Wednesday, March 5, 2014

Radio Shack Adjusts As Phones Get More Durable

Radio Shack had pinned its hopes on mobile phones, and that strategy made some sense in 2009, when a phone would break at the drop of a hat. Someone, you would think, would have to provide the place where you can go, no matter where you are, to get a replacement phone. Phones are more durable now, though, and that situation doesn’t come up nearly so often. Radio Shack has been closing stores, about 4 percent since the beginning of 2011. After a dismal holiday season, it says it will close another 20 percent.

If it cannot be the country’s emergency mobile phone vendor, Radio Shack may have too many stores even after these closings. It still expects to have 4,000 locations, a number large enough that you can compare it to Starbucks’ 13,000 or Bank of America’s 6,000. To support so many locations, you need a product that is local, urgent, frivolous, and disposable. Radio Shack is still the go-to place for device batteries and connectors, but that may not be a large enough category to support the store.

Of course, Radio Shack is not the only one having to make adjustments. Retailers in virtually all categories are adjusting to changing replacement cycles, shopper fatigue, and the increasing cost of energy. This doesn’t mean the whole retail sector is about to fall over. Radio Shack has so few direct competitors it is hard to understand why it couldn’t make a profit just by focusing on its unique strengths.

Below: Radio Shack’s 2014 Super Bowl commercial, in which it seems to admit that its retail concept is a little out of date. “The ’80s called. They want their store back.”