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RadioShack: A Post Mortem

The following analysis was posted after RadioShack’s first bankruptcy in 2015. Given the developments of the last two weeks, we think it’s worth revisiting.

About nine years and five CEOs ago I was on a conference call with RadioShack’s top brass.

The chief executive at the time, longtime McDonald’s veteran Claire Babrowski, put me on the spot by asking my thoughts on the company’s biggest challenge.

First to mind was the anachronistic name: A) its reference to a ship’s radio cabin was lost on customers long ago; B) they don’t sell radios; and C) the term “shack,” which was used in a recent re-branding campaign, is hardly a lure.

But the underlying issue, I offered, was RadioShack’s raison d’etre, or lack thereof. If you can’t describe your role in the marketplace – your reason for being – in one sentence or less, you probably don’t have one.

In the days following last week’s Chapter 11 filing there’s been no shortage of Monday morning quarterbacking across the blogosphere, and TWICE is no exception.

But as our decades-long coverage has indicated, and our print-edition analysis will underscore, the bankruptcy was in the making long before the current headlines – a form of “slow-motion suicide,” to borrow the late Surgeon General Dr. Julius Richmond’s description of smoking. As an industry chronicler it was painful to watch, and for company insiders it was certainly wrenching.

Any number of missteps and market forces contributed to the chain’s decline:

*   the waning hobbyist segment, which had been its core customer base;

*   the dearth of techno-innovation that made it the Apple of its heyday;

*   an over-reliance on mobile, where it competed with carriers and discounters;

*   CE’s thinning margin structure, which could no longer support the business model;

*   outdated logistics and inventory management systems;

*   destructive cost-cutting, and;

*   the distractions of ancillary businesses like its in-store mobile kiosks for Sam’s Club and Target.

But clearly the biggest blunder in hindsight was the failure to leverage its massive catalog, customer database and store fleet for the coming omni-channel revolution. Once considered an asset, with stores packed within a five-minute drive of 94 percent of the population, its real estate instead was rendered an albatross by the Internet.

But all that postulating aside, the crux of the matter remains that RadioShack never managed to find its place in a rapidly changing retailscape. Because at the ripe old age of 94, it still didn’t know what it wanted to be when it grew up.