Radio Shack Going the Tweeter Route

For a while now we have been hearing about the slow demise of Radio Shack. A couple of weeks ago, I interviewed a guy for my team who was part of the group of people recently laid off from Radio Shack. I wonder if they are going the route of Tweeter.

With competition from low cost retailers like Fry's and Best Buy, Tweeter was not able to survive in the the electronics industry. Though they had a customer base for the high-end brands they carried, the majority of electronic consumers are clustered within the mid-priced products range. Retailers like Best Buy and Fry's also display more versatility than niche players like Tweeter. Best Buy offers a wider range of items such as appliances while Tweeter offered mainly high-end home audio and video equipment.

Radio Shack is definitely feeling this competition as well. While having been around for over eighty years, RadioShack has had many shifts and downturns in the recent past. Their growth has been stagnating for the past 5 years due to their inability to successfully compete and control their operating costs. Additionally, Radio Shack has also had trouble defining their marketing strategy and finding a niche consumer base.

For many years, Radio Shack was the sole provider of high quality home electronic products. Today they carry an assortment of medium grade products including mobile technology, home theater, and home audio devices. They established themselves as a quality leader with a reputation of employing well trained individuals and delivering exemplary customer service. The market downturn for Radio Shack occurred after low cost competitors such as Best Buy and Fry’s came into the market. These companies had larger stores with wider selection. Radio Shack, on the other hand, focused on increasing the number of smaller locations nationwide. They carried their own brand of products such as Optimus along with generally known brands like Energizer, Panasonic, and Sony.

I think by having unknown in-house brands, Radio Shack is wasting shelf space and advertising money. While these brands appeal to the cost-sensitive buyer, they do not necessarily help to build or maintain a consumer base for Radio Shack. Additionally, Radio Shack can use the opened shelf space to appeal to the higher end clientele previously being serviced by Tweeter. Thus, they can broaden their selection and fill a gap in the customer base that is not recognized by any of their major competitors.

Without proactively making some vital changes, the company will continue to see fluctuating or declining sales and be forced to close more stores and lay off more employees, merely reacting to their crisis and thus going the way of Tweeter.