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  • Could This Company Have Been Saved?

    Posted by David Foster on February 7th, 2015 (All posts by )

    If you had been elected as CEO of Radio Shack, let’s say 5 years ago, what would you have done?  Was there a viable strategy for a long-term future for this company, or would it have been best to wind it up in an orderly manner?

     

    35 Responses to “Could This Company Have Been Saved?”

    1. Mike K Says:

      Five years ago was too late. They are going the way of Circuit City and the other electronic retailers. The big music stores were killed off by iTunes and the switch from physical media to electronic. Book stores ditto. Now San Francisco and Seattle are killing off the few niche bookstores with minimum wage hikes. Blockbuster video was a great example of someone with an older idea who missed the trend.

      Wayne Huizenga got the idea of buying up small companies to form a conglomerate with Waste Management. That made him rich and he did the same thing with Blockbuster, buying up video rental stores. That one didn’t work but he seems to have escaped the consequences. Auto Nation is the same idea with used cars and now new car dealerships. That is a bit like owning a restaurant. You are totally dependent on being able to rely on employees to run things. Maybe he is good enough to do that. Size is not an indicator of ability as the many failed conglomerates show.

      Sears, as we have discussed, could have done it 20 years ago because they had the infrastructure if not the concept.

      Eastman Kodak invented the technology that killed them, the digital camera.

      I’m a little surprised that the auto supply stores are still surviving but, as the older cars go away, I suspect they will die. They may survive as niche markets for old car restorers, which seem to be doing well. Of course, leftist regulation is an existential drag on that area. I watch “Pawn Stars” and am interested in the number of car collectors that appear. When I was thinking of moving to Tucson, I was going to find an MG-TD in good shape and drive it around there. California is too big and traffic too bad to enjoy that here. Tucson is flat and not very big. Traffic is not bad. Los Angles is rush hour 20 hours a day.

      I realize I am limited in imagination when I see the number of Tesla cars on the freeway. I cannot imagine anyone who would pay that much for a car with limited range. Maybe it’s an LA thing.

    2. Grurray Says:

      In their own way, Radio Shack used to be what Apple Stores are now, a cool place for people to go and feel like insiders in an emergent community. The customers were in on something exciting and fun. You would walk in look at some electronics or radio equipment or game consoles or soldering irons and feel like you were three steps ahead of the game just browsing the aisles.

      They lost it long ago and became over-saturated. Just another store front with a whitewashed, meaningless brand. There were a dozen other places within a few miles where you could get the same stuff. Nothing special about it at all. The world passed them by.

      The rising tide of PCs then cell phones then smart phones kept them afloat, but they got sucked into territory that e-commerce had a clear eventual advantage. I think it’s just that their time has come and gone. Maybe they could have staked out some niche or honed their brand by going retro or something. Maybe they turn into Amazon stores, but they’re coming really late to that party.

    3. David Foster Says:

      Thoughts from Wozniak and some others:

      http://www.wired.com/2015/02/radioshack-helped-build-silicon-valley/

    4. Tim Oren Says:

      It might have been too late already, but perhaps…

      Back in the day Radio Shack was the local place to get electronic parts (tubes!!) when the alternative was mail order from paper catalogs, and it usually had a knowledgeable clerk behind the counter. They also played this game well in the early personal computer days.

      By 5 years ago, that niche had collapsed as the Net made ‘mail order’ of techie parts routine and brought down prices. Radio Shack had half-way morphed itself into a baby Best Buy, without the selection or volume, but with house brands of dubious quality and clerks who knew little. Then that niche collapsed on them as well.

      If someone had been ready to go for broke (ahem!), they might have tried:

      – Sell off most of their real estate and any lease holds that had value.
      – Consolidate down to a few ‘destination’ storefronts
      – Drop the ‘me too’ product lines and focus on new hobbyist level technology niches, e.g., 3D printing, drones, ‘bots, GoPros, etc., that still have a lot of hand building and hand holding involved.
      – Hire some of the local ‘maker’ types and put them behind the counter.
      – Go on an acquisition binge buying up existing suppliers of those hobbies, to get the customer lists, street cred and Internet presence
      – Stay nimble and shift to new hobby tech niches as they appear.

