What Should RadioShack Do With All its "Shacks?"

Last Updated Aug 25, 2009 3:29 PM EDT

Why write about RadioShack? I mean, who cares about a throwback to the age of ham radios? Well, after reading about its pending rebrand as "The Shack," a cursory look at its business, and an obnoxious in-store experience, I found a reason.

With roughly $4 billion in annual sales, $200 million in profits, and an okay balance sheet, the business fundamentals seem solid, except for one thing. It's been that way for a decade.

For lack of a better term, RadioShack is stuck. And CEO Julian C. Day - the former Sears and Safeway executive credited with saving Kmart - needs to get it unstuck. But how?
The Situation
The company's focus is, well, pretty much everything electronic. Sure, it's been pushing wireless in recent years, but the company sells just about everything you can think of that plugs into something else ... and all from those shoe-box sized stores.

That's sort of the problem. The company's business model stopped making sense a long time ago. As a place for geeky enthusiasts to buy esoteric electronic components, it was fine. But now it's a bit player with tiny stores that sells everything to everybody in an age of global super-brands, huge retail chains, and a zillion ultra-low-margin Internet resellers.

The company's 10-K says its "day-to-day focus" includes providing customers with a positive in-store experience, but have you been to one of these stores lately? I have, and it was anything but a positive experience.

I guess I had this memory of the RadioShacks of old, where the sales associates actually knew something, when I entered the store looking for what my BNET editor called "a cheap gadget that connects my digital recorder to my phone."

What I got - one self-important but clueless sales associate, an assistant manager, and 15 minutes later - wasn't what I was looking for, but I bought it anyway and, guess what? It was missing a proprietary USB cable so I couldn't use it.

Returning the item was equally frustrating. The self-important but clueless sales associate asked a bunch of questions, fiddled with the thing for a while, checked something online, then got the manager who did pretty much the same thing. It took 20 minutes.

I know I shouldn't generalize from one experience, but still, I don't think I'll be going back anytime soon.

What Now?
So, back to the original question of "What should RadioShack do with its 4,400 shacks?" I can tell Julian C. Day what he shouldn't do, and that's try to be all things to all people, rebrand the company "The Shack," revitalize the corporate culture, keep costs down, and hope for the best.

Those may all be good ideas, but he also needs to 1) figure out what business the company should be in so it can actually grow and focus on that; 2) come up with a legitimate value proposition for why customers should buy from "The Shack" instead of a thousand alternatives; and 3) somehow get the sales people to actually make it a reality. At least, that's the way I see it. Got any better ideas?

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