Tuesday, February 3, 2015

Bloomberg: "Inside RadioShack’s Slow-Motion Collapse"

Bloomberg story:

  • No one he knew was trained for the Do It Yourself campaign. When asked whether he thought customers even wanted something like that from RadioShack, he pauses. “It’s really hard to tell because so few customers come in” [...]
  • RadioShack had also found something it was good at. Cell phones were becoming popular, and customers were intrigued but intimidated. Wireless carriers and device manufacturers were looking for someone to hold first-time owners’ hands. Given that RadioShack stores were already places where people sought technology advice, the chain was well-placed to play the role of helpful tutor. It didn’t hurt that the stores were everywhere. “It was a massive land grab to get everybody signed up, and RadioShack provided that scale” [...]
  • A longtime executive who left the company in the mid-2000s compared the wireless business to a narcotic, with the company bingeing on phone sales while ignoring the other parts of its business. The addiction had consequences. Signing someone up for a mobile contract took about 45 minutes, and many stores were staffed for long stretches by a single employee. Customers in search of help regularly left in frustration and foot traffic began dropping...
  • RadioShack couldn't sell phones for long, either. Mobile carriers stopped relying on the chain and eventually negotiated deals where they didn’t have to pay the company monthly residual fees. All the major wireless carriers operate their own retail locations now, often adjacent to RadioShack stores.
  • Attempts to squeeze maximum value out of each person who walks into one of its locations has made shopping or working at RadioShack irritating.
  • As the cell phone moved away from RadioShack, it also helped kill the rest of the business by destroying the market for so many of the gadgets RadioShack used to sell...

1 comment:

Anonymous said...

Does this section remind anyone of another retailer run by a famous hedge fund manager?

"He spent most of his energy assuring Wall Street that the company was getting its house in order, according to people who follow the company. This led to a period of cost-cutting at the stores and at headquarters. By any financial measure, RadioShack has been in decline ever since. Its stores look like they were preserved in amber 10 years ago."

Bloomberg can use this story as a template for the inevitable story it'll write about SHLD's bankruptcy.