      Jumping from a putative mass market to a collection of niches might have collapsed their share value, but they ended up there anyway.

    5. Mike K Says:

      “Thoughts from Wozniak and some others:”

      Interesting as it has always been my impression that Fry’s electronics was the go to place in Silicone Valley.

      The store billed itself as “The One-Stop Shop for the Silicon Valley Professional”, as one could buy both electronics and groceries (computer chips and potato chips) at the same time.

    6. Grurray Says:

      At least it’s fun to look back.
      Remember the Trash-80?
      Their 1981 catalog.

    7. Michael Hiteshew Says:

      I remember a local store called Baynesville Electronics in the 1960’s and 70’s. Think of a large Quonset hut building on a bit of suburban property. Their target market was hobbyists who built their own radios and TV’s. I imagine there are people here who remember a company called Heathkit, for example. (My neighbor built a color Heathkit TV in the late 60’s.) You could buy a selection of resistors, capacitors, transformers, solder, wire, tubes, all sorts of stuff like that. It might still be there, I haven’t been in that area for many years. A local version of what Radio Shack once was.

      When it’s so cheap to buy electronics in a global marketplace, it’s hard to imagine keeping a business viable that’s aimed at the build it yourself hobbyists. And morphing into a me-too vendor when your competition is someone like Amazon, I can’t imagine how you would prosper.

    8. pouncer Says:

      Had I been unwillingly thrust into command of Radio Shack, I would have attempted to resurrect the “HeathKit” system. Support and lead the Maker-Culture meme with books and instructions and parts and swap-meets and faires and prizes and above all efforts to test products on people who are NOT techies. Ask a bunch of freshmen nursing students or accounting majors to read the Ikea-like instruction page, dump the bag of parts, and assemble the cool personalize-able heads-up-display that reflects a cellphone screen on the brim of ballcap; or puts the on-off switch onto my wristwatch band, or assemble my own “swiss-army-knife” USB device…

    9. Trent Telenko Says:

      I went to a local Radio Shack a couple of weeks ago to find a cable co-ax cable and a part for a broadcast TV antenna because Fry’s was a long drive.

      The former was far more expensive that Fry’s and Radio Shack didn’t have any of the latter. The clerk recommended a hobbyist store (farther away than Fry’s) he knew of or the internet for the latter.

      If I knew what I did now, I would simply have driven to Fry’s or used by Amazon Prime account.

      i see other made the same sort of decision.

    10. Dougas2 Says:

      I think Tim Oren has it. Tandy sold off all their stores in the UK when access to their prime location real-estate was valuable. It took some time, but just about all of the places that had Tandy stores selling radio-shack products now have Maplin stores selling things to hobbyists, and selling electronics accessories products to people who have enough nous to know that accessories such as connecting cables and wall-mount brackets are tremendously overpriced at the shops that sell the computer. TV and stereo equipment.

    11. Mike K Says:

      One trend I see among my own grandchildren is away from building things. That’s a small sample but I wonder if it is real. I gave my grandson, who loves military things, a number of small kits to make catapults and various war machines for Christmas last year. The year before I have him some of these snap-together electronics sets for boys. He was probably too young and is now showing a bit of interest at 10.

      I made a similar mistake with my own sons in buying electric train sets for them when they were young. They never played with them. Southern California is not the place for electric trains, I guess. There was a great store here for many years, called Allied Model Trains which closed its big store and now has a smaller store not far away. For a while I heard they were moving to the San Fernando Valley but I guess that didn’t happen.

      I had a an Erector Set when I was five and built elaborate structures with it before I was in kindergarten.

      I also had a chemistry set that would probably be banned now.

      I just don’t know if kids will be into building things in the future although I readily acknowledge that southern California’s climate may have a large effect. My older granddaughter got a wet suit and surfboard when she was about 11. The kids here are outdoors all year. My younger son put in a beautiful pool last summer and the gift for my grandson this year was an underwater camera.

