walkitout (walkitout) wrote,
walkitout
walkitout

RadioShack woes

RadioShack recently filed for bankruptcy.

When I was young, RadioShack was a place we went at least a couple times a month. I had a battery card -- a loyalty card punched every time I bought batteries, and after a while you got a free battery. I remember buying a small transistor radio there, and later a larger boombox with a tape player. I remember my older sister buying a turntable, but I was gonna wait for CDs, which I had heard about on the radio (yeah, my anti-vinyl thing dates back a ways).

I knew, in some limited way, that Radio Shack bore some connection to the Tandy leather stores that my dad would occasionally buy some project at -- he'd buy the components for making a wallet every few years, assemble it, and then replace it when it wore out. He tried branching out into buying projects and then giving the results as gifts (belts, purses, etc.) but by that point I think it was probably 1980 and that kind of leather thing was beyond Not Cool any more.

I've been spending some time trying to figure out what happened to result in such an entrenched component of the strip mall retail ecosystem to declare bankruptcy. Here's what I've come up with so far.

(1) That battery card. Radio Shack is still the place where you can go and buy any conceivable battery. But you can also do that online, and for most batteries, you can get a better deal at an office big box store or Costco or whatever. Most importantly, a lot of stuff that used to take batteries doesn't any more, and a lot of us are using rechargables even for the AA, AAA etc. type stuff. We don't buy batteries every couple weeks -- we buy them in bulk at Xmas and that's about the end of it.

(2) The TandyCorp connection. Tandy had a history of hanging on to things way past their pull-by date. And when they did jump on a new trend, it was a little hit or miss. When my oldest sister was buying a computer because she needed one to connect to her college accounts in the 1980-1984 time frame, she bought a used TRS-80 system; they failed to transition successfully to the IBM PC era. Their efforts to come up with a big box chain failed -- they never made it out of their massive, entrenched strip mall retail ecosystem, which eventually seemed smart but meant they've been out of the mainstream of retail for a long time.

(3) Smartphones. Again, a hit and miss transition. They are a retailer, and as long as crackberries ran on regular batteries, that was helpful, too. But -everyone- sells smartphones now, and the batteries are all rechargeable, and everyone sells accessories and there's just no margin left at all. Worse, Tandy's focus on We'll Help You Fix it means they get stuck with a lot of high demand/low dollar customer interactions.

What could they have done?

Well, before there were Apple Stores, RadioShack was representing itself as the reliable, gentle place to bring your stuff and see if it could be fixed or possibly repair it. If they could have moved upmarket and been what Apple Store became, maybe Apple would never have felt compelled to launch their own brand. But Apple Stores went for lifestyle centers and eventually regular old malls -- they've steered clear of strip malls, which is where RadioShack has always lived.

What about games? There's no obvious reason why GameStop came into existence if RadioShack could have successfully served that crowd. And if RadioShack had successfully transitioned to big box retail, they probably _would_ have been selling all the games and game systems that people bought at GameStop for the last couple decades.

Music was never going to happen for RadioShack, because music stores selling vinyl predated them, and they owned the music market.

I think RadioShack was probably another fine example of done in by one's own success. They were pretty clear about what they needed to get into if they were going to stay current, and they even seemed to thoroughly understand each time they failed to do so. At the same time, with so many established stores in such desirable locations, with long term relationships with strip mall owners (who haven't been in a position to get new tenants or raise the rents on their existing ones for decades), they must have had difficulty going all-in on any one transition.

And so, they are soon to be All Done, with a ghost of its former self living on as cobranded Sprint/RadioShack shops. We're all walking around with radios (cell phones) in our pockets and soon to have radios on our wrists, and radios (RFID) attached to the shit we lose track off frequently -- but there won't be a RadioShack to go with all those radios for much longer.

ETA: Bloomberg article about Salus' big loan to RadioShack in 2013.

http://www.bloomberg.com/news/articles/2015-02-08/behind-radioshack-s-collapse-is-a-tiny-lender-that-found-trouble

One of the circling sharks is Standard General:

http://www.chicagobusiness.com/article/20150207/NEWS07/150209814/radioshack-starts-store-closing-sales

Standard General bought out GE Capital's exposure? stake? Not sure what to call it when you are the lender, especially the lead lender.

http://www.thestreet.com/story/12903214/1/radioshack-is-thrown-a-lifeline-by-hedge-fund-standard-general.html

Standard General also has a stake in Dov Charney's shares of American Apparel.

http://fortune.com/2014/07/02/dov-charney-american-apparel-soo-kim/

The Radio Shack in my town is not closing, according to CNN's interactive map.

http://money.cnn.com/interactive/technology/radio-shack-closings-map/?iid=EL
Tags: our future economy today
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