Business Columns & Blogs

Changing retail scene erases RadioShack, creates new alliances

If you had RadioShack as your pick in the retailing dead pool, prepare to go to the window and collect your winnings.

To the surprise of absolutely no one, RadioShack Corp. is going to bankruptcy court.

What becomes of the retailer after that is a matter of conjecture and rumor, but it’s likely you’ll see considerably less of it, or perhaps you won’t see it at all.

It plans to sell 1,500 to 2,400 stores to its largest shareholder, Standard General, and has filed a motion to proceed with closing the remainder of its 4,000 U.S. stores.

Sprint Corp. plans to open mini-shops in as many as 1,750 of the RadioShack stores Standard General is buying.

For some, this is a story of nostalgia, from the days when RadioShack had a viable business model and the latest tech products. More than a few journalists, this one included, got their introduction to filing stories remotely on the TRS 80 Model 100, a forerunner of the laptop or notebook computer but one with an eight-line text screen, limited memory and acoustic couplers to fit over a telephone headset.

Even for nostalgia fans, though, it is now a story of irrelevance. RadioShack’s model has long been as contemporary as the Trash 80 (as that dawn-of-the-personal-

computer-age relic was known). Even in the pre-Internet era RadioShack stores weren’t big enough to compete with the big-box retailers. Consumer electronics spread to almost every subsector of retail, and with online retail the home became another outlet to buy tech. RadioShack didn’t help its cause with its own operating quirks such as its annoying and insistent demands for customer names and phone numbers on even the smallest transaction. Wonder how many people walked away because of that or never even went into the store.

RadioShack‘s story has some lessons for retail, starting with the dumping of a lot of retail space on a market that already seems oversaturated. Sprint is planning to absorb some of the space, but with the proliferation of mobile-phone mall stores and kiosks and freestanding stores, is this the next bubble in search of a pin?

Retail is struggling with filling vacancies, and more are coming if reports about a number of chains play out similar to the RadioShack saga. To date there has been no hot concept or sector to pick up the slack, and the recession drained the potential for growth that might have kept some going.

But that brings up another point. The widespread nature of the recession obscured the fact that some sectors, such as retail, were in trouble before the recession, and they remain in trouble even after economic recovery, such as it is, takes hold. Even if we get a boom, that’s not going to solve the structural problems such as competition from online retail. Even a boom a few years earlier would not have saved RadioShack.

MERGER TIME:

Going from three national office-supply chains to one sounds like the sort of event that, in another era, would set off all kinds of antitrust alarms — Staples tried to buy Office Depot in the 1990s and was shot down. The conventional wisdom now, though, is that online and other large retailers have changed the competitive landscape. That could be true, but if the combination goes through, still more vacant space is headed to market.

AD REVIEW:

Lest we place too much significance on Super Bowl ads, remember this: One of the better ads of last year’s Big Game (the one Seahawks fans would prefer to remember) was from a retailer that wanted to update its image. It did so with a clever ad showing 1980s pop-culture figures rampaging through a store and grabbing merchandise.

The sponsor of that ad? Yep, RadioShack. Advertising can do a lot of things, but it can’t save you when your business model is as dated as a store stuffed with boom boxes, VCRs and fax machines.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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