    12. David Foster Says:

      I think probably their best bet would have been to refocus themselves on supporting Makers, where “makers” is defined more broadly than “people who mess around with electronics”….there are, for example, people who enjoy building things that require machining, and even metalcasting. There is also an expanding and important field of Mechatronics, involving the combination of electronic *and* mechanical components. And there is tremendous interest right now in getting kids involved in STEM, which yields a whole range of product marketing opportunities.

      The above market segments, though, are surely not sufficient to support anything like the present store footprint, and also don’t have much to do with the current staff. If 5 or 10 years ago a CEO had proposed shrinking the store count by 80% and hiring new kinds of employees while dismissing the majority of the current ones, he probably would have been fired, and maybe considered mentally ill as well.

    13. Mike K Says:

      “And there is tremendous interest right now in getting kids involved in STEM, ”

      I’m not doing very well at it now and have little background to help because my father was less than supportive although he, himself, was a whiz at doing things mechanical. I probably got my aptitudes from him although by osmosis. I could never do anything to satisfy him.

    14. Bill Brandt Says:

      I don’t think it could have been saved. I was looking at a 1962 issue of Popular Mechanics, and in it was an ad for Heathkit.

      Remember those?

      You would put together anything from an oscilloscope to a TV. Automation in assembly took care of that, where it was more expansive to buy a kit than a complete product made in Japan.

      I remember about 15 years ago they tried a box store concept called Incredible Universe. They spent a lot of money on this and it went bust.

      It turned me off because if was membership only – you were supposed to carry with your keys a little bar code that they would scan to give you admittance.

      A company that took this concept and made it work was Frys. Interesting history – they iused to be a Bay Area chain of stores and when the father died the sons took it in a differet direction in the 70s – just as the silicone valley was taking off.

      You can get computer motherboards there, appliances, memory – and while you are in the checkout line get candy.

      They drove CompUSA out of town.

      I always associated Radio Shack with having cheap crap that they sold at a premium.

      I think they could have made Incredible Universe work – and work well, but the membership model was a turn off for a lot of us.

      http://en.wikipedia.org/wiki/Incredible_Universe

    15. Bill Brandt Says:

      “I realize I am limited in imagination when I see the number of Tesla cars on the freeway. I cannot imagine anyone who would pay that much for a car with limited range. Maybe it’s an LA thing.”

      Mike – our car club took a tour of the Tesla factory and of all the electric cars this might work. First they look sleek – second outstanding performance (0-60 in under 4 seconds) and third a range (if you don’t constantly mash the accelerator pedal) – over 200 miles.

      Tesla is building a series of “supercharger” stations around the country – it takes just 20 minutes to charge the car to 80% (the last 20% it was explained take a couple of hours)

      I don’t know if I would buy one (at over $100,000) but they are coming out with a $30,000 model in a couple of years.

      The main impediment is the cost to make the batteries and they just agreed to build a $4 billion battery factory in Reno.

      The other impediment is the necessity to carefully gauge your car’s range. When you are out…you are out and you’d better be by a charging station.

      https://thelexicans.wordpress.com/2013/11/03/a-visit-to-the-tesla-factory-in-fremont-ca/

    16. Mike K Says:

      Yeah, the car works for commuters but nobody is going to think of driving one to San Francisco. Of course, the owners are probably all bullet train enthusiasts. It just looks to me like enviro porn.

      Now, if I was going to spend that kind on money on a car this one might do it. I saw a black one on the freeway last week. Almost followed it home. Talk about car porn !

    17. Bill Brandt Says:

      You have good taste in cars, Mike! BTW The SLS is out of production – the new GT will take its place.

      On the Tesla I met an owner from British Columbia who was recharging at the factory’s supercharging station – that is my main objection – meticulous planning and mental arithmetic as to where you can alight to recharge!

      It would not be fun to be out of juice and in….Buttonwillow off I5.

      Sounds like a new C & W title.

      And the more I thought about Tandy’s Incredible Universe flop, they could have made it work with a few changes as Fry’s made it work.

    18. David Foster Says:

      Bill,

      What could you get in an Incredible Universe that you couldn’t get in a regular RS store?

