Radio Shack Bankrupcy

[radiomog]

I agree with those that mentioned several bad decisions.

Anyone remember Tech America?

they had a big store in Denver, always lots of traffic going on in that store.  When they pulled the plug, we were all surprised.

I went to proto a board, needed an 74HCxxx.  RS didn't have one and actually the cheapest one I could find was on ebay, delivered, FROM RS!... don't know what they're doing though.. it still hasn't arrived.

I was in an actual RS store the other day (as mentioned), their selection of stuff is dwindling, need help?  hahaha

joke has always been.... 

walk into a RS and the employee says "welcome to radio shack"

reply is "I doubt it, but I dare ya to try"

It's kinda like Sheldon at the computer store:
http://youtu.be/gORmiX-5PWU?t=1m6s

[Richard Crowley]

Radio Shack has been rather schizophrenic for most of its history. Neither fish nor fowl. Not really a proper electronics vendor nor a decent consumer electronics shop. It seems like the management has continually been tweaking the balance between the two and never finding the right balance. Perhaps because it doesn't exist and it is a losing battle. Bankruptcy would seem to prove that it was an impossible task.

Over the years they have tried all sorts of stunts, some of which I found really annoying.  They went through the phase where they wouldn't sell you anything unless you revealed your name or address or phone (or some kind of identity), I believe mostly for the purposes of demographic analysis and direct-mail marketing, but I found it really annoying, nevertheless.

And then there seemed to be a phase where the "clerks" seemed to hover around the front door and "pounce" on customers as they came in. They asked (presumably with good intentions) whether they could "help" you.  But I was usually in search of something pretty obscure or esoteric (from their POV) and if I told them I needed an inverted phone plug or a DPDT switch or something, you could see their eyes glaze over.  So I took to almost being rude to them to get them off my tail. If they asked if they could help, my typical response would be "probably not".

But then, to add insult to injury, when I DID find the component I wanted to buy, when I went to the cash register, there was nobody there to take my money because they were all hanging around the door (or fawning over some girl looking for a cell phone or something).  More than a few times I had to raise my voice and ask if there was anyone ready to take my money.  But both of those practices seem to have been discontinued in the last few years. Perhaps because they have such thin staffing, they can't do that anymore.

[justanothercanuck]

Yup, it's a sad one. On the other hand I'm pleased they where around when I needed them. It's another ball game now.

I wonder if the brand will be taken over by another company? Be kinda neat if a company already in the online market, (hobby electronics) picked it up.

Well, I have no problem with veering this off-topic, as Radio-Shack has been utterly despisable (in Canada at least) for all my life and I'll be glad to see them go.

For what it's worth, Radio Shack has been gone from Canada for quite some time.  Circuit City bought them out, rebranded the store as "The Source by Circruit City", then went bankrupt themselves.  What remains is nothing like what Radio Shack was commonly touted as.  Even when Circuit City was running the show, they were nothing more than a gizmo store, similar to Best Buy, but severely reduced in size.  You're lucky if you can find capacitors or resistors in most Radio Shack stores these days.  I think the last time I went into one, I was looking for replacement speaker wire.  Luckily they still had a few spools sitting on a shelf. 

[dannyf]

Over the years they have tried all sorts of stunts

They had to try because their initial market went away and they had to find a new way forward.

It is nothing short of a miracle that Radioshack stayed in business this long.

[Galenbo]

They stop'd doing that because the market went away, the customers went away. The business model simply became out-dated -> selling parts / kits to hobbyist is no longer a valid business for a company as large as radioshack.

So today they are primarily a cell phone / service retailer.

That is simply not true. In Europe, the German chain Conrad is doing exactly what RS was doing back in the heyday, and is making a decent profit.

http://en.wikipedia.org/wiki/Conrad_Electronic...

They are indeed a very successful company, and deliver good service.

[Stonent]

Tandy (the former company) had many failed business ventures after the 90s.  McDuff Electronics, Video Concepts, Computer City, Incredible Universe, all went out of business or got bought by another company. 

McDuff was a appliance / television store.  Video Concepts was pretty cool, they were the only store I remember in the US that not only sold Amiga computers but had them where you could try them out. 

