Who Killed Radio Shack?

[rrinker]

 Indeed, it wasn't China, or cheap online competition that killed Radio Shack. It was 1950's business practices in the 21st century that doomed them.
Disclaimer: I worked for Radio Shack in the mid 80's while I was in college, so some of this is personal experience

 First of all, there was oversaturation - in my neighborhood alone, a small suburban area, NOT a major metropolitan area, we had TWO Radio Shack stores within walking distance of one another. I worked at one, my best friend at the other. Within a 20 minute drive of my home, there were at least 6 Radio Shack stores. Sometimes this worked out, at least for the company, as if we were out of stock of an item, we would call the other store and it wasn't really inconvenient for the customer to head over there. However, I have to wonder how often that customer then bothered coming back to our store. Of course, that worked both ways.

 Second of all - the insane business operations. EVERY customer was written up by hand. We sold computers, for goodness sake. But no, all sales tickets were hand printed. Then at the end of the say we keyed all the day's receipts into the store computer. This was long after even smaller retailers had gone to electronic cash registers and so forth. Then they tried to ride the wave of charge cards, and set quotas on everyone to get x number of credit apps per shift. Never mind it was only good at Radio Shack (and really there never were a lot of truly high ticket items - a full computer system, or the higher end stereos was about it) and the interest rates were horrible even for the times. Remember the free battery of the month club? Whenever someone came in for their free battery, we were supposed to write up a sales ticket, getting their name and address, AND try to get them to fill out a credit application. 9 times out of 10, this just pissed off the customer. That other 1 out of 10, they understood we were just doing what we were told. They still didn't take the time for the credit app. The free battery thing was one of those "Oh hey, I'm walking past the Radio Shack, let me pop in and get my battery" things, they weren't in the store shopping, they came to pop in and pop right back out again, and here we were trying to delay them with a credit card application.

Thirdly - even by then, there was a distinct lack of product knowledge. There were exceptions among my coworkers, but most of them had no clue what they were selling. I don't claim to know everything, but I could talk intelligently about the electronic parts we sold, the computer systems, and stereos. We had one guy who knew pretty much all there was to know about hooking up phone equipment like autodialers and answering machines (this was just after it became legal in the US to connect your own equipment, add you own lines in your house, and competing long distance companies like MCI and Sprint were popping up). Others I worked with were just outright clueless, many times I overheard utter bullshit being spewed to a customer.

 And other things - I worked at the store near home over the summer, then transferred to one closer to college once classes started up. At that store, my manager was big into audio and video, and knew what he was doing. He had pretty much every combination of receiver and speaker hooked up in our store, so a customer could put together what they thought they wanted, and give it a listen, and we could maybe steer them to better speakers, or whatever. One day the district manager came by and told the store manager in no uncertain terms that ONLY the stereo system featured in the monthly flyer was to be hooked up, nothing else, and he needed to take it all down before his next visit. We had 2 boxes full of coax splitters and amplifiers, RCA cables, speaker switches, etc. When inventory came around, the store manager took one look at the boxes full of random stuff and basically said the hell with it, we're not inventorying that and putting it back on the shelves. I ended up with a box full of bits that to this day I have not fully exhausted despite giving TV coax cables to various other people as well as using them myself. What's just funny about it all is that even a store like KMart had a display with all their (crappy) car stereos hooked to any of their (also crappy) speakers so you could listen to any combo you wanted. But not Radio Shack, oh no!

 Oh yes, inventory - another horrible all night and into the next day manual process. The computer would print out inventory sheets, then we went around the store and counted. Marked counts on the sheets. All fine and dandy for big box items, but those pegboards full of electronic parts - and you know there was always a joker who put pack a pack of 1K resistors 4 back on the peg for 10K's. After all this, the numbers were then keyed back into the computer to generate the final inventory report. For the standalone stores or those in a strip mall, it was no big deal, because those stores could stay open as long as necessary, and open as early as necessary. But our store was in a mall. Mall leasing rules set an absolute time we could stay and get in, and also dictated that our gate had to be up and the store open to customers within a certain time of the mall opening or face fines. We had all sorts of tricks to get a jump on the inventory, like counting all the big stuff during the day. It wasn't like we were going to sell more than 1 of some stereo system in a day, so we just kept the completed sections behind the counter and if someone happened to sell one of those things, they just marked it off on the inventory sheet.

