What happened to RadioShack?

Founded in 1921 by brothers Theodore and Milton Deutschmann. RadioShack was an industry leader in the tech world of the late 1970s and early 1980s. The company failed to capitalize on the PC and portable device revolutions that followed. This forced bankruptcy proceedings in 2015 where the RadioShack brand was sold off to various entities around the world.

Background

RadioShack is an American electronics retailer founded in 1921 by brothers Theodore and Milton Deutschmann.

From a single store in downtown Boston selling products to radio officers on ships, RadioShack grew to operate around 4,300 franchises in North America. It also managed stores in conjunction with the Tandy Electronics brand in Mexico, the United Kingdom, Australia, and Canada.

Before the advent of the personal computer, RadioShack was an industry leader in the tech world of the late 1970s and early 1980s. RadioShack stores were the place where kids and hobbyists went to buy radios and walkie-talkies and the parts to fix or build them from scratch.

Missed opportunities

RadioShack’s inability to capitalize on the personal computer revolution is made even more significant when one considers the TRS-80. 

The TRS-80 was the first mass-produced personal computer and was a sales hit for the electronics retailer. But computer hardware remained unprofitable, with one former executive told to restrict computer sales to under 10% of the total business mix because it didn’t earn the company money.

The company stopped making computers entirely in 1993 as it shifted its core focus to cell phones. However, the cell phone sign-up process took around 45 minutes per customer. This relatively lengthy process tied up store employees and frustrated RadioShack’s core customer base of electronics enthusiasts.

Mobile carriers eventually began opening their own stores which caused a significant drop in RadioShack revenue.

Sales cannibalisation

RadioShack stores were notorious for sales cannibalization where they competed with each other for sales revenue.

This occurred because bricks-and-mortar stores were too close to each other. For example, there were once 25 stores in Sacramento within a 25-mile radius.

eCommerce awareness

For whatever reason, the company failed to establish an online presence in the late 1990s when competitors were ramping up their efforts. During this time, consumers could not purchase anything from the RadioShack website – it only offered a list of store locations and press releases.

When the company did make a foray into eCommerce in 2006, Amazon was already a giant obstacle that could not be overcome.

Inventory mix

RadioShack stores often occupied small strip malls where floor space was at a premium, necessitating careful selection of the right mix of products.

Despite this, the inventory mix in some stores was strange, to say the least. One notable example was the sale of remote-controlled cars in the USA from a cartoon series called Brum that was based in the United Kingdom. No one had heard of the series, so no one purchased the car. 

Maker movement

Focused on selling cell phones and other miscellaneous products, RadioShack failed to identify the burgeoning Maker movement where DIY enthusiasts started applying their skills to tech and engineering pursuits.

Given the company’s pedigree in home technology, a failure to capitalize on this trend represented yet another missed opportunity. By the time the company was aware of the movement, consumers were already shopping elsewhere for materials.

Key takeaways:

  • RadioShack is an American electronics retailer founded by brothers Milton and Theodore Deutschmann in 1921. The company enjoyed market dominance in the 70s and 80s but faded fast after a slew of missed opportunities.
  • RadioShack operated over four thousand stores in the USA, but many were placed too close together which caused sales cannibalization. These stores were also often small and had a confusing inventory mix.
  • RadioShack sold the first mass-produced personal computer with much success. However, the company saw no future in personal computers because of the high cost of hardware. It then instructed sales managers to intentionally keep PC sales under a certain threshold.

Main Free Guides:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"