Computer City was Tandy's venture into selling other brands of computers, they also sold a brand called Victor that looked exactly like the Tandy x86 PCs sold at Radio Shack. They got bought up by CompUSA.

Incredible Universe was a place I worked for a little while.  They had lots of sections in the store that were like stores within a store.  One area was exactly like a mini-Radio Shack.  When it was announced they were being sold to Fry's Electronics, Jim, the manager who was second in charge of the store and a former McDuff store manager had this to say " The problem with Tandy is they only know how to run Radio Shacks, they don't know how to run stores that directly compete with other stores.  They only know how to sell lots of small junk with ridiculous markup."

Radio Shack was my favorite store as a kid.  Not Toys-R-Us like normal kids.  I used to religiously go there and get my free batteries each month.  I loved the  "Assorted xxxx" packages they had for $1.99 that had LEDs, capacitors, and other stuff.  I had 2 Forest Mimms books, a 50-in-One electronics lab, 60-in-one electronics lab, and eventually a 200-in-One electronics lab and later a 200 Channel scanner which I used to listen to peoples analog cell phone calls on.  (Before the FCC restricted that band from scanners)  I remember hearing bookmakers taking bets in one particular frequency band.  I just stayed in that area and heard phone call after phone call of people betting.  I used to listen to the 2 meter guys talk back and forth and one time a guy gave out his phone number and I quickly rang it just for fun and heard him say on the radio "Well I guess we're not the only one's in on this conversation"

Tandy had a clearance / surplus store in Fort Worth that once a month they had a big sale and outside swap meet (or car boot sale as some of you loyalists might call it) where all the local hams would sell stuff.

My first 3 computers were all Tandy.
When I was around 5 years old.  My dad picked up an MC-10 for $20 with the 16K expansion pack that was on clearance.  I learned BASIC on that computer. It had a 6803 CPU.

A few years later I got a Color Computer 2 (6809E), an FD-502 floppy drive and a DMP-106 serial printer.  When we got the disk drive, they said we could have any disk software we wanted for free so I stocked up on all the tan boxed Tandy programs they had like Factory, Bagasaurus, and many others.  I also had the Editor-Assembler, and the Audio Spectrum analyzer, and Dungeons of Daggorath.

Eventually I graduated to the Tandy 1000HX and learned MS-DOS. 

After that, I moved away from Tandy.  Unfortunately, places like Sears and Best Buy had more computer for less money.

So I guess I would have to say that Radio Shack played a large part in my life as a kid and adulthood.  I'm about 90% sure if I hadn't have gotten my first computer there at age 5 I would have became an electrical engineer instead either way, Radio Shack had a lot to do with it.

[Stonent]

Tandy (the former company) had many failed business ventures after the 90s.  McDuff Electronics, Video Concepts, Computer City, Incredible Universe, all went out of business or got bought by another company. 

There's quite a difference between going bust and getting bought out. One's bad and the other is good (for the owners).

I liked many of the products I bought from Tandy. They proved to be exceptionally reliable. I still use some many years later. One thing I liked was that they offered some things that were not the same as you would get at other stores. They offered an extra choice.

Well getting bought out was usually the way that Tandy would shed itself of divisions that were losing money.
The Incredible Universe store that I used to work at was a former McDuff Electronics location attached to a 500,000 Sq.Ft. warehouse.

When Fry's bought that location, they cut the warehouse in half, put up a wall and sold the other half of it to someone else.
I had to participate in an inventory that was done by Fry's before the sale went through and we found at one point 50 boxes or so of 387SX math Co-Processors.  The Fry's guy gave them a value of 0.  We found unopened Atari 2600 games (90's re-issues) that they sold to employees for $0.25 each.

Incredible Universe's slogan was "If it's not in the Universe, it doesn't exist!" as they tried to carry as many brands of everything as possible.  The store was so big it was like an attraction.  People would go there and walk around for hours.  They had a small food court, a karaoke booth were you could have your own laserdisc of you singing made, a huge stage in the middle with a jumbo-tron style TV system, a really advanced wireless system  (for the early 90s) with Grid pads (later Telxon) where your items were all ordered as you walked around and would be waiting for you when you got ready to leave. 

One problem is people would go there and walk around for hours, enjoy the attractions and vendor displays, have lunch or a snack and leave without buying any real merchandise.

