RadioShack - Can It Arrest the Decline?
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Case Code: BSTR463 Case Length: 17 Pages Period: 1921 - 2014 Pub Date: 2015 Teaching Note: Not Available |
Price: Rs.500 Organization: RadioShack Corporation Industry: Electronic Retail Industry Countries: US Themes: Brand Management, Business Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
A Gradual Decline
A typical RadioShack store was much smaller than other top retail stores in the US . The stores stocked an assorted range of electronic goods, spare parts, electronic accessories, and electronic hobby items. Though the company sold national level brands, it stocked a large number of private label items and manufactured almost half of the items it sold through its stores. Its proprietary brands included Optimus, Presidian, Accurian, and Enercell. The company also spent heavily on advertising its products. In addition, it provided a percentage of store profits as bonuses to store managers and division vice-presidents to motivate them. Industry observers opined that RadioShack was the store to which most Americans went to buy electronic accessories such as cables, batteries, adapters, and extension cords. Moreover, the stores offered odds and ends in electronic items that included transmitters, tubes, and radio receivers that catered to the needs of the ‘electronic do-it-yourself (DIY) tinkerers/hobbyists' ....
Change in Leadership
By 2006, RadioShack was a US$ 4.5 billion-dollar business with over 6,000 locations world-wide. However, its revenues had grown at less than an average of 1% in the previous four years. RadioShack realized that the margins in the sale of wireless products were very low due to the high level of competition in that segment. The company faced tough competition from online retailers, mobile phone manufacturers, wireless carriers, and other large electronic retailers, all of whom were strongly focused on the mobility segment. ...
Being Revamped as the 'Shack'
Day then strove hard to bring about a change in the brand image of RadioShack. Over the years, the company had gained a reputation of being a kind of 'electronic hardware' store that offered odds and ends in electronic items. Day felt that the dated brand image was the reason for falling footfalls. He concluded that RadioShack stores needed to reduce the stocking of items that catered heavily to the needs of the electronic hobbyist...
Another go at a Turnaround
For fiscal 2012, RadioShack made its first annual loss in over 11 years. In February 2013, it hired Magnacca as its fourth CEO in three years. Magnacca had previously served as Executive Vice President in charge of marketing and merchandising at the US drug retailer, The Walgreen Company . Speaking about his intention to reinvigorate and transform the RadioShack brand, Magnacca said, “I was brought in to help transform this business and the team that I'm putting in place is focused on rebuilding RadioShack".....
Future Prospects
As of 2014, RadioShack had a global retail network that included more than 4,000 company-operated stores in the US and Mexico, apart from over 950 dealer outlets across the world. The company was striving to bring down rents by having discussions with its landlords, bringing in store fixtures from Asia, and evaluating better rate plans for utility bills. It was also working on re-negotiating freight transportation by consolidating them onto fewer carriers....
Exhibits
Exhibit I: RadioShack's Marketing Messages
Exhibit II: Trends in US Month to Month Consumer Spending (2008-09)
Exhibit III:Growth of Apple and Samsung in Mobile Market
Exhibit IV: Trends in US Consumer Electronic Industry (2013)
Exhibit V: Radioshack’s Market Share in the US Speciality Electronics Retail Market
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