Radio Shack is in the middle of renegotiating deals and trade terms in the hope of avoiding bankruptcy. Analysts talk about problems with Radio Shack’s positioning, but it also faces all the problems that face the entire retail sector right now. One of those is an increasing recognition by consumers of the transportation costs of shopping. U.S. retailers mostly plan on shoppers driving to their stores, but driving is more expensive than it was a generation ago, and this is a bigger problem for some retailers than for others. It is a particular problem for Radio Shack’s suburban locations.
This hit home for me a month ago when my lawn mower failed. It was late enough in the summer mowing season that buying a new lawn mower wouldn’t make sense. I would have to finish the lawn with the trimmer, which was sitting unused in the garage. Unfortunately, the garage door wouldn’t open. I needed a new battery for the garage door remote control.
In the past I would have driven to Radio Shack and paid whatever price they were asking for a replacement battery. But on this occasion I could afford to be patient. The batteries I needed were also available online, and the cost to have a pack of five delivered to me was about the same as the cost of fuel to drive to Radio Shack. When I thought about the half hour or longer that a trip to Radio Shack would take, I placed my order online.
Radio Shack has so many locations on the theory that this will be convenient for its customers who need electronics, but in my case, getting the product delivered to my home was even more convenient — and though I also saved money by not going out to the store, it isn’t really because of Radio Shack’s premium prices. Even without knowing Radio Shack’s in-store prices, the shopping trip was more expensive just because of the cost of driving.
Many shoppers still neglect the cost of driving when they make comparisons, so this will be a growing disadvantage for local retailers as more shoppers take the cost of driving into account.
Radio Shack specializes in items that are easy to identify and easy to ship, so it faces this difficulty more than most retailers. Its stores in malls and city centers may fare better, if the location means that people are in the area anyway and don’t have to pay for a ten-minute drive to visit the store. But my guess is that the retail chain will be better off without most of the suburban and small-town shopping-center locations — and that’s a big change for a retailer that spent the last two decades trying to be everywhere.