[dannyf]

they tried to carry as many brands of everything as possible.

A poor and expensive business model.

[Tandy]

While the exact date is unknown it is almost certain that RadioShack will enter bankruptcy in the next few weeks. In October, RadioShack entered into an agreement with a group of creditors to restructure part of its debt. As part of that agreement, hedge fund Standard General replaced GE Capital as the lead lender. Attached to this loan agreement was a clause that required RadioShack to show $100m in cash and/or available credit by the 15th of January 2015. They failed to meet that deadline.

As a former employee of Tandy RadioShack and now CEO of Tandy Corporation (UK) I have been closely following the company and my somewhat long analysis of the company is below.

As most people will already know; the Fort Worth, Texas Tandy Corporation (known as RadioShack Corporation from 2000 onward), started out as a Leather company with Dave L Tandy in 1919. His son Charles Tandy bought the then small (9 store) Radio Shack chain in 1963 and it expanded rapidly into a huge network of electronics stores. RadioShack tended to open small stores that allowed it to rapidly build a very widespread local presence. In the 1960s electronics was still relatively new, the consumer, DIY repairer and hobbyist were often one and the same. You didn't tend to own electronic equipment unless you were an early adopter who often had some understanding of how it worked. People used to go into Radio Shack with the tubes from their radio for example to get them tested and replaced. The early expansion of Tandy RadioShack coincided with that early interest in electronics, long before we had all the entertainment we could ever want piped into our homes via cable TV or the internet the primary form of entertainment was pursuing a hobby. People would spend hours on all sorts of activities, arts, crafts, and collecting things for entertainment. Electronics was once a popular hobby as you could build something exciting, perhaps a radio that would pick up stations that nobody else could get. RadioShack also managed to do well by being early in the market for both CB Radio and home computers in the 1970s & 80s.

With hindsight it can be seen that a number of factors have caused the demise of RadioShack but the management failed to notice them or made the wrong choices along the way. Perhaps the first problem is that the success of RadioShack was primarily lead by Charles Tandy who was a strong character taking a very active role in the direction of the company. Charles died in November 1978 at the age of 60 and as is often the case his successors didn’t like some of the business choices made by Charles Tandy and saw an opportunity to put their own stamp on the company. In the decade following his death most of the senior executives who had been loyal to Charles and followed his vision for the company retired and new ‘fresh’ ideas began to replace the established business model.

One of the first changes made was to change focus from their own in-house branded products to global brands. For many years customers would ask why and sometimes complain that their stores did not sell popular brands that they were familiar with. Management started to listen to them and gradually global brands such as Panasonic and Philips started appearing in the stores. Usually it is a good thing to listen to your customer feedback but sometimes they can lead you in the wrong direction. To be fair to the management of the time the market was changing and powerful global brands were beginning to dominate the electronics market making it increasingly difficult to compete with them. It must therefore have seemed the most sensible thing to try and take advantage of the popularity of the major brands.

I believe however this was a mistake as they hadn’t taken into account that the competition in major brand goods is fierce. The sale price is dictated by the market while the cost price is set by the brand manufacturer resulting in smaller profit margins for the retailer. For every private label product sold at least 5 major brand products would need to be sold to create the same profit for the store.

The trouble is during the 90s they failed to adapt with the changing market for consumer electronics. The company was increasingly in direct competition with other established consumer electronics retailers. The small format that enabled them to open so many stores proved to be a disadvantage as other retailers were beginning to establish a number of out-of-town super stores offering a huge range of choice. The typical small RadioShack store format could not possibly provide a product range to compete with superstores and would often have insufficient space to store inventory. The 1980s also saw the beginning of a fall in the number of electronics hobbyists and the rise of low cost disposable electronic equipment that people just didn’t bother repairing. This resulted in a decline in demand for electronic components further eroding the profitability of the business.

RadioShack realised that they couldn’t offer a full range of products in the small format stores and decided to bet the future on mobile phones. The problem is that once again they were at the mercy of others, having to sell mobile phones made by manufacturers such as Nokia and Motorola and contracts for the incumbent operators. RadioShack had bet the farm on the mobile market, most of the electronic components were removed form stores and a number of new stores were opened; almost exclusively selling phones and accessories in expensive locations such as shopping malls. What they failed to notice was that the carriers were increasingly adopting a direct business model that effectively squeezed them out of the market. They also failed to develop an early presence on the internet. In hindsight they should have gradually closed their smaller stores and consolidated them in to out-of-town electronics supermarkets and concentrated much more on creating a competitive on-line presence.

