It can’t be much of a surprise to any thinking person to hear that Radio Shack are on the skids. Times are hard in retailing right now and they aren’t the first and certainly won’t be the last big name to fail.

As evolution quickens across all sectors retail gets hit on two fronts – fashion and technology. Retail trends are increasingly short-lived and technology is accelerating the pace of change. If innovation isn’t in your DNA, you are probably going to fail. It’s been decades since Ralph Halpern turned the UK’s Burton Group around and even then a cornerstone of his strategy was to have as many as twenty new formats under test at any one time. HMV and Abercrombie and Fitch are hanging on to existence, right now, by their fingernails because they failed to adapt to changing consumer demands, but there are few offenders who deserve to fail more than Radio Shack who appear to have had an inordinate amount of time to sort it out yet look increasingly as though they are wading through molasses. I don’t know this company intimately, but all the evidence suggests an old-fashioned, bureaucratic culture incapable of innovation, which is a bit of a disconnect seeing as they made heir name servicing the tech enthusiasts whose successors are setting the trends right now.

The most cursory glance at a Radio Shack store is enough to tell you that this is a company who are unclear who their customers are. The products are diverse and disconnected. The proposition undefined. Very little is done well or thoroughly, staff knowledge falls well short of the “expertise” that they built their name on and customers wandering around seem disconnected. In a sector which, as Retail Dive points out is tough, this makes you look like Mary’s little lamb in a field full of wolves!

I thought the Retail Dive article was actually a bit of a cop-out. It offered the excuse that times are hard in electronics these days, but, as I said at the opening of this piece, times are hard for everyone. The question here is “are you man enough for the job?” and when you fail as Radio Shack have there’s no avoiding the conclusion that you are not.

By contrast take a look at a very similar business from Ireland Maplin, who admittedly were struggling a few years ago, but saw the writing on the wall and under the enlightened management of John Cleland have turned their business around, to the point where they have just landed £85million in investment to fund their next phase of their development.

Apart from their size the thing that most distinguishes Maplin and Radio Shack is the definition of their respective brands. Maplin appear to know who they are and are working to build on that with new innovations and really tight execution, whereas Radio Shack seem reluctant to leave the comfort of their traditional and largely now irrelevant positioning and are struggling for a purpose in the new world order.

Until brand basics are fixed, anything else you do with an organisation like this is just papering over the cracks and will only add to the mess and confusion. It seems to me that what Radio Shack need is some serious help with their brand strategy. Once that’s defined, the internal marketing that will pull everything into line, can commence and over time (depending on how much you put into it) they’ll be able to innovate and their current problems will start to go away. Of course, a whole new set of problems will have emerged by then, but hopefully they’ll have learned that you are only as good as your next big idea! Given that they have wasted so much time already though, maybe Radio Shack are at the end of their road. If I was looking for an investment opportunity right now, I might consider Maplin, but as for Radio Shack, why would I want to risk my hard-earned on a business that is clearly so disorientated? In some ways it would be a pity to see them go, but that’s the game.

Phil Darby
September 3, 2014

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