    19. Bill Brandt Says:

      David – the Incredible Universe was likea box store – huge – Fry’s introduced computer hardware components – and no membership requirements – but a regular RS didn’t have the appliances and consumer electronics that the Incredible Universe had.

      I know in my town at least Fry’s got the property for pennys on the dollar – and they have been very successful.

      People I know have a love-hate relationship with Frys – hate because they restock a lot of returned items, help that is not very knowledgable, advertised items not in stock….

      But the love part is that anything you need for your computer, or a new computer, they will probably have in stock.

    20. Grurray Says:

      Last fall I saw the Local Motors 3D printed car.
      This photo was while they were assembling.

      It’s sort of a gimmick now, and I’m not sure if microfactories will ever really happen.
      Still, the car worked, and they drove it off the premises. The 3D printing part was impressive with parts coming close to metal alloys in toughness.
      Maybe distributed manufacturing will take off somehow.

    21. TMLutas Says:

      Radio Shack could have converted their stores to hackerspaces, coordinated a back end infrastructure like Ace or True Value, and made a go of it in a new market but honoring their past and maximizing their brand equity. Where there were active hackerspaces already with better stores, you go virtual and sell the hackerspaces access to what you offer in a franchise deal.

      But Radio Shack never had a CEO willing to do what Ryder did when they pivoted and sold off their iconic yellow trucks because they knew the consumer one way truck rental business was a dead end for them. Radio Shack’s shifts in business model were small, almost inconsequential.

    22. Joe Wooten Says:

      One trend I see among my own grandchildren is away from building things. That’s a small sample but I wonder if it is real

      Yes it is real Mike. I do the Space Exploration MB with the local scout troop a lot. After a 4 year hiatus, the new boys wanted to do it again. I always made the scouts get a kit that required them to build, not a ready-to-go model rocket. The general clumsiness and lack of fine motor skills in their hands led to a build session that went from one night 6 years ago to 3 nights this time. They needed constant supervision lest they hurt themselves with exacto knives and super glue. Only one boy had even built a snap tight model before. Not teaching cursive writing in the schools has led to poor motor skills and it can be seen not just in the model building, but in knife (horrors!! a weapon!) use.

    23. Mike K Says:

      “Not teaching cursive writing in the schools has led to poor motor skills and it can be seen not just in the model building, but in knife (horrors!! a weapon!) use.”

      Interesting concept. My grandson plays baseball and works at it year round. His two sisters (including the one who surfs) play soccer. His younger sister is really into art projects. She is 7. One of them wanted a ukelele a couple of years ago but I haven’t seen it lately. I gave them a piano a couple of years ago that I bought for my youngest daughter. Sports seems the best bet for motor skills now but fine motor skills may be another matter.

      Forty years ago, I was puzzled when I learned that young doctors applying for surgical residencies were no longer being asked about fine motor skills. I was asked if I worked with tools or played a musical instrument but only by one member of a committee. Nobody else asked and I have seen many surgeons who are clumsy and have trouble with simple motor skills, many to my surprise being women. Girls don’t sew or play instruments anymore, I guess.

      I belong to a couple of model groups on the internet but most models I see being built are the plastic assembly type and not the old flying model type. Flying models now are foam.

    24. CapitalistRoader Says:

      @Mike:

      I’m a little surprised that the auto supply stores are still surviving but, as the older cars go away, I suspect they will die.

      Not from my admittedly limited view. Auto parts retailers are constantly putting in new stores and those stores are busy, especially on the weekends. Until very recently used car prices were very high and worth fixing. It might just be the metro area I’m in, but I’ve noticed that half the customers are Hispanic. I also think the markup at local auto parts stores is pretty high if I compare their prices to an online-only retailer like RockAuto, which tells me that the local stores have pretty big operating margins.

      A tangential indicator of a healthy auto parts aftermarket is the number of very active repair forums on the web. I’m a cheapskate Boomer and fix my own cars, but I was surprised when I saw one of my tenants – a PhD in the healthcare field and not someone I would expect to repair his own car – with his car up on jack stands. He was replacing a modulator or some such inside the transmission because the car wasn’t shifting into fourth gear and he found the fix on a repair forum. Probably saved himself several hundred dollars. He’s a millennial, BTW.