Ironically there has been a resurgence in interest in electronics in recent years but it is much different than it used to be. Today people want to hook together a couple of ready made modules and download code off the internet to get a project working. Today a microcontroller is used to flash an LED just because it is just the way it is now.

At least if RadioShack does not emerge from bankruptcy and closes there will still be Tandy in the UK.

[dannyf]

The trouble is during the 90s they failed to adapt with the changing market for consumer electronics.

spot on.

RadioShack had bet the farm on the mobile market,

Nothing wrong with that. The only thing I would criticize is that they bet on signing up customers (paid for churn), not on a cut of the customer revenues that they generated for the wireless carriers -> non-recurring revenues.

Because of that, they had to purchase phones and use the phones to draw in customers every year.

Too much work for too little money.

Ironically there has been a resurgence in interest in electronics in recent years but it is much different than it used to be.

That market (makers) is tiny and will not be able to sustain a business like radioshack.

[cosmicray]

At least if RadioShack does not emerge from bankruptcy and closes there will still be Tandy in the UK.

Thank you. That is an excellent recap, and from my own experience spot-on.

[Vgkid]

Im looking forward to this. I will stock up on transformers, and project boxes.

[Tandy]

That market (makers) is tiny and will not be able to sustain a business like radioshack.

You are absolutely right that the maker market is nowhere near big enough to sustain such a large cain of stores. I mentioned it because it is somewhat ironic that RadioShack is failing today when the interest in DIY electronics, something they were heavily involved in back in the day is now growing.

It is easy with benefit of hindsight to see what could or should have been done. They were right to decide to specialise in a particular area if they were to keep the small format stores, but mobile phones proved to be less profitable than they had hoped. I think perhaps the biggest error was sticking with mobile as their main focus for so long even while the networks were establishing their own local presence throughout the US. When your own suppliers are competing with you there is no way you can win.

[dannyf]

but mobile phones proved to be less profitable than they had hoped.

I think if you look at their financials, you will come to the conclusion that the phone market is what has sustained radioshack over the last 10 years or so -> the rest of their businesses essentially has a negative margin.

So I would argue that the strategy to focus on mobile is the right one; the execution is flawed: they should have focused on how to derive more of their economics from recurring revenues vs. one off (getting paid for signing up customers).

I hope people understand what's in the inventory,

[Mechanical Menace]

At least if RadioShack does not emerge from bankruptcy and closes there will still be Tandy in the UK.

I honestly thought Tandy had disappeared completely until reading that and searching. I'me very surprised to find out someone found the name worth buying.

[cosmicray]

It is easy with benefit of hindsight to see what could or should have been done. They were right to decide to specialise in a particular area if they were to keep the small format stores, but mobile phones proved to be less profitable than they had hoped. I think perhaps the biggest error was sticking with mobile as their main focus for so long even while the networks were establishing their own local presence throughout the US. When your own suppliers are competing with you there is no way you can win.

Mobile phones turned out to be a commodity item (from a customer perspective). You have a Radio Shack in the same strip mall with an AT&T or Verizon agent store, and down at the far end is the WalMart supercenter with their own phone kiosk. There are too many outlets, all trying to monetize the same product line.

[GreyWoolfe]

Im looking forward to this. I will stock up on transformers, and project boxes.

I have one about 8 miles away in the next town over.  It will be interesting to see what the prices will be.  I am sure that I will load up on anything useful.

[Tandy]

A number of RadioShack stores are already having 20-50% clearance events

http://www.nbc12.com/story/27904652/struggling-radioshack-turns-two-stores-to-clearance-stores

[Zero999]

At least if RadioShack does not emerge from bankruptcy and closes there will still be Tandy in the UK.

I honestly thought Tandy had disappeared completely until reading that and searching. I'me very surprised to find out someone found the name worth buying.

I thought Tandy completely disappeared from the UK.

Is it just the brand which has been purchased or the whole business?

[Tandy]

Is it just the brand which has been purchased or the whole business?

