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RadioShack's Magnacca Charting New Roadmap

7/21/2013 08:00:00 PM Eastern

NEW YORK — RadioShack’s recently installed CEO Joseph Magnacca is consolidating SKUs, re-assorting the mix and re-merchandising stores in pursuit of higher margins and profits.

Five months into his tenure, his vision for RadioShack — and the lessons he learned leading Walgreens’ Duane Reade pharmacy chain — have taken form in a showcase pilot store here on Manhattan’s Upper West Side.

During an exclusive industry media walk-through last week, Magnacca pointed to a litany of initiatives, including a renewed emphasis on showrooming-proof private-label and price-protected premium products; transitioning accessories from a hodge-podge of house brands to a core RadioShack badge; and culling duplicative SKUs from the store assortment and moving them online.

To help drive traffic and attract a new, younger customer base, the store itself has been transformed into a CE playground with live product displays, interactive touchscreen panels, new video signage, and a wireless speaker wall that allows customers to A-B demo models with music from their own Bluetooth devices or from a display tablet’s exhaustive playlist.

The layout and fixturing has also been reconfigured, with mobile moving from tables by the entrance to the store’s right rear wall. To eliminate SKU redundancies, handsets are displayed by category and pre- or postpaid status rather than by carrier, as AT&T, Sprint and T-Mobile offer many of the same models, he said.

Magnacca, and store concepts executive VP Michael DeFazio, have also created dedicated sections for Samsung and Apple products and accessories and, borrowing from their shared Walgreens background, have added a rack of high-margin impulse items including flash drives, memory cards and tech magazines.

Replacing mobile by the store windows is a traffic-drawing display of radio-controlled toys topped by eye-catching video signage, and a power wall of high-margin batteries bearing the RadioShack brand.

In addition, a new help desk area relieves congestion from the checkout section and contains drawers of small electronics parts and accessories that used to take up valuable wall space.

The tightly edited assortment allows for a more spacious and inviting layout while focusing on what Magnacca described as the chain’s three core categories: CE, including headphones, wireless audio and laptops; mobile, including smartphones, tablets and accessories; and do-it-yourself products.

The latter hearken back to RadioShack’s ham radio heritage and serve as a link between its traditional customer base and a new generation of shoppers the chain is looking to lure. For the latter, the company has updated its logo, begun opening RadioShack sections in college bookstores, and debuted a youth-oriented TV spot for Beats by Dr. Dre’s Pill wireless speaker featuring a custom version of Robin Thicke’s risqué “Blurred Lines” music video.

Magnacca is also stepping up in-house product development to create unique, innovative devices that are protected from discounting and showrooming and will make RadioShack a “trend-forward” destination for more than just replacement parts. One such product is a transparent acrylic wireless speaker with illuminated wires that will debut in the fourth quarter, while earlier unsung items have included surroundsound speakers and glass screen protectors for cellphones.

“We want to be the place people go to for innovation,” he told TWICE, “not me-too products.” To that end, the company is taking a more “customercentric” view of the assortment and held a series of merchandising reviews that broke down silos between general merchandise managers. Exercises included projecting categories out over the next several years and analyzing the stores’ product facings two feet at a time.

Behind the scenes Magnacca is looking to improve the company’s logistical and supply-chain prowess, and indicated that its much-ballyhooed discussions with investment banks were related to financing those improvements, which will comprise fully half of his capital expenditures.

RadioShack’s website is also in for an upgrade, he said, and will soon enjoy a better search engine and enhanced functionality.

And while the new CEO is open to future wireless service partnerships, as it once maintained with Target and Sam’s Club, he believes the bigger opportunity lies in franchising stores, both domestically and abroad, which he described as “huge pillars of growth” that will also help build the brand.

As for the 4,000-plus corporate stores, Magnacca believes the count is just about right, give or take some overlapping locations, and hopes to have a dozen of the “high-touch” showcase shops up and running by the holidays, and for their most promising merchandising elements to be in place across half the chain by that time.