand as one destined to become "a nostalgia showpiece".

Brian Kristofek, president & chief executive of Chicago-based marketing and advertising agency, Upshot also cites a lack of relevance to modern consumers as being the reason for its downfall.

"Being known for selling batteries, cords and the like was barely enough in the past, and now all of those items are easily replaced by online stores. The brand has also not kept up with the trends shaping their category. Consumer electronics has become an experience category to better appeal to the growing cohort of Millennials. RadioShack has done a number of brand and store refreshes, but it’s hard to compete with experiences delivered by brands like Apple when you're constrained by legacy locations, footprints and a lack of lifestyle focus," states Kristofek who was positive about the Spirit co-branded takeover that it would be a step in the right direction.

"It gives them a clearer focus and reason for being. The Sprint brand offers a lifestyle opportunity and RadioShack's numerous locations help deliver convenient customer service demanded by today’s wireless customers."

Meanwhile, Julie Quick, head of insights & strategy at shopper engagement agency, Shoptology, describes RadioShack as "a cautionary tale" for other retailers dependant on brick and mortar shopfronts.

"If your product assortment, prices and experience cannot beat others, you won't remain competitive," explains Quick.

"Retailers looking at RadioShack should take away a clear message: evolve or die. RadioShack’s performance has been slipping for more than a decade. But it seems they lacked the fresh ideas—and the urgency—needed for dramatic change."

She adds that RadioShack felt more like it stocked products that it wanted to sell rather than what consumers wanted to purchase.

"If they’d made investments in assortment, store experience and e-commerce when the consumer electronics channel first started to shift, they might have avoided this fate," she claims, while being less than convinced by Spirit's acquisition strategy at the same time,claiming that it "feels more like a stop-loss than a play for real business gains."

Stacey Rubin, VP of strategy for shopper marketing agency, Catapult, cites the multi-millions also being spent by rival firms on mobile shopping and online sales as another reason why RadioShack struggled to claw back sales.

"Younger, more affluent consumers are driving the category – younger consumers own multiple devices, they are 'power' users who spend more on their monthly bills," she adds of consumers who weren't generally visiting RadioShack, adding that retailers must show the connected generation that they can meet their every mobile needs and become a " preferred mobile place".

Despite the miserable tale that RadioShack has to tell of late, it still lives on, albeit in a diminished form. Where it goes next it is hard to know at the time of writing, but it is clear that a massive overhaul of product and service offer is a fundamental necessity should it wish to survive another 94 years.

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