RadioShack’s back to the ’80s culture meets 2014: Company to close 1,100 stores


RadioShack announced plans to close over 1,000 of its underperforming stores, approximately 20 percent of its retail locations, as part of a restructuring to be more competitive in retail electronics. (Justin Sullivan/Getty Images)

Back when stereo was cutting-edge, RadioShack sold hi-fis driven by a smooth diamond stylus at one end, cloth-covered speakers at the other and a warm, glowing tube amp in between. The chain put CB radios in the hands of average drivers, let high school kids slap a cassette player in their car and produced a mass-market computer, the TRS-80, within months of Steve Jobs.

It was retailing of the best sort — and so last century.

The company today is “broken,” chief executive Joe Magnacca said Tuesday as he announced plans to shut 1,100 stores, about one-fifth of RadioShack’s U.S. footprint, amid plummeting sales and losses that hit $400 million in 2013, triple that of the year before.

The company’s stock price fell 17.3 percent Tuesday to close at $2.25, continuing a free fall that has pushed what was once one of the country’s premier retailers into self-ridicule — parodying itself in a much-discussed Super Bowl ad that validated what consumers had already decided: RadioShack is an analog company fighting for attention in a networked world.

That is ironic for a firm that helped define modern electronics retailing and for a while was included alongside Apple among the leading consumer brands in the early years of the digital age.

What tripped the company is the speed with which those technologies took over, changed, morphed and made much of RadioShack’s stock in trade — think component sound systems, cathode-ray televisions and all the stuff those people in the commercial were carting out of the store — irrelevant.

More than half of RadioShack’s revenue comes from a category it has dubbed “mobility,” including sales of cellphones, phone plans, tablet computers, wireless devices and the host of related merchandise and services that has put it in commoditized competition with Best Buy, Amazon.com, phone companies and pretty much the entire Internet.

RadioShack has proved a mediocre competitor in that space, with sales falling about 10 percent from 2012 to 2013.

But there’s more to it. Aside from mobility, there’s what might be called “all the other stuff” — a compendium that runs from radio-controlled Christmas toys to a grab bag of electronic parts. The company stopped publicly distributing its printed catalogue in 2002, according to a Web site devoted to vintage catalogues from the store. The catalogue extended 446 pages and ran the gamut from a Tasmanian Devil land-line phone to a $24.95 Morsecode practice key.

That seems to raise the question: What if the culture passes you by? What if the ethic that built your business — that do-it-yourself, everyone’s-an-expert notion that made people want to match audio components in perfect ensemble and fix their headphone cord when it wore out — becomes less relevant to what people want and how they consume it?

Music “devices” don’t have needles, magnetic heads or other parts to maintain, even batteries. Headphones have become earbuds with soldered joints too small and insulated to mess with; when the cord breaks they get ditched. “Electronics” now means computer code and integrated circuits — and if you are messing with that stuff, you are probably ordering parts from one of the big online warehousers.

“They were the go-to store,” said Ward Silver, a technical writer and editor for the American Radio Relay League, an amateur radio broadcasters group. “When the Web came along, you had a blizzard of companies you could order through,” while RadioShack’s catalogue, however extensive, seemed among experts to be filled with “least-common denominator” items that mattered less to their pursuits.

The stores, meanwhile, seem a hodgepodge in an age of specialization — iPhone sleeves on one wall and geeky soldering-iron kits on another.

“They lost touch with the changing consumer dynamics, and they lost with the changing retail scene,” said Yoram Wind, a marketing professor at the Wharton School of the University of Pennsylvania. “The big issue is that in today’s environment, people look for excitement, experience. RadioShack is the same old store.”

Web-based competition and shifts in technology have disrupted many other companies. And RadioShack isn’t the first — or likely the last — to help invent a business only to lose it.

Magnacca, chief executive for only a year, has launched a turnaround plan. The store closures are just one piece of it. The other involves retooling the remaining stores to be more engaging, with a dedicated wall of speakers, for example, that shoppers can sample with a touch pad using their own music, display cellphones that can be used and experimented with, and a “do it yourself” consulting center for people who need advice on how to use technology.

“It’s clear that we need to change the conversation about RadioShack in a dramatic and impactful way,” Magnacca said.

Bottom line: If you have to make fun of yourself in a Super Bowl ad, something’s probably wrong.

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