Radio Shack’s 2nd Bankruptcy in 2 Years; The Era of The Gadget is Over

Radio Shack sign

REUTERS/Brendan McDermid

In yet another clear sign that the era of the gadget is over, once prodigious gadget-seller Radio Shack files for bankruptcy on Wednesday…again. This is the second bankruptcy filing for the company in just two years. A strategy of partnering with Sprint didn’t produce the revenue the new owner’s anticipated and this second filing was unavoidable. So what happens now?

See what is in store for wounded giant Radio Shack…



It seemed like a plan that had a reasonable chance of success. New Radio Shack owner General Wireless Operations, Inc. would partner with Sprint Corp. to open Sprint Mobile stores in Radio Shack locations around the country.

Stuck in a brutally competitive mobile phone business Sprint was looking for a quick and easy way to scale up against their often larger competitors. And Radio Shack, whose locations were struggling to generate profitable revenues, would earn rent and royalties from their co-brand partner Sprint to bolster each location’s business.

A Partnership that Failed

Sprint went into several hundred of the 1,740 locations that General Wireless Operations kept after buying the company out of bankruptcy in 2015. And, for a while, things looked promising. However, both partners have struggled…resulting in a partnership that failed to meet expectations.

Sprint continues to struggle as many in the industry consider their network inferior as compared to the other major carriers. As a result, Sprint has been forced to discount heavily…leading to lower royalty payments to Radio Shack than originally anticipated. The formula behind this co-branding partnership, began to fail.A Sprint Radio Shack store

“The Sprint relationship did not yield the benefits” the company was expecting, Radio Shack said in a statement.

Failing to Find It’s Place



In the meantime, Radio Shack was also failing to find its place in the retail landscape. Crushed between online powerhouses like Amazon.com and larger local retail outlets with broader product assortments like Best Buy – it just has not been able to define its unique niche.

For us, this is yet another indication that the era of the gadget is rapidly fading into the rearview mirror. Radio Shack once was a significant player in the gadget selling game. Now, this is likely the end of the road for the once powerful brand.

Closing Hundreds of Locations

Radio Shack has said it will immediately close 200 locations and consider what to do with the remaining 1,300 stores. Sprint has said it will take “several hundred” and convert them into Sprint corporate-owned stores. Sprint has also said in a separate statement that this development – the Radio Shack bankruptcy – is not anticipated to have a material effect on their business.

General Wireless listed assets and liabilities in the $100 million – $500 million range with the U.S. bankruptcy court in Delaware. This is a sad end to a nearly 100-year old company that took its name from a boom of a previous era when tech enthusiasts were operating short-wave radios out of a shack in their backyards.


About Ted

A sales and marketing specialist - primarily in the technology industry - I've experienced a sort of "circle of life" in business. I've been a mass merchant retailer, a specialty retailer, a specialty manufacturer, a large volume manufacturer, a distributor, and even represented sales representatives. Now the owner of a marketing company that works with a variety of businesses on improving their strategic marketing and business development - I analyze issues from all angles to develop holistic solutions.

Comments

Radio Shack’s 2nd Bankruptcy in 2 Years; The Era of The Gadget is Over — 4 Comments

  1. Not sure the “age of the gadget” is the core reason, more like the age of omnichannel. Radio Shack like others with a large footprint are having a very difficult time adjusting to the new realities facing retail. While smaller outfits can simply serve better or be more local, larger firms have to compete at all levels and RS simply did not and it seems could not. There is far too much real estate in retail in the US and this was the case before the surge of e-commerce, it has only made the situation critical. Meanwhile, those who have gotten on with executing a digital strategy are doing much better. Of course, it is easy to look at Best Buy who have done a good job of adapting, but many others have too. The lesson here is not to delay, to try to find or emphasize your unique proposition and to offer consumers all the way they want to interact with you. This can be done by anyone though it may be tough to get through. RS was so distracted and waited far too long.

    • Hi Robert,

      Yes, the end of the Era of the Gadget was not the “core reason” as you put it…but this development for Radio Shack is “another clear sign” that Era is over.

      Nope, Radio Shack had many problems, including the fact that it was “failing to find its place in the retail landscape.” Those who fail to adapt…die.

      Still…one of my favorite stores over the years and a critical source of my breadboarding experiments.

      Ted

  2. Ted and Robert:

    Regardless of what may end up being the core reason for Radio Shack tanking, “The End of the Gadget”, at least from my viewpoint, isn’t one of them. People are buying lots of gadgets, but they are buying different kinds of gadgets and, relevant here, buying them in different kinds of places.

    Clearly there is the impact of online retail, but reflecting on Radio Shack I would say that least for me, one retailer has replaced another. Yes, it helps that live about 10 or 15 minutes from one, but the type of “gadget” or electronic part that I used to whip over to Radio Shack is at Fry’s in abundance. OK, it’s different in terms of size and scope, and you could fit a hundred old Radio Shack stores inside a typical Fry’s, but you get the idea.

    Curiously, many of the “gadget-like” products one used to find at Radio Shack may be found in the increasing “stuff” aisle in Rite-Aid, CVS, Walgreens and similar. In parallel, walk through a Bed, Bath & Beyond and notice the long aisle of BT speakers and similar “gadgets” that in past years would have been in a Radio Shack circular.

    “Gadget”? Forget the rest of a Fry’s. Just walk though the lines leading to the cashiers and you’ll see more “gadgets” on POS display than an old Radio Shack.

    THe “stuff” is still available at retail, just in different forms and different places.

    OK, but one guesses that we’ll never replace going buying an analog “Rat Shack” SPL meter. Anyone who has ever done demos of show set up had one. Many still do!

    • Mike,

      Thanks for your comment. I agree with some of it. But a couple of points:

      1 – Fry’s is an awfully long drive from my home

      2 – I still have and USE my Radio Shack SPL meter, an indispensable part of my audio toolkit

      Ted

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