Tuesday, February 21, 2006
Why RadioShack Will Be Fried! And What They Should Have Tried . . . (hint; sell Macs)
I read an interesting post on Forbes & Slashdot this morning.
Looks like the Radioshack CEO is resigning after the company announced a 62% drop in fourth quarter earnings. That's 62% less than last year and includes Christmas.
No one really touched on the REAL reason Radioshack has lost money and is just saying, "We are restructuring". Restructuring usually means cutting back on full time employees, paying part timers less, cutting out at as little executive management as possible, and closing a few stores.
I don't know if any of you have ever been to a Fry's Electronics or not, but it is nothing short of a geek paradise ... they are like an Apple Store, a Circuit City, a Barnes and Noble, a Best Buy, and a Radioshack ... all under one roof. (Outpost.com is Fry's online storefront) They sell pretty much everything that Radioshack does ... they don't sell much if anything under their own brand name.
Tandy corporation, which owns Radioshack seems to think the Radioshack namebrand is a strong name ... so therefore they brand everything with the logo you see at the top of this post. Only until recently (the last 5 years or so) has Radioshack started selling a lot of non branded electronics. A lot of items that Radioshack carries and has carried in the past ... have been rebrands of other products ... some with their supposedly prestigious name Optimus.
Here are the key areas Radioshack has truly failed and most likely can never recover ...
1) Too many store locations ... in my area we have one every 10 miles or so. Do people need Radioshack like McDonald's?
2) Rebranding instead of carrying unique items ... I know of few people who actually want to own Radioshack branded products ... in fact it bothers me that simple cables have the Radioshack name embossed on their connector ends ... I feel cheap just plugging it in. Radioshack's name is not a strong name brand ... of course nothing with the word "shack" in it when referring to high end consumer items is appealing.
3) Radio Shack has the same problem as Toys R Us ... they sell things in their retail stores that kids simply do not want. The most recent example I can think of ... Cat In the Hat remote control cars ... from the Cat In The Hat live action movie ... this movie was out 2 years ago and some stores STILL have stock! Merchandise managers and purchasers are just plain clueless when it comes to what it's customers want.
4) Most Radioshack stores I have visited (even if newly renovated or newly opened) are crowded or messy ... one thing the Apple Retail Stores excel at is cleanliness and focus on product ... eventhough each store has thousands of items for sale.
5) Competitors like Fry's are expanding and offering a greater selection ... kind of ties in to # 4
6) Their commercials are some of the worst in the advertising industry and almost solely focus on cellphones. Really ... Radioshack commercials are often idiotic featuring ignorant or whiney characters. Their Christmas holiday ads were ineffective.
I have always thought that Radioshack's should try to sell Apple computers. The deal with HP was very awkward and from what I know ... HP reps rarely visited Radioshack stores. This would be an opportune way for Radioshack to get true geeks in their store and get them a fan base that would visit and buy because of loyalty. It would also allow radioshack to carry a truly prestigious name in their stores. Maybe Apple would even share in some advertising and merchandising.
One other tip I have for Radioshack that I see a lot of other big electronics business do; is sell on eBay. I don't think Radioshack does this.
What do you think?