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R’Shack Outlines Go-Forward Strategy

Fort Worth, Texas — RadioShack will “burnish” its brand, add more private-label programs, and continue to improve productivity and performance under its 2009 game plan.

Despite weak fourth-quarter results, chairman/CEO Julian Day told investors during an earnings call today that the chain made significant operational improvements in 2008, and that sales have picked up since December.

To keep the momentum going through the new year and beyond, the company will break a new ad campaign in July that leverages RadioShack’s rich heritage while “clarifying its positioning” in the marketplace.

“The brand needs burnishing,” said chief marketing officer Lee Applbaum. Although “RadioShack” wouldn’t be his first choice if the chain was launched today, he said, “the name itself isn’t a significant barrier … there’s lots of brand equity in ‘RadioShack.’”

Indeed, the company has launched a new, albeit fledgling, chain, and has given it the very un-RadioShack-like name of PointMobl. Executives wouldn’t comment on the three-store experiment, except to say that it is an exploration of different ways in which to present the company’s assortment.

That assortment will expand in the coming months as RadioShack rolls out three new private-label A/V and power accessory brands, with two expected in the second quarter and a third in the third quarter. Merchandising executive VP Peter Whitsett described the new additions as “national brand equivalents” that, along with the company’s Gigaware badge for music, gaming and mobile accessories, will comprise a “reinvigorated portfolio.”

Another cornerstone of RadioShack’s assortment will be the rapidly growing netbook category. The company hit pay-dirt with its Acer Aspire One promotion, which offers the 3G unit for $99 with a two-year AT&T contract, and Whitsett said “mobility has never been more important” to consumers and RadioShack.

“We are well-positioned to bring solutions and products together given our experience in mobility,” he said, and the company is launching new initiatives, sourcing abilities and supplier relationships to maintain market leadership.

The company has also enjoyed a strong resurgence in its post-paid Sprint and AT&T wireless businesses, he said, attributable to better sales training, fresh product, and a new display format that accommodates more handsets and more live models, said store operations executive VP Bryan Bevin.

Asked about competition from Best Buy’s new in-store and stand-alone Mobile concept, which has been gaining significant market share, CEO Day said “Best Buy is a great operator … but [the share gains are] not coming from us. There has been no negative impact.”

Day added that while the economy will be a challenge to all in 2009, RadioShack is focused on those things that it can control, including inventory and markdown management, cost controls and improved store-level execution that can result in higher customer satisfaction and conversion rates.