Shack's Blockbuster Deal Bears Fruit

By Alan Wolf On Jun 11 2001 - 6:00am

AUSTIN, TEX. — RadioShack opened its first in-store shop at a Blockbuster video rental store here last week in the first phase of a 10-year pact between the two national chains.

The deal, announced in February, calls for the placement of as many as 5,000 "RadioShack Cool Things" stores in Blockbuster outlets nationwide over the next two years (see TWICE, March 12, p. 1).

The shops will range in size from 150 square feet to 600 square feet, with the largest carrying more than 1,000 SKUs of consumer electronics products, including video, home and portable audio, and wireless communications. The stores will also stock batteries, parts, accessories and what RadioShack describes as "other fun gadgets and toys." The shops will feature interactive displays for such products as MP3 players, wireless phones and surround sound TVs, and will also sell telephony, broadband Internet and Ultimate TV and DirecTV services.

The Cool Things vignettes will be rolled out this month to about 120 corporate-owned Blockbuster units in four initial markets, including Austin (33 stores), Las Vegas (34 stores), Tulsa, Okla. (23 stores) and Norfolk, Va. (30 stores). The first phase of the rollout will be completed by month's end, and a national rollout is set to follow next year.

Said RadioShack chairman/CEO Len Roberts, "Our presence in Blockbuster allows us to reach a new customer base of women and young shoppers who are shopping more frequently than the typical RadioShack customer."

Blockbuster chairman John Antioco added, "RadioShack Cool Things marks another step in our mission to transform Blockbuster stores into complete home entertainment destinations and positions us to leverage our customer traffic and increase the profitability of our stores."

Under terms of the deal, RadioShack will pay its partner a license fee for each location, and both chains will share in the projected $1 billion annual cash flow and other economic benefits of the pact, which include cost savings generated by "managing vendor and service relationships," the companies said.

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