RadioShack Plans Reinvention

Posted by: Douglas Macmillan on August 4, 2009

Most people visit their local RadioShack to pick up mundane electronic accessories like batteries and headphone adapters. Would a new brand name and flashy products make the store more of a destination for big-ticket items?

RadioShack is willing to try something new. On Monday, the Fort Worth company announced a marketing campaign that will dub its store “The Shack” in TV, print, and online ads. The branding effort comes on the heels of a deal RadioShack made in July to bring T-Mobile handsets to its stores.

Like other electronics retailers Best Buy and Wal-Mart, a lull in consumer spending has severely impacted sales at RadioShack, which has announced layoffs and numerous store closings in the past year. But unlike big-box stores with larger footprints, RadioShack is unable to sell a great deal of big items with high margins, like TVs and computers, because of its smaller stores.

The “Shack” ad campaign will highlight the area where the store wants to compete: mobile phones. “You will see a real focus on mobility and wireless products from leading brands in our new advertising,” RadioShack chief marketing officer Lee Applbaum said in a press release. In addition to T-Mobile, the retailer sells handsets used on Sprint, AT&T, Nextel, and Alltel. It carries Palm’s popular smart phone Pre – but not its chief competitor, Apple’s iPhone.

This strategy is not unique to RadioShack, according to Steve Baker, an analyst at market researcher the NPD Group. He says that because two-thirds of handset sales in the U.S. are made at the stores of the carriers themselves, “all the retailers look at that as a huge opportunity.”

Will the move towards mobile work? “I think the concern is that they need to get people to think of them beyond capacitors and transistors – that’s been their struggle,” Baker says. “They have to find some way to connect and be a little more current in terms of perception.”

RadioShack seems to be acknowledging its need to get more hip with its “Shack” marketing campaign, though not everyone is sure it will have that effect.

“What you don’t want to end up doing is spending marketing money overcoming current perceptions” about the word shack, says Martin Bishop, director of brand strategy at San Francisco consultancy Landor Associates. People are already inclined to associate the word with basketball star Shaquille O’Neal, the B-52’s song “Love Shack,” or actual, wooden shacks, he adds.

RadioShack recently made another attempt to modernize its brand: it’s sponsoring Lance Armstrong’s American Pro-Tour cycling team.

Reader Comments

Robert MacMillan

August 4, 2009 4:30 PM

I recall when Radio Shack was somewhere I wanted to go. As a graduate of RCA institutes some of the faculty used to talk about radio row that was destroyed by building the World Trade Center in the 60's. Radio Shack was my radio row. I recall they were in the forefront of the Personal Computer, remember the TRS 80? Now they sell the same stuff in Walmart or BestBuy at inflated prices. Pizza Hut is changing its name to the Hut and RS to the Shack. They must have the same marketing company.

Tim

August 4, 2009 5:00 PM

They'll not make it against the big boys. Its not their arena, not their area of strength. Stores are too small as well. They'd be better served going back to helping the nerds with their electronics and the guys who want to hook this piece of audio equipment to that. We'll all miss them when their gone... but only once a great while when we need that funky connector nobody else has.

Bob

August 4, 2009 5:38 PM

The affectionately titled "Rat Shack" of yore is no more. It is a burnt out seller of commodity cell phones and other gadgets.

I'm sure the suits running RS will ruin it even more by completely turning it into a cell phone store.

The last remaining non-commodity items like shortwave radios and scanners will disappear.

I tried to but a small shortwave wire antenna the other day at the mall, but they no longer carry them. I also needed a European PAL connector, which they didn't have as well.

George

August 4, 2009 5:41 PM

I like Radio Shack because it feels like a local audio/tv store. If they must reinvent to stay alive, go for it. I will be there as a customer and advocate.

Mark

August 4, 2009 5:43 PM

They are also sponsoring Lance Armstrong's new bike team next year. I was wondering why they would do that but I guess it's part of "the Shack" campaign. I wouldn't be very optimistic if I were them. Circuit City couldn't hang.

Aaron F

August 4, 2009 5:45 PM

Radio Shack is more obsolete than a black-and-white TV. There are a few large stores that carry the same stock and a million online stores that carry the same stock and so much more.

Any store with the name "Shack" in it is destinied to fail anyway. Why would you promote that word? That words carries a conotation of 'poor quality' and 'cheap'. Do you think of gourmet food when I use the title "Steak Shack"? Do you think of quality TVs when I say "TV Shack". How about "Matress Shack", "Pizza Shack", "Lumber Shack", "Car Shack".

