Radio Shack Earnings

Radio Shack reported earnings today. They were again negative and the loss was almost double what the analysts had expected. The stock now sells for almost $1.00 a share. Actually it is around $1.35 this morning in pre-market.

The CEO blames the loss on a slowing of electronics sales. Well duh.

Did anyone ever consider the possibility that Radio Shack does not have the products people want? I cannot buy products I need if you do not have them in the stores.

Radio Shack lost its way a long time ago and it is suffering a slow agonizing death. Again, I doubt they will be in business 5 years from now.

Important lesson here. When you abandon your customers, your customers will abandon you.

The Late Great Radio Shack Store

I once heard a motivational speaker say, “if you don’t like change, then you are really going to hate extinction.”

Never were truer words spoken. Change is necessary and inevitable. In fact, I like change and get nervous when there is no change as that means we are not moving forward.

So it will seems strange when I make my next comments. This is about the change that is supposed to be going on at our local Radio Shack stores.

When I was in school I worked at Radio Shack. Actually worked there for over five years. Still have my Tandy Corporation five-year pin somewhere around the house.

Back then I always felt that Radio Shack was very poorly run. Oh, it was successful, but they could have been so much more successful. They NEVER had enough stock of popular items. Thus forcing the stores to repackage the display unit for sale.

They did change with the times somewhat. When I was there in the 1970’s, they wanted to be the number one retailer of audio equipment. Then, in the 80’s and 90’s it was computers. Late 90’s and currently it seems that cell phones are the big push. So they do change with the times.

Radio Shack used to have repair centers. They wanted to be like Sears and service and repair all the goods they sold. I don’t think they do much of that now as I don’t think they have local or regional repair centers anymore. I guess people just throw away broken electronics now.

Once they had their own brands. The stereos and CB’s were “Realistic” and “Micronta” for test equipment and there were other house brands they sold. Now most in-house brands are simply labeled “Radio Shack” but they have very few in-house branded items now. What they do have that is privately labeled are accessories for the electronics made by others.

There sales have continued to drop. Last time I looked the price of a share of Radio Shack stock was under $2.50. Penny stock status so to speak. Clearly they are now in trouble.

So we all saw with the Super Bowl ads that they are now leaving the 80’s behind and bringing in the new. Frankly, I was confused by those ads. Because I think Radio Shack left the 80’s a long time ago. With it, they left their customer base.

My current company is transforming as it should. They call it “transformation without disruption” meaning they know they have to evolve, but not at the expense of losing our current customers. We need to become something new, and we are, but we will still market and support the products our customers still want today. Therefore we can grow to meet the new demands, but not abandon our current customers.

This is where Radio Shack went wrong. They left their current customers behind each time they made a transformation in the past. They are about to do it again. This time I believe they will not survive. In my opinion, they will be gone within five years, maybe a bit longer, but they will be gone soon.

The reason being they keep forgetting their old customers. Want an audio or entertainment system now; do you go to Radio Shack? Need a computer; do you go to Radio Shack? Need a radio or communication equipment, do you go to Radio Shack? How about a cell phone, do you still go to Radio Shack?

Parts for an electronic project? Accessories?

They still have some items but in general, once they abandoned a product vertical, they dropped their customers.

We all know in business that it takes a lot less money to keep a customer then to get a new customer. With each change Radio Shack makes, they have to spend a lot of money to acquire a new set of customers. This time I don’t think they have the financial ability to do it yet again.

Welcome to hospice Radio Shack.