 In my area, I was pretty much stuck. If Radio Shack didn't have an electronic component, I had little choice but to mail order. And mail order in those days (prior to working at Radio Shack - under 18, no credit cards, no checking account) meant giving my Mom the money, getting her to write me a check, and sending it off and waiting at least 2 weeks - 3-4 days for the order to reach the company, usually on the other side of the US, a week waiting for the check to clear, and another 3-4 days for the order to come back. There was one shop nearby that carried RCA components, which was great when I built my first computer, which was all 4000 series CMOS, so I could get a few spare chips, when I could convince my Mom to drive me over there. But they were not a full service component shop, they had very little else, and even the 4000 series parts, they didn't stock much, most of the time I went there and ordered something and then had to go back a week later to pick it up. In a metro area that hosted 6 universities and the ATT/Bell Labs and plant that built among other things the first 64Kb RAM chip, it was amazing there were no electronic component sellers, at least on a consumer level.

[boffin]

No Radio Shack in England (or rather very very few).

When I grew up as a hobbiest teenager needing parts, I was lucky enough to live i the UK.  The maplin catalogue was the most important thing you could have.  Maplin were a tiny bit more expensive, but it came quick. Get a postal money order, mail off your order and 2-3 days later it was on your doorstep, also used Greenweld quite a bit. Once I got a moped I could actually get to Greenweld (and buy 2nds from the Vero factory), and it was quite the treasure trove.

[vk6zgo]

Tandy,as Radio Shack was known in Australia,operated as a franchise set up.

Even back when they first appeared on our shores,I wondered how they survived.(It was rumoured that they were a CIA "front" )

Tandy tried to do everything,but were uncompetitive at all of it.

Dick Smith,at the time was going "gangbusters".
They had more stock,much cheaper prices,& tie-ins with the local magazines,so they could provide kits.

DSE got into CB radio very early,& Tandy never caught up,
By the time they got stocks,everybody & his cat were selling CBs at less than half their prices.

Tandy also tried to compete on HI-FI equipment,right at the time when it went from a "geek" hobby to a mainstream thing.
The big Domestic Appliance/TV  stores killed them!

They were left as the place you could get weird non-mainstream components,or small bubble packs of more standard parts-----good,if you just needed one or two & were a long way from Dick Smith,Altronics,Jaycar or the like.

Computers looked like Tandy's "white knight" (TRS-80 et al),but the rise of the PC killed that.

Dick Smith sold out to Woollies who kept things going as normal for a while.
Following that,they bought up the Tandys stores closed some, & converted the rest to DSE.

For some unfathomable reason,they then chucked out all the Electronics stuff,& tried to sell mobile phones & computers.
Ultimately places like Harvey Norman,JB HIFI & so on took all that market segment,leaving DSE to die ignominiously.

Jaycar & Altronics seem  to survive OK,& still have a reasonable stock of parts.

[dannyf]

"I don't think I blamed the Chinese"

Sorry. That wasn't directed at you but those ignorant "experts" we so often run into here.

No amount of facts, logic, and rationale could sway those folks.

[dannyf]

"The system seems designed to minimise administative overheads and make for an efficient cross border transfer of mail. Predominantly letters and small items. "

It seems to be designed to facilitate delivery of parcels internationally by making the cost of such parcels comparable across disparate economies from the sender's perspective. So someone in China may pay a comparable cost, relative to his income, to send a letter to the US, vs a US person sending that letter to China.

If you didn't have that system, it would be cost prohibitive for someone in a poorer country to send a parcel to a richer country.

Whether that system is fair is up to debate, but it's rationale is pretty clear to me.

[Tandy]

I agree that RadioShack is a bad example but I think some people are missing the point somewhat.

Say you want an item that costs $1 from a Chinese factory.

Option 1 order from a Chinese seller, they buy from the factory add 50c markup and add 50c postage. So they can sell you the item for $2.

Option 2 buy locally. The item has to be sent from China using commercial shipping and import duties paid, 20c for arguments sake. Has to be held in a warehouse or shop waiting for your order, perhaps another 20c. Order is packaged by staff that have to be paid at least minimum wage and have all sorts of employment protections such as working conditions and paid sick leave. The 50c markup that the Chinese seller is content with wouldn't come close to covering these costs so lets add $1. Now lets post it, to the customer $3. Now your expected to pay $5.40 and there may be sales tax depending on where you live.

If it cost the same to send locally as it does from China you might be more willing to buy it. If in our example it cost the Chinese seller $3 just like it does the local seller to post the item to you our example would be $4.50 from China or $5.40 from a local supplier, for the sake of quick delivery and convenience of returns etc many would choose the local option. That is just on a equal pricing structure, if you took into account the actual cost to send something from China has to be more than it does from one state to another in the same country then in theory someone sending a package from China should be paying more than someone sending locally.

[dannyf]

"Order is packaged by staff that have to be paid at least minimum wage and have all sorts of employment protections such as working conditions and paid sick leave. "

This goes back to a question I asked a while ago: whose fault is it that you live in a high cost country?