If they really want to re-brand, then they should change the store name. Something like "Razors", "PC Club", "Trendy's Electronics", "Japan Super Robot Superstore", "Pwned", "World of Storecraft", "Stargate Electronics", "Modern Edge".

Strategery

August 4, 2009 7:11 PM

Radio Shack has alienated two of their core customers--the "parts" customer and/or the "electronic geek" customer. Radio Shack put all of their parts in drawers, making them difficult to shop. They used to have a special order catalog that was literally the size of an encyclopedia set (Radio Shack Unlimited), but they did away with that--claiming the same parts can be found at radioshack.com, however, they are not there. Management (in the past, I don't know about now) discouraged salespeople from helping parts customers and set minimum per-customer sales goals. As for the gadget geek types, Radio Shack discontinues products without a replacement and they fail to bring new products into their stores. Much of what they do carry is available at other retailers. For things truly unique to radio shack like shortwave radios, scanners, antennas, etc., their selection is limited; causing many to seek online retailers. Their minimum-wage staff is interested in selling you a phone (annoying) but they lack knowledge of how electricity/electronics work, with the exception of the geeks that think they cannot find a better job.

Coffee Shack

August 5, 2009 2:26 AM

They should start selling COFFEE. McDonalds did it (well, expanded its existing coffee menu), so why can't "The Shack?"

When i go to Starbucks, i often look in the pastry case and buy a cookie or muffin ..... so the Shack can sell coffee, offer WiFi and while your waiting for your Shack'a Latte, you can look in the glass case, point out the transisters you want along with your coffee and everyone's happy!

WFD

August 5, 2009 3:25 AM

Whoever came up with "The Shack" needs a rearrangement to correct brain lobe positioning. So "The Shack" is supposed to be cool with the kids? This is another lame brained example where some stuffy OLD executive tries to come up with "youth oriented" marketing. But of course this store isn't what it used to be. It was a great hobby store back when "Allied" was part of it's name. I recall cooking many old 2N107 transistors that I would buy there in the late 60's and early 70's! Now they just try to push phone plans on you with more enthusiasm than your neighborly street corner drug dealer! I suppose a name change wont really matter as it stands now.

chris

August 5, 2009 10:41 AM

Disaster. The ad agency should be fired.

Mario Sanchez Carrion

August 5, 2009 12:54 PM

They may be more successful by closing the stores and operating radioshack.com as an Internet store only, while sticking to connectors, cables, and all those things that we usually go to Radio Shack to buy.

gerrrg

August 5, 2009 3:17 PM

It's clear from most of the comments, that Radio Shack is going to continue to alienate their original, core customers in a bid to expand their appeal base. Mistake? Only if someone else steps in to fill the void left behind by The Shack; someone like a Home Depot, that already has a broad DIY emphasis.

Shacktanic

August 6, 2009 2:04 AM

That's like changing the name of the Titanic so that it wouldn't sink.

Shacktanic

August 6, 2009 2:04 AM

That's like changing the name of the Titanic so that it wouldn't sink.

rob of glen iris

August 6, 2009 5:45 AM

In Australia, Radio Shack became Tandy Electronics. Tandy was bought out by Woolworths, the largest retailer in Oz, which also owns Dick Smith Electronics. Both brands have moved away from the electonics enthusiast into marketing consumer items like cell phones and toasters. Electronics enthusiasts now go elsewhere for their components and parts, and the electronics consumer goes to far larger stores for their LCD and Plasma Tvs. I don't see much future for either Tandy or DSE. We did have a number of radio 'shaks' in Melbourne, selling army surplus items and they were great fun to browse through. They have long gone now, and what remains are stocked with cheap parkas and camp beds from China, and a plethora of khaki items of little use.

Former Shack Rat

August 6, 2009 1:24 PM

As a kid, I would ride my bike 2 miles to the nearest Radio Shack just looking for a project to build. I loved Radio Shack you could find everything there. A month ago, I replaced a stereo in my daughter's car. I pulled out my "electronics tackle box" from those youth years and found a couple of crimp on connectors left over from my first car stero install thirty years ago. I needed two dozen of them so I headed over to RS. No luck! They had packs of something similar for with five pieces but only had three packs on the shelf. So...I went to home depot and bought a box of 100 for the price of those three packs at Radio Shack. They (RS) didn't have the traditional electronic part I needed, but didn't fail to try to sell me a new cell phone on the way out. I miss the Radio Shack of old. Reinvention is important but I fear that they are reinventing in the wrong direction. Last thing we need is another cell phone store.

