Or is RadioShack There Already?

Is RadioShack Destined for Irrelevancy?

Will Deener

wwrdeener@aol.com

Published: 12 August 2012 09:11 PM

I did something the other day that I’m reasonably sure most of you haven’t done in a long time, perhaps in years.

I visited a RadioShack store.

Not only that, I even purchased a packet of AAA batteries. I didn’t need the batteries, but the sales clerk seemed so melancholy and yet eager to help me — the lone

customer in the store — that making a small purchase seemed the least I could do.

My visit to RadioShack was a sort of fact-finding mission — as in what the hell happened here? A few days before my visit I had read with interest the company’s

dismal second-quarter earnings release.

RadioShack Corp. is pumping red like a ruptured artery. The Fort Worth-based electronics retailer posted a loss of $21 million in the quarter, compared with a profit of

about $25 million in the same quarter last year, and this was on top of an $8 million loss in the first quarter.

And if that weren’t bad enough, it announced it was suspending its dividend payout. Not surprisingly, the stock was clocked, closing down 30 percent in one day.

RadioShack shareholders have lost about 80 percent of their investment over the past year as this old retailing warhorse seems destined for irrelevancy, if not outright

bankruptcy.

This pains me because one of my fondest memories as a young boy was my father taking me to RadioShack and buying me a remote-controlled car — the best of

times.

Iconic companies

In recent years, several iconic American companies seem to have lost their way, including Sears Holdings Corp., Eastman Kodak Co. and now RadioShack. A retail

analyst I contacted before my visit to RadioShack told me the flaw that these companies all share is that they adapted too slowly to their competitors and to a

changing retail environment.

Sears underestimated its competitors and from at least 2007 to 2009 drastically reduced spending on upgrading its stores. They look tired, they look old, and most of

them are in shabby malls. People stopped going.

“If you leave your stores like that for a few years, Target is going to come in and say ‘I can pick off a really dirty-looking Sears,’” said Paul Swinand, a retail analyst at

Morningstar. “And it did.”

Kodak, which is in bankruptcy protection, foolishly resisted the move to digital cameras long after it was obvious to everyone that film was becoming irrelevant.

“Kodak tried everything it could to keep film relevant, but the writing was on the wall with digital cameras and digital phones,” said Michael Lewis, a retail analyst for

The Motley Fool. “There was no reason for people to buy film, and yet Kodak made no effort to get into the digital business until it was too late.”

Kodak shares now trade around 30 cents — what a monument to stubbornness.

As for RadioShack, when I strolled through the aisles of that store on my recent visit, I couldn’t help but think how spot on was Lewis’ description of the company.

“RadioShack sells things that we don’t buy at RadioShack anymore,” he said.

How true. I could have purchased the batteries at Wal-Mart or Tom Thumb, and any electronic gadgets, such as a universal remote, could have been bought on

Amazon.com or Wal-Mart cheaper and more conveniently.

 

To its credit, the company tried about two years ago to stop the bleeding by offering to sell a few Apple products, such as the iPhone and iPad. In fact, the stock got a

nice pop when this was announced, but a Forbes magazine headline captured this strategy just perfectly: “RadioShack’s iPhone Strategy Is Working Well: What a

Disaster.”

The problem is that profit margins on iPhones are razor-thin, which erodes the bottom line. Additionally, Lewis said that customers looking to buy Apple products

simply don’t think of RadioShack as the place to do it.

“A customer’s first thought is that ‘I will go to an Apple store, or I will order it online,’” Lewis said. “It feels good to be in an Apple store, but RadioShack is a depressing

place to be.”

Well, I don’t know that I agree with that, but my experience in the store was something short of exciting. As I was about to leave, I asked the sales clerk if his store

sold iPads.

“Yes sir, we do,” he said, pointing to a poster of an iPad hanging on the wall.

“Well, OK, can I see it?” I asked. He responded: “We don’t actually have them in this store. I would have to call another store and get one.”

That’s OK, I said. Maybe I’ll come back later. But I worry that RadioShack, which has been around for more than 90 years, may not be there.

The Lesson is - Customers Want a "Deal"

JCP teaches a ‘fair and square’ lesson on pricing
 July 27, 2012 | By Gail Hoffer
"We thought simplifying 590 unique sale events into three types of pricing would be easier, but it turns out that customers and others found the pricing a little confusing," he said. "Now we're going from 590 to 3 to 1: The first price is the right price."

We don't think customers are confused - we think they want to feel like they got a "deal".  EDL pricing makes them wonder "how much lower could they go?".  What most customers do is delay purchasing at EDL until they compare the EDL price with sale prices elsewhere.  It means more work for the customer and when they find the same item elsewhere and validate JCP's price - they buy where they are - rather than return to JCP.

Is New Footprint Making the Difference?

Report: Tesco could exit U.S. if Fresh & Easy doesn’t improve

July 2, 2012 | By Marianne Wilson

NEW YORK — U.K. retailing giant Tesco PLC could give up its American supermarket venture, Fresh & Easy Neighborhood Market, if the chain continues to disappoint and not make a profit, according to various news reports.
In remarks at the company’s annual meeting on Friday, Tesco CEO Philip Clarke said: “If we see there is no chance of success, we’ll do as we’ve just done in Japan,” referring to Tesco’s deal this month to exit that market.
At the same time, however, Clarke sounded an upbeat note about the U.S. venture’s prospects, RetailWeek reported. “Fresh & Easy is improving as a business and I can assure you that it is receiving close attention from the executive team,” he said. “We believe there is great value in the business and, if we get it right, an excellent stream of growth in future years.”
Clarke has refused to bow to shareholder pressure to set a target date for when Fresh & Easy, which launched in 2007, would finally begin to make a profit.

F&E's small urban stores for higher density markets may be making the difference...

Surprised it Took So Long - Aren't You?

Healthy Checkout at Hy-Vee Grocery Stores
From Feb 2012 | By Susan Reda

Midwest moms no longer have to deal with kids pestering them for sweets as they snake through checkout lanes. Hy-Vee supermarkets are on board with a plan to retrofit existing checkout lanes by ditching candy bars, chips and other sugary indulgences for healthy options like fresh fruit, nuts and water.

Earlier this year a Minnesota store piloted the idea of a healthy checkout aisle as part of a promotion with the AARP/Blue Zone Vitality Project. The aisle was such a hit with shoppers that the company is reported to be in the process of expanding the concept to more than 100 stores.

The “better-for-you” items, including milk, granola bars and baked chips, are a favorite of parents who are all too familiar with pleas for “just one.” And there’s statistical proof that healthy snacks are gaining acceptance among the pint-size set; a recent study by NPD Group shows fruit is the top snack for kids under six years old.

While experts applaud Hy-Vee, there’s plenty of skepticism over whether this will catch on. Long-standing contracts will be difficult to break -- and let’s be honest: Slotting fees can be tougher to shed than unwanted pounds