RadioShack's next step: An electronics convenience store
After RadioShack came close to hitting dead air, the 94-year-old electronics retailer is navigating through bankruptcy with a new purpose.
The company, which sold ham radio parts and CB radios to generations of Americans, has received U.S. bankruptcy court approval to move forward with plans to create a slimmed-down version of its former operations, creating electronics convenience stores. RadioShack filed for bankruptcy in February after a series of self-inflicted missteps.
The move comes after an operating plan from hedge fund Standard General won out over RadioShack's largest creditor, Salus Capital Partners, which may have liquidated the retailer's assets. With approval from the bankruptcy court, RadioShack will continue on with about 1,700 stores, saving about 7,500 jobs, compared with roughly 4,000 locations before the bankruptcy.
The aging electronics retailer will be reimagined as a slimmed-down electronics convenience store, selling mobile phone accessories and other small items that consumers may not want to wait to order from online rivals like Amazon, according to The New York Times.
Larger, more expensive electronics such as laptops and digital cameras won't be part of RadioShack's new inventory, which will shrink its number of product lines.
But several questions are hanging over the retailer. First and foremost is whether the new format will appeal to consumers, given RadioShack's long-term struggle to boost foot traffic given competition from big-box stores and online rivals.
There's also the issue of whether RadioShack will be able to continue to use its brand name, since Salus owns the rights. The retailer has only six months to continue using the brand, according to the Times.
RadioShack didn't immediately return a request for comment.
About 1,440 stores will be co-branded with Sprint, which will take over RadioShack's mobile phone business. The hope is that the Sprint stores will help drive consumers into those locations. Standard General is also searching for additional partners that would co-brand with RadioShack by operating mini-stores within their locations.
The remaining RadioShacks will be in smaller cities of 5,000 to 100,000 residents, where people still rely on electronics stores, the Times noted. Locations in bigger cities and expensive malls tended not to perform as well, thanks to higher rents and more competition.
"The parts of the business that you think are unsexy are the ones that are doing great," Soohyung Kim, managing partner of Standard General, told the publication. "And the parts that you'd think are cool, the smartphones and the prime locations -- horrendous."