    25. Mike K Says:

      “I’ve noticed that half the customers are Hispanic.”

      I have seen this, too. I still wonder how long these folks can keep older cars going. Some of the stuff is generic like batteries and after market items. Most newer cars require a computer that is pretty expensive to diagnose electronic systems.

      I had a good independent mechanic in the early 80s when I drove Mercedes but now have kind of given up and take the car to the dealer. For a while I had a good independent mechanic for American cars and I took my Ford pickup there and my son’s Ford Expedition but he retired and guy who bought the shop doesn’t seem very smart. I did have a local shop replace the timing belt on my Toyota Highlander but I found out they charged me as much as the dealer would have.

    26. Jonathan Says:

      Cash for Clunkers caused a big runup in used-car prices.

      Cars are better made than they used to be. Also aftermarket parts are cheaper and you can buy everything online without the time-sink of visiting the parts store, junkyard or dealer. And, as CR mentioned, you can get a lot of high-quality crowdsourced repair advice online. (And parts stores will read your vehicle’s diagnostic codes, so you don’t need your own reader.) So, overall, it’s probably cheaper and easier than ever to keep an older car running.

      The big problem with maintaining older cars is that you need a good mechanic and they are hard to find. Dealers tend to do everything by the book and are expensive. The best mechanics have a high degree of analytical ability and diagnose problems quickly. Many customers can’t tell the difference between adequate and exceptional mechanics (perhaps it is similar with physicians and their patients). At some point the repair hassles become excessive for most people and they replace the car.

    27. Gringo Says:

      Joe Wooten
      “Not teaching cursive writing in the schools has led to poor motor skills and it can be seen not just in the model building, but in knife (horrors!! a weapon!) use.”

      Sounds plausible to me. Cursive practice also had usually not noticed place in the daily routine of the classroom. Cursive practice gave kids a break from high intensity stuff, such as math problems. The lower intensity gave them a break, enabling them to concentrate better when a higher intensity lesson followed. Kids need a break in the routine. Getting your ya-yas out by running around during recess helps them concentrate better. Cursive practice gives kids a break while still doing something pedagogically useful.

    28. CapitalistRoader Says:

      I still wonder how long these folks can keep older cars going. Some of the stuff is generic like batteries and after market items. Most newer cars require a computer that is pretty expensive to diagnose electronic systems.

      Not in my experience. Cheap code readers in the $25 to $50 range work just fine. Online factory service manuals are available online free for the taking, complete with self-diagnostic troubleshooting pages. New cars are actually easier to troubleshoot and repair than old, carburetted cars from the 70s & 80s. Worse comes to worse, you can take your car to get the codes read for free at any auto parts store, as Jonathan noted. Yeah, this lead to parts-swappers instead of trained mechanics but so what? Way cheaper than taking your car to a high $$$ dealer or worse, junking it.

    29. MCS Says:

      The real loss will be for smaller towns that had franchised stores, often in a hardware or auto supply.

      In Dallas, there’s a store that seems to be busy with a very esoteric stock of mostly basic components with a scattering of stuff bought as surplus or at auctions. A lot of Kroger and Albertson’s stores have computers and such repaired with components from there.

      Lately, they have been stocking a lot more Arduino and Raspberry Pi and have had the good luck that the new Dallas Makerspace is about 100 yards down the road. It’s really handy to have them and I try to use them as much as possible.

      The local auto supply store has the advantage that you can get the part now when waiting for Amazon would mean walking until the package arrived. As far as the work, it’s still mostly un-bolting the broken part and bolting on the new one with the advantage that the computer will usually point you in the right direction and as pointed out, there’s a lot more good information available on the web than was ever in a “Chilton’s” manual.

      Radio Shack has been steadily reducing their inventory of stuff I found useful to become a second rate phone store. I probably haven’t spent $20 a year there in the last 15 years, although I once bought a $2500 computer from them in 1986.