Is it the Chinese fault that our governments mandated minimum salaries, labor protection laws, or environmental niceties?

If you follow your logic, you have to conclude that it is our governments who regulated jobs out of our own people.

Alternatively, you could also argue that losing such jobs is just a price to pay for those niceties.

Apparently such niceties are must haves when you have the income to afford them. Some perverseness in offering them to those who cannot afford them.

[all_repair]

I agree that RadioShack is a bad example but I think some people are missing the point somewhat.
.....
Say you want an item that costs $1 from a Chinese factory.....

In the volume game, once you have the base cost covered, the cost for an additional piece is negligible.  The bulk shipper is buying up the slack at the minimum price from the Postal system.  Amazon is doing likewise too in shipping out of USA.  Due to even higher volume that Amazon can bring, they are able to enjoy higher priority than normal  drop-shippers.    The RS thing and the class 3 rate are irrelevant.  Volume and cost of business are.   When you have a production line running, and when the fixed cost is there, the game is to fully load up the line to the maz (= the postman instead of carrying 1 box to 1 street at 1 time, he should be carrying 100 boxes to 1 street a 1 time).  In this game, there is no subsidy from developed countries to less developed countries.  If Amazon was allowed to be more agreesive, and further subsidizing the expansion to Singapore like they did in the first year, they would be building up a warehouse here and doing predictive stocking up, and predictive distribution ahead of sale by now.   But last 2 years, Amazon was stopped by the shareholders.

[strangersound]

Interesting look at an issue most of us would not even have known existed. I agree with others that many factors played into the demise of Radio Shack, and they just make a good example to highlight the shipping cost issue. But this is a serious issue, especially when you consider that long story short, you have taxpayers subsidizing companies abroad while hurting their home business and economies.
This is hardly logical, except when you consider that the bigger picture here is trying to level the playing field in the world economy. From a global trade standpoint and trying to bring "3rd world" economies into a competitive position, it makes sense. But it tends to stink to the high hilt when you consider this is exactly the type of thing that goes on with relatively no input from the taxpayers who subsidize it and the companies that suffer from it. Amazon gets appropriate criticism for a lot of things, but if they think it's an issue, I'm inclined to listen, they're a smart company.

Radio Shack killed themselves, though. They were in the most advantaged position to ride into the information age, the maker scene, and all the technologically driven commerce we see today, but they diddled around with misguided business models and made themselves irrelevant by not staying ahead of the curve. They should have been leading the charge, but it seems like their management just was out to lunch.

Like others have noted, you can still make a choice on your buying habits. As consumers, and the primary beneficiaries of our respective economies (good or bad results), we have to be smart in our buying habits. Cheaper isn't always better, especially when you look at what that mentality can lead to in the long term: WalMart, Lowes, etc. If you are in a bigger city, or a medium city, you still have choices. But in small town America, like where I'm at, Walmart, Lowes, etc is all there is. You're forced to use these retailers because there isn't any competitors. This is the reality for a lot of people. A lot people say "Just don't give them your business.", and that's fine if you live in an area that has other options, but I challenge anybody to come here to this small town and the millions just like it, and show me an alternative. Walmart used to be all about "Made in America", but they flipped the script and now the majority of that store is filled with products from China. And then you have half their workforce on some form of public assistance. And God only knows what kind of human rights or labor issues we're directly supporting by buying all these Chinese goods. Bottom line is we have to start being a lot more educated as consumers and start leveraging our power in the marketplace. It's ultimately up to the consumer what we will tolerate. As long as we keep acting in a short sighted manner and remaining ignorant about the bigger picture, we will continue to get manipulated and contribute to all sorts of issues that are not in anybody's best interests in the long term.

And Radio Shack is also a good example of consumers responding appropriately. Radio Shack had it's head up it's ass for far too long and people took their business elsewhere. And I was a Rat Shack fan for years, but they lost me when they went through all those silly phases as "battery store" or "phone store" or whatever marketing failure they were on at the time. They drifted away from their core model, and in my opinion, that was the primary reason they should have been a leader on today's electronics/information market. And even Best Buy and that sort of chain...where the heck was Radio Shack during that whole boom? Like they could have gone from small shop to big box without much effort, but again it seems management was out to lunch. Although, I seem to recall they did try an entry into that segment of the market, but I don't remember what it was called. --- I looked it up...Incredible Universe. I actually went to a grand opening. From what I read, it seems like their overall vision was a bit grandiose and couldn't compete with Best Buy and such, which didn't try to turn their stores into some retail theme park mix. The place where it was located is now a Home Depot. Go figure.

