Monday, June 19, 2006

How Radio Shack Blew It!

Of my 3 local Radio Shacks, 2 are now closed and the 3rd is being “updated.” All are victims of the latest in a long line of failed attempts to revive the once thriving brand. Originally dating from 1921 the Shack really came into it’s own in the 70’s with the Ham & CB radio craze in full boom (a radio shack is actually Ham slang for your personal rig), the homebrew electronics builders & a line of very innovative and successful computers.

However, the dubious appointment of former fast food executive Len Roberts and then the subsequent resume gaffs from his successor have brought this once highly regarded chain to its knees. Floundering between the big box electronics retailers and discount chains the stock performance clearly shows that the once proud Radio Shack has completely lost its direction. Unsuccessfully flirting with various third party manufacturers including RCA, Compaq, Blockbuster & Apple has only served to confuse the brand further.

A visit to your typical store will show a mish-mash of cellular phones, home entertainment equipment, computer peripherals, toys & electronic parts & accessories. Of course batteries are still a mainstay but the traditional selection of cables, parts and innovative problem solvers have been largely eliminated. Days were you could pretty much fix any electronic equipment with parts bought right at your local Shack. I remember finding an IC for an Otari 24 track recorder right there on the shelf. Nowadays you’re lucky to find an antenna cable let alone a replacement transistor.

Now the company’s reasoning behind these changes is that the homebrew electronics fan has largely disappeared and if you’re talking about the guy with the breadboard & smoking soldering iron then that reasoning is largely true. However he has been replaced by a much larger group, the home computer builders & PC hot rodders. Here is where Radio Shack has completely missed the boat. These individuals are into building the biggest, baddest home computers with clocked chips & neon lit cases; their retail source for parts? Not Radio Shack who helped usher in home computing and had a vast wealth of electronics knowledge but Frys Electronics, the abandoned grocery store retailer turned mass marketer. While Radio Shack are going toe to toe with Wal-Mart, Best Buy & a million corner store phone retailers Frys are selling high ticket microprocessors, hard drives and cases to the new generation of home experimenters. To add insult to injury some Frys are actually located in old Incredible Universe locations, themselves another failed Radio Shack project.

The Company’s current solution seems to be mainly cost cutting, plans are to close 700 stores worldwide in 2006, however, the investment community remain to be convinced and I’m right with them, Radio Shack just doesn’t have a product to sell anymore.

My advice? Get back to what made you great in the first place. Firstly, a neighborhood store that actually stocks the things you need to get that Best Buy HD TV to connect to your home stereo. Put together a high-tech parts selection with the kind of stuff the current generation of home experimenters want. People are editing videos and cutting CDs in their front rooms, you used to sell decent pro-am audio equipment, expand the line to offer the kind of hardware home creators need. And most importantly, staff the stores with people who know & understand the technology, “You’ve Got Questions, We’ve Got Blank Stares” is getting old.

1 comment:

Bob King said...

I hadn't thought about the PC Hot Rodders, but you're right. They're the same crowd, albeit a different generation, as the CB crowd was back in the day.

Perhaps this is an opportunity for The Shack to redeem itself and save some corporate hide. More likely is the same song and dance that rules the rest of Wall Street. The MBAs will manage the P&L for this quarter and never think about the long term. Thus, The Shack will relegate itself to the annals of history just like Western Auto.

Too bad. I really wanted to trick out my Color Computer 16. I think a bit of neon around the cartridge bay would look hot!