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Friday, February 13, 2015

Radio Shack bites the dust

    I thought I would go by our local Radio Shack store in Dobbin Center to see what type of deals they had now that they are going out of business.  I remember when you went to Radio Shack in the Mall for anything electronic.  No Best Buy or Staples existed.  I even bought my first computer from Radio Shack, a TRS-80 shown below.

     I paid over $500 in 1980 to get 32K memory as the standard memory was only 16K  You had to write programs using BASIC and save the programs to a tape in your tape recorder.  But hey I was entering the computer age!  Now my watch has many times more memory and cost me $25.
     So what happened to Radio Shack?  First thing is the name.  What viable business in the 21st century has a name that reminds us of mid 20th century technology.  Companies are always hesitant to change their name but if it is no longer relevant it is more dangerous to stay with an outdated name than to transition customers to a new business name.  With the pace of technological change today it probably doesn't make sense to have your company named after only one of your products.  When was the last time you actually purchased a radio at Radio Shack?  The only thing I have purchased at Radio Shack the past couple of years were head phones and batteries.
    The New York Times explained how its efforts to re-invent itself have largely failed:

     "RadioShack entered the 1980s poised to be the center of the computer revolution. Indeed, in 1977, the company had introduced one of the first mass-produced computers, the TRS-80, and initially outsold Apple using the power of its retail channel and its thousands of locations.
     But from that perch, RadioShack went nowhere. RadioShack’s computer business lost traction and was eventually made obsolete as companies like IBM and Dell delivered more powerful computers through different channels. Failures abounded. RadioShack phased out its computer business in 1993 along with its circuit board business. That year, too, the company sold its cellphone manufacturing business.
      Instead of concentrating on RadioShack and building up its offerings, the company tried new concepts with new stores: Computer City to sell computers, Energy Express Plus to sell batteries, Famous Brand Electronics for refurbished electronics, McDuff and Video Concepts for audio and video, and the Incredible Universe, which became the company’s Best Buy knockoff. None of these worked, and all were either closed or sold off by the late 1990s."

    Radio Shack made the mistake of only wanting to sell products, like computers, that were Radio Shack brands.  Software designed for Radio Shack computers could only run on their computers.  While Apple has been successful using this model most other retailers have failed with this model exclusivity.  If Radio Shack had moved to be the retailer who you could buy a variety of computers, as Staples and Best Buy, they might have been able to survive in this highly competitive market.  Computer purchasers wanted the newest and trendiest products regardless of who was manufacturing the product.  Radio Shack bet its future relying on its manufacturing model and not in its retailing model.  Big mistake.
     Finally others have felt that the bricks and mortar model of retail that provided the foundation to Radio Shack's business model prevented them from moving quickly enough in the digital world that quickly changed the face of retail business.  Radio Shack seems to be following other business that made this mistake like Borders and Kodak before them.  The businesses that are so fixed to one product or business model will be highly vulnerable in our rapidly evolving world.   Is it hard to predict what the "game changers" our world will experience in the next ten years but those businesses that don't develop the ability to stay ahead of the tech curve may find themselves in Radio Shack's situation in the future.

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