RadioShack detailed an overarching strategy of differentiation at its annual shareholders meeting here last month that's founded on providing families with accessories, CE solutions and proprietary novelty products while improving back-end efficiencies.
Chairman/CEO Len Roberts said the company's core solutions strategy differentiates the chain from low-cost, mass-market rivals and high-end specialty stores by offering ease, convenience, selection and quality at a reasonable cost, while providing answers to consumers' product or service-related needs and wants.
The latter will continue to be emphasized via RadioShack's "You've Got Questions. We've Got Answers," branding campaign.
Roberts said the solutions strategy was based in part on extensive consumer research conducted last year that revealed four key customer insights:
- Many customers are confused by certain CE categories, and will remain loyal to a provider that can customize cost-effective solutions. RadioShack intends to dominate the solutions business, and must protect its share of market and customer mind "at all cost."
- Customers are willing to pay a reasonable price for routine electronics needs, i.e. batteries, cables, parts and accessories, in return for convenience, selection, simplicity of store experience and quality of items.
- Customers want unique products.
- Fulfilling the wants of profitable customer segments can provide a long-term competitive advantage.
RadioShack has identified three family-oriented customer segments that fill the bill: Active suburban families with teenage children, urban "flash" consumers with pre-teen kids, and a "small-town values" segment with children of all ages. Together, the three demographic groups represent 38 percent of the population, 46 percent of the CE market and 52 percent of all RadioShack dollars, Roberts said.
While the company seeks to serve the mass market for routine electronic needs, it is targeting its unique, proprietary products at the family groups. These products include the Zip Zaps line of $20 miniature radio-controlled cars, the $200 Environizer air cleaner, plus wireless color PDAs and 3G photo phones.
To underscore the importance of differentiated products, it was noted that Zip Zaps are selling at a pace of 20,000 per week, and that 1 million were sold in 13 weeks during the fourth quarter last year.
Roberts added that RadioShack's "best-to-shop" store design concept, now being tested in Tucson, Ariz. and Jacksonville, Fla., represents the physical incarnation of the solutions strategy, and that 200 additional concept stores will be rolled out this year. (See TWICE, Jan. 9, p. 78.)
President/COO Dave Edmondson next outlined a series of operational imperatives to help drive the strategy. Among them:
- Grow the wireless, satellite, proprietary products, and parts, batteries and accessories businesses
- Lower selling, general and administrative expenses (SG&A)
- Reduce cost of goods sold (COGS)
- Improve inventory management
- Enhance productivity by streamlining the supply chain process and developing a sophisticated information management system
- Simplify store operations
- Improve organizational structure.