      As far as saving the stores, that ship sailed a long time ago. I think that most of this sort of retail is going away. You can’t support the overhead selling cables and things with a “have it now” premium when lowest price available of any bigger ticket item is a click away, from someone with a fraction of the overhead. Home Depot will last until a building supply wholesaler figures out how to deliver small orders quickly and cheaply to the “pro” customers that keep the big box stores in business.

      If I want something in a couple of days, I can save money on Amazon. If I can wait a week I can do better somewhere else. If I can wait 2 or 3 weeks, I can get it from China for a fraction if I can do without any sort of customer support or understandable documentation.

    30. Robert Schwartz Says:

      Radio Shack lost the thread a long time ago. One electronic store that seems to be doing well is Micro Center (microcenter.com). They have lots of computer stuff including parts, cables and the like. They have also put a lot of effort into electronics hobby projects and 3D printing.

      There are 25 of them around the country including 2 in the Chicago area and Mike K for you, one in Orange County.

    31. ed in texas Says:

      CapitalistRoader, there’s even easier codereaders available. I run an Android ap called ‘Torque’, which coupled with a plug-in Bluetooth reader ($10 on Amazon) allows full code access, and the ability to ‘record’ driving routines (i.e. it only throws this fault at 60 mph, etc) plus you can ‘build’ virtual gage panels, for all those odd items where you wish you could see what’s going on. It also integrates with a laptop ap, so you can actually see this stuff, as opposed to trying to read your phone while on the freeway.

    32. David Foster Says:

      WSJ article today suggests that one of the factors in Radio Shack’s demise has been the reduced amounts of free time available to the average American.

      OTOH, there is a whole industry of craft stores such as Hobby Lobby, which seem to specialize mostly in crafts which are typically of interest primarily to women, and time pressures on women have probably increased at least as much as those on men.

    33. Jonathan Says:

      WSJ article today suggests that one of the factors in Radio Shack’s demise has been the reduced amounts of free time available to the average American.

      Perhaps it’s that people have more options now, and as the number of options increases some traditional activities are no longer competitive. It’s like TV programming, where the old broadcast networks have lost viewership as newer alternatives proliferate.

    34. Grurray Says:

      “there’s even easier codereaders available. I run an Android ap called ‘Torque’, which coupled with a plug-in Bluetooth reader ($10 on Amazon) allows full code access”

      Thanks for the tip Ed. Now I don’t have to borrow my neighbors OBD reader anymore.

      Tesla apparently sends wireless vehicle updates. I follow Elon Musk on Twitter, and a couple weeks ago out of the blue he announced that the update coming the next day would shave 0.1 seconds off of the 0-60 time.

    35. Bill Brandt Says:

      I think a large part in retail is the ability to be in a consumer’s head – when I need a tool I used to think “go to Sears” – they will have a Craftsman tool that I need.

      The last few years the MBAs convinced them to move their production off shore – now most of their stuff is made in China.

      If you want cheap Chinese-made tools you can go to Harbor Freight.

      Also Sears severely limited their selection in the stores. That made their inventory costs cheaper, but at least in my mind together with the lack of Made-In-USA quality – made me stop going to Sears.

      What, in your mind, compels you to shop at Radio Shack….for anything?

      It isn’t selection.

      Mike – That discussion with the car serviceability interests me. I have a 1996 Mercedes – the first year they went to OBD II – distributerless ignition.

      Bought an OBD II reader – that, with the help of the Internet, I think makes these still fairly friendly.

      But the newest Mercedes – such an array of electronic aids, networks…they have electronics that enables “night vision” on the car’s CRT, radar that not only slows the car in cruise control if a car is coming up ahead but will apply the brakes, radar that will detect a car in th4e blind spot and actually steer the car away….

      Think you can fix that on your driveway with an OBD reader? (asking rhetorically)

      Every 2 years, Daimler sponsors a world-wide competition among its dealership mechanics to find the “best team in the world”.

      Last time, the 7 member “Team USA” won it, and 2 of those members were from our local dealerships.

      One of them gave a talk to our club, and said that the cars are getting so complex now that “when they go out of warranty you should get rid of them”.

      Pretty scary but I think these days you need more than an OBD reader to fix the latest cars.