Innovation & Design

The Source Rewired


The decision to undertake arguably the biggest rebranding in the history of Canadian retail was made in the courtroom, but the executive forced to oversee the change has never been so happy to lose a case.

As of the beginning of July 2005, more than 900 RadioShack locations in malls across Canada were rebranded The Source by Circuit City following a Texas court ruling.

"It was not a decision we strategized on; it was thrust upon us," says Lyndsay Walter, vice-president of marketing for Ontario-based The Source by Circuit City. "But we saw this as a real opportunity to branch out and create a new entity. This is definitely not your grandfathers' RadioShack."

The controversy began in the spring of 2004, when the American big box electronics giant, Circuit City, acquired RadioShack Canada's parent company, InterTan Inc., for US$ 284 million.

Shortly after, RadioShack's US parent revoked the brand's licensing rights in Canada and a court battle ensued. This spring, a Texas judge ruled Circuit City had to drop the RadioShack name in Canada by June 30.

Walter says the company was prepared for such an outcome and decided to increase the relevance of the brand for today's electronics consumers. It solicited feedback on what the old RadioShack did well, what it did poorly, and how it should change for the better.

She says even though the company was selling internationally-known brands such as Sony and RCA, it wasn't getting credit for doing so in

consumers' minds. In order to change that perception, the company decided to greatly expand its offering of several key products -- including flat-screen televisions, MP3 players, and digital cameras -- from ten to 20 different versions of each.

One area that required only minor tinkering was The Source's sales associates, who were renowned for their expertise and knowledge. The company

spent more than $1 million on training to make sure they were completely up to date on all products in the stores. In addition to time spent in a classroom, associates get a three-minute snippet each morning -- covering topics ranging from new sales techniques to special in-store offers -- when they log on to the computer system.

Walter says The Source also wanted to upgrade the popular RadioShack branded equipment, so it launched a new division in Asia called Circuit City Global Sourcing. Through it the company researches and develops products offshore and brings them to the North American market under its own private label brands, Centrious and Nexxtech.

"We're really trying to dramatically shift the perception of the brand externally and internally and re-energize our culture," she says. "We are still the reliable resource for our customers at all times. The only thing we have changed is we've invigorated the stores with this innovation, and we've made it a lot more fun. I think we're a lot more contemporary store now."

To get the rebranded message out, The Source embarked on an intricate and multi-faceted campaign, including television, radio, outdoor media, in-theater, newspapers, flyers, direct mail and e-newsletters.

Walter says even though this is The Source's first foray into the Canadian market, it's not like it's an unknown quantity north of the border. She says the awareness of the Circuit City brand has been raised over the years through US advertising spilling over onto Canadian television, and that Canadian shoppers who frequently make a run for the border are also aware of its presence in the marketplace.

Derrick Coupland, director of brand strategy at Blacksheep Strategy Inc., a Winnipeg, Canada-based brand management firm, says The Source can do all the rebranding it wants; its challenge is bucking the growing movement among consumers toward big box stores.

"How relevant is a mall presence for a consumer electronics store under any brand when the trend is so strong toward the big players, such as Best Buy and Future Shop, and their big locations," he asks.

The Source will also have another competitor to deal with before the end of the year -- RadioShack itself. RadioShack Corp. announced in May that it would re-enter the Canadian market with 25 to 30 stores, primarily in the Toronto area. It has also launched a new website, radioshackisback.com, on which it says it will update customers on the latest corporate news.

Kay Jackson, senior director of corporate communications for RadioShack, says the company is currently in search of retail space "that makes sense."

"We don't have a goal of how many stores or where they'll be. We're looking at all metropolitan areas," she says.

She says the new RadioShack stores will be located in malls and strip malls but will bear little resemblance to the old ones. They will feature bright colors, such as purple, lime green and orange, wider aisles, improved lighting, better layout of products on the shelves, and a service counter in the middle of the store.

"Our brand is very strong in Canada. I think consumers have come to know and love RadioShack. We're going to come back to Canada with a bigger and better store that has the latest and greatest electronics but still maintain very knowledgeable associates," she says.

Walter says by the time RadioShack returns to Canadian retail, she's confident The Source's customers will have been fully acclimatized to the new brand and any negative effect will be minimal.

"While they may be able to open a store with national branded merchandise, they don't have the expertise with Canadian rules and regulations. At this point, we haven't seen that they have any real estate or stores. I believe they want to have international growth but it will be a challenge for them to do so very quickly," she says.

Coupland agrees. He says while the RadioShack brand in Canada had a "tremendous amount" of awareness for its more than 30 years of existence, he questions its strength today.

"In terms of its relevance to Canadian electronics consumers and the regard with which the brand is held relative to other players, I'm not sure it's as strong with consumers as it may have once been," he says.


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