Radio Shack Is Becoming Obsolete

Radio Shack

Radio Shack is a cool and cutting-edge concept, a chain of electronic stores as a one-stop shop to buy audio/video cables, batteries, calculators, flashlights and any and all other electronic needs. This is absolutely true, if time could travel back to 1984. Radio Shack has become obsolete, which is evident in its underperformance caused by advanced technology, a different retail environment and a changing economy. DIY electronics are like ancient artifacts in an age of user-friendly throwaway technology. Just the name itself sounds outdated and the company has not innovated any optimal strategies to compete against online and big box retailers. For this reason, as of Tuesday, Radio Shack has announced a massive closing of 1,100 stores, or 20 percent of its retail locations. Time will only tell if this colossal closure is the beginning of an ineffective reconstruction or the death knell to an antiquated American company who failed to adapt to market trends early on.

Radio Shack’s history can be traced back as far 1921, when two brothers wanted to sell equipment for the burgeoning technology of ham radio. Fast forward to the 1980s, and Radio Shack sells its proprietary TRS-80, the first mass-produced personal computer that became a success. However, since the 1990s, the company has executed some very inferior tactics because of a revolving door of leadership of top executives that had short-term insight and inept cost-cutting methods. In 2001, Radio Shack had a joint venture to operate kiosks inside Blockbuster locations; however, the project discontinued a year later due to underperforming below expectations. In 2013, Radio Shack’s wireless mobile kiosk partnership with Target ended because of low profit margins.

When Radio Shack aired their commercial during the 2014 Super Bowl that referenced ’80s pop culture it was nostalgic flashback for a certain age group that used to shop at the electronics retailer for outdoor antennas, landline phones and two-way radios. The ad also confirmed that Radio Shack acknowledges its vintage image and being near the state of obsolescence if does not incorporate new business methods to stay competitive. Radio Shack insiders stated that the Super Bowl ad was a marketing campaign to make consumers aware that the company is in a position to rebrand itself to stay relevant in the 21st century. Current CEO Joseph Magnacca’s ideas and blueprint for a turnaround could prove to be profitable, if he had been brought in 10 years ago. The company’s plan to lure younger consumers in Radio Shack stores is futile because today’s young consumers are tech savvy with smartphones that have the ability to do real time comparative shopping to find the best deals.

Retailers do not have a quick death; rather, they suffer from years of profit losses, declining stock prices and changing management that believes the company still has potential. There is no need for a fortune teller to see the bleak future of Radio Shack. The electronics chain will stagger along on life support before it gets bought out or is forced into liquidation bankruptcy. The bottom line is Radio Shack is doomed to becoming obsolete by lack of traffic to their retail locations because consumers do not want pay $25 dollars for an electronic component that can be bought for $14 online.

By Isriya Kendrick


Money Journal


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