The short answer is that it is a bit complicated due to the way the original company was structured but it is mainly the brand that was purchased from RadioShack.

The somewhat longer answer is...

In 1973 Tandy Corporation expanded the RadioShack store format into Belgium and the UK, using the Tandy name. The UK stores were directly owned by the American Tandy Corporation (excluding independent dealerships). In 1986 The international part of the business was separated from the American parent company and the UK subsidiary was called InterTAN UK Ltd. The local assets and liabilities such as company owned vehicles, machinery, store leases, staff, and pension liabilities were transferred to the new subsidiary company. The American parent company retained the brand and all other intellectual property rights such as copyrights. This is how large international corporations like Starbucks operate today, the international subsidiaries pay royalties to the parent company for use of the brand and other intellectual property to reduce the tax paid in those countries. Essentially InterTAN UK operated like a large franchisee of Tandy Corporation USA.

Towards the end of the 1990s the Fort Worth Corporation was loosing interest in the international divisions as they were all either contributing little to the parent company or loosing money. Towards the end of 1999 an agreement was made to sell the assets of InterTAN UK to mobile phone retailer Carphone Warehouse who were primarily interested in obtaining the 200 or so store locations. Carphone warehouse were granted a licence to use the Tandy name during a 3 year transition period while the stores were converted to Carphone Warehouse outlets. Once the assets and staff that were being retained were transferred to the Carphone Warehouse company and all regulatory obligations met InterTAN UK Ltd was dissolved (closed). RadioShack Corporation retained the remaining assets and rights to trade as Tandy in the UK and Europe, keeping open the possibility of re-establishing a UK and/or European presence themselves or the option of granting a franchise at some future date.

While for the sake of completeness it would have been ideal if the InterTan UK Ltd company could have been purchased but it wasn't possible. Other than being the same legal entity that had been trading in the UK under licence from Tandy Corporation USA since 1986 it wouldn't have really added anything to the business. By 2011 RadioShack found itself in difficulties and realised that there could be no realistic prospect of new international growth opportunities other than by recruiting a franchisee. I entered into negotiations with Radio Shack to buy the remaining European assets including the UK and European Tandy brand, the purchase was completed at the end 2012.

We were offered a franchise opportunity so that we could remain directly linked with the Fort Worth corporation, but chose not to take that option. Perhaps the most obvious reason is the financial difficulties facing RadioShack meaning that being directly tied to them carries the risk of jeopardising our business if they should close. The other reason being the way RadioShack has concentrated on mobile and abandoning their own brands in favour of major brands. This didn't fit well with our idea for how we would like to develop the company in the UK. Independence means that we have the opportunity to steer the direction of Tandy away from the pitfalls of mass market consumer electronics and mobile phones and instead support hobbyists and create innovative new products that meet specific needs. While we were not obliged to take on the responsibilities of supporting legacy products we also maintain an archive of support materials helping people obtain manuals and spare parts. In fact we have found that Radio Shack have mostly abandoned their back catalogue of products and US customers who are unable to find the help they seek and are familiar with the link between Radio Shack and Tandy have come to us for assistance where we have gladly provided help where we can.

We have developed relationships with many of the same manufacturers that RadioShack use both today and in the past so that we can offer identical products to those sold by Tandy and RadioShack using the same catalogue numbers. As we are working at re-establishing Tandy in the UK and Europe we have a lot to do in building up the product range. Our product range is growing in two directions simultaneously, on the one hand we have a number of new products such as useful development modules from companies such as Adafruit. On the other we are re-introducing as many products from the Tandy back catalog as we can.

As you can see the answer to the question ‘what is the relationship between Tandy in the UK and the Tandy Corporation in the USA’ is a long one. Tandy Corporation Ltd is a company created as the official successor to the original UK subsidiary complete with original Tandy trademarks and other assets dating back to its formation in 1973 while being fully independent from what is now Radio Shack Corporation.

I don't want to hijack this thread about the RadioShack bankruptcy but I am happy to answer any questions people might have or feedback/suggestions about what we are doing perhaps in a new thread or via private messages so as to not take this thread too far of topic.

[Galenbo]

I remember a Tandy store in Belgium when I was young. Instead of electronics, they showed me what plastic is.
The shop looked like a christmas or birthday thing.

