Minneapolis — RadioShack will no longer operate Target’s 1,500 mobile departments, effective this April.
The three-year-old outsourcing arrangement had proved a profit drain on RadioShack, which was excluded from sharing in prepaid and accessories sales, the two most lucrative pieces of the mobile business. It lost $14 million on the Target business in the third quarter of 2012, and attempts at renegotiating the contract failed.
RadioShack will be replaced by wireless distributor Brightstar and MarketSource, a sales and marketing services firm, following a 10-week transition period.
RadioShack said it had been attempting to renegotiate its agreement with Target since October 2012, and had executed a termination notice that would allow it to exit the Target business if mutually acceptable terms could not be reached.
“In order for RadioShack to have continued this relationship, we needed to establish a new agreement that would be financially appealing to both companies,” said RadioShack executive VP Telvin Jeffries. “Ultimately, we amicably agreed to dissolve the relationship.”
Under the new outsourcing arrangement, Brightstar will be Target’s supply chain and point-of-activation technology provider, and MarketSource will be its in-store sales services partner. “These partnerships move the business forward and ensure our guests will receive the latest products and services coupled with Target’s exceptional value and best-in-class shopping experience,” said John Butcher, Target’s electronics VP.
Target is the second major discount chain to sever its mobile outsourcing ties with RadioShack, after Sam’s Club brought its wireless kiosk operation in-house in 2011. RadioShack also trialed an outsourcing program with OfficeMax that year.
RadioShack, which lost $47 million in the third quarter, shared its intentions to negotiate a new contract or walk away from the Target business in October, as it sought to beef up margins and improve profitability.