J

August 6, 2009 3:06 PM

From a former Tandy corp guy...the ad group should be fired. Bad idea.
RS has tried everything to save the company but it is in a downward spiral that probably cannot be stopped. The kids that work there can only sell you a phone and that is it. Loews and HD have more electronic parts. Costco has great LCD and plasma prices. You can go to a T Mobile or Apple store for a phone with all their options. What is "The Shack" bringing to the market?

Jack Shack

August 6, 2009 11:57 PM

The Shack will survive because that is where poor people buy all their throw away junk that comes from China. Also many people use The Shack as a bank. They buy the stuff and they know they have thirty days to return it to get their cash back. Also it's a great place for renters. They buy the stuff, use it for what they need and then return it. I bet their return rate hovers around 50%.

E Johnson

August 24, 2009 2:39 PM

IN JULY I REFINANCED MY HOME TO CONSOLIDATE BILLS AND REMODEL. DAYS BEFORE CLOSING ON THE LOAN THE TITLE COMPANY FOUND RADIOSHCK HAD CHANGED MY ACCOUNT # TO UPDATE THIER BILLING SYSTEM,AND MY ACCOUNT WAS SHOWING ON MY CREDIT REPORTS AS TWO SEPERATE ACCTS WITH TWO DIFFERENT BALANCES. AT THAT TIME I WAS LEFT WITH TWO CHOICES,STOP THE CLOSING AND REDO ALL THE PAPER WORK, OR LET THEM BE OVERPAID,AND ASK FOR A REFUND ON THE OVERPAYMENT. I CALLED THEM AND WAS ASSURED I WOULD RECIEVE THE REFUND IN ABOUT THREE WEEKS. I ALSO WROTE A LETTER AND ENCLOSED IT WITH THE PAYMENTS. cALLED BACK A WEEK LATER TO BE SURE THEY RECIEVED PAYMENT, WAS TOLD BY A ACCOUNT MANAGER THEY HAD CONTACTED EQUIFAX TO FIX ACCOUNT MIX UP, AGAIN WAS TOLD I WOULD RECIEVE REFUND IN ABOUT 3 WEEKS,NOW I RECIEVED A LETTER TO CONTACT THEM ABOUT MY RECENT INQIRY ON MY ACCOUNT, AT WHICH TIME THEY TOLD ME I NEED TO PROVIDE A COPY OF MY BANKING RECORDS TO PROVE THE CHECKS HAD CLEARED ALTHOUGH ACCOUNT REFLECTS A 0 BALANCE AND AN $1,100,CREDIT. THE CKECK WAS CUT FROM A TITLE COMPANYS BANK ACCOUNT.CONSIDERING THIS WAS THIER FAULT FOR REPORTING THIS AS TWO ACCOUNTS TO CREDIT REPORTING AGENTS,THATS HOW CONSOLIDATION LOANS WORK THE TITLE COMPANYS ESCROW ACCOUNT CUTS THE CHECKS, RADIO SHACK CAN CHANGE THIER NAME ALL THEY WANT THEY CAN NEVER COMPETE PRICE WISE, SERVICE WISE .THEY SHOULD BE ASHAMED OF THE WAY THEY TREAT CUSTOMERS.I WAS A GOOD CUST,WITH ACCOUNT IN GOOD STANDING.THEY SHOULD TAKE LESSON FROM CIRCUIT CITY, SHOP AT QVC WHERE PRICES ARE BETTER NO FIANCE CHARGE ON EZ PAY,NO RESTOCKING FEES ECT, IM ALSO A SPRINT CUSTOMER CANT FOR THE LIFE OF ME UNDERSTAND WHY THEY WOULD AFFILIATE THIER BRAND WITH RADIO SHACK THEY CHARGE HIGH SERVICE FEE TO PAY CELL PHONE BILL, THEY CANT COMPETE WITH WAL-MART BEST BUY ECT, IF THE NEW CEO CANT UNDERSTAND WHY THIER STILL IN BUSINESS,HE SHOULD BECOME ONE OF THIER CUSTOMERS,I INTEND TO CONTACT ONE OF THE LOCAL NEWS CHANNELS IN MY AREA IN HOPES THEY CAN GET MY REFUND, IN THE MEAN TIME CUSTOMERS BE SMART SHOP ELSEWHERE.. E JOHNSON

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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