Daily Dose of iQ: What's To Happen with RadioShack's Remaining Stores?

Apr 06, 2015 — Allan Pulga

RadioShack's bankruptcy has made headlines for several weeks, marking a changing of the guard in electronics retail, so to speak.

But according to the Standard General hedge fun, led by Soohyung Kim, there is still hope for the brand and just over 40% of its stores.

The New York Times reported yesterday (April 5) that last week, Standard General was approved by the courts to take over 1,700 of RadioShack's 4,000 stores. But more interesting about the article, were details surrounding Standard General's plans for these stores.

The new RadioShack will play to its strengths: one-off phone accessories like chargers and earphones.

"RadioShack will slim down to become an electronics convenience store of sorts, focusing on things like Bluetooth headsets, chargers and other accessories that shoppers may need immediately rather than waiting a day or two for shipment of a web order," wrote the NY Times' Hiboko Tabuchi.

"One of the most profitable RadioShack stores is a Bridgehampton, N.Y., outlet that is frequented by weekend vacationers who have forgotten their smartphone chargers or earphones. And one of RadioShack’s top-selling products is hearing aid batteries."

Also worth noting were RadioShack's previous difficulties selling mobile phones. Because the company did not have its own credit underwriting system for cellphone customers, when customers defaulted on monthly payments, RadioShack was required to make up the difference owed to carriers. Oversights like these likely contributed significantly to the financial woes leading to RadioShack's ruin.

RadioShack will benefit from a single-carrier relationship; Sprint will increase its store footprint to stave off competition from T-Mobile USA.

But now, Tabuchi writes, Sprint is partnering with Standard General to right the mobile retail ship: "Now, Sprint will take over the selling of mobile phones, paying RadioShack to take up 60 percent of the floor space plus a sales commission and freeing RadioShack from what had weighed heavily on its bottom line. RadioShack hopes that the Sprint shops-inside-shops, which will appear on Sprint’s store locaters, will also drive more traffic to its stores. (Sprint will increase its store count by almost 50 percent.)"

This seems to be a nice arrangement for both parties, as RadioShack will benefit from a streamlined phone activation/underwriting process and Sprint can increase its store footprint in its efforts to stave off looming and continued competition from T-Mobile USA.

Topics: Retail Operations, Mobile Industry, Customer Experience

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