None the less, good video. Educational and informative. 

[zapta]

If you didn't have that system, it would be cost prohibitive for someone in a poorer country to send a parcel to a richer country.

That's seems as a reasonable consequence for being poor.

[mathsquid]

I think that saying that anything "killed" Radio Shack is off-base.  RS is still there online, and still has tons of stores.  The ones near me seem no different than they were before they filed for bankruptcy.

[Tandy]

I think that saying that anything "killed" Radio Shack is off-base.  RS is still there online, and still has tons of stores.  The ones near me seem no different than they were before they filed for bankruptcy.

RadioShack Corporation is bankrupt, there are still stores that carry the name RadioShack but they are run by an entirely new company called General Wierelss. General Wireless bought the trademarks and a number of store leases from the bankrupt RadioShack Corporation and continues to trade as RadioShack. They left many suppliers with $ millions unpaid debts. The new company sells a similar range of products but that is new investment, the old corporation is just going through the legal process of dying.

[dannyf]

"That's seems as a reasonable consequence for being poor."

Not an unreasonable position to take.

And that's my point earlier: we can all debate whether that's the right or fair approach tobhavebthe rich subsidize the poor. It happens that the folks at the you decided on a different path - they prioritized global access to postal services more so than the monetary aspects of things.

Again, you don't have to agree that it is the right thing to do but it is not that hard to see how others might have taken that approach.

[@rt]

Video probably had something to do with killing Radio Shack as well

[rdl]

I wonder how many of those small packages from China are delivered every year by the USPS. The estimated loss of $1 per package comes directly out of the pockets of American tax payers. I wonder what percentage of American tax payers actually buy stuff from China that's sent by mail.

Video probably had something to do with killing Radio Shack as well

Not really. At least I don't think so. There's no doubt that use of the Radio Shack name did grab some attention though.

If you didn't have that system, it would be cost prohibitive for someone in a poorer country to send a parcel to a richer country.

That's seems as a reasonable consequence for being poor.

I agree with the noble cause of supporting poor countries. However, in this case it's more like the two countries with the largest GDPs in the World supporting number three.


edit: GDP not economy. Note that the EU is considered as a single entity/country. While, as the article states, "GDP is generally considered a poor figure for the purpose of making comparisons", it is something to keep in mind.

[RGB255_0_0]

I agree with the noble cause of supporting poor countries. However, in this case it's more like the two largest economies in the World supporting number three.

You might want to change that statement.

[dannyf]

"The estimated loss of $1 per package comes directly out of the pockets of American tax payers. "

Someone mentioned this earlier but didn't use the exact term: marginal cost. Google that up.

Essentially, it can be good business to lose money.

Also, there is the concept of "social warefare".

[rdl]

I agree with the noble cause of supporting poor countries. However, in this case it's more like the two largest economies in the World supporting number three.

You might want to change that statement.

I agree.

[rdl]

...
Someone mentioned this earlier but didn't use the exact term: marginal cost. Google that up.

Essentially, it can be good business to lose money.

Also, there is the concept of "social warefare".

That's what I was wondering. Is this postage cost difference really enough to worry about? I'm sure actual numbers exist somewhere.

[dannyf]

The marginal or incremental cost of delivering a piece of parcel is likely very low, once you have the infrastructure set up. That's why this is a scale business in that everyone wants to be bigger and bigger so you can spread the same fixed cost over more deliveries. Very much like the airline business where the cost to carry a passenger-mile is less than ten cents.

I don't know what that 1usd figure is but ibwoukd think it is far high than the marginal cost. Let's say it is 50cents. If the postal service gets at least 51 cents for that job, it makes good business sense to have that business, even through on a fully loaded basis it is losing money on that parcel.

[NottheDan]

Video probably had something to do with killing Radio Shack as well

Not really. At least I don't think so. There's no doubt that use of the Radio Shack name did grab some attention though.

He was making a joke.

[System Error Message]

to be more specific i missed the old radioshack where things were really cheap. The new one seems pricey.

[N2IXK]

to be more specific i missed the old radioshack where things were really cheap. The new one seems pricey.

When was Radio Shack EVER a cheap source for anything?  At least for components, they were always the most expensive place to get parts. Charging $1.99 for a 555 timer chip that you could get for $0.25 from a "real" distributor.  They were the go-to place when you needed a jellybean part RIGHT NOW, and didn't care about paying the huge markup, but you could always do better on price from just about anyone else....

[dannyf]

"When was Radio Shack EVER a cheap source for anything? "

For decades until the late 1980s and early 1990s. They started their life as a catelog company and then bnm store on fancy electronics.

There were lots of deals to be had then.

They basically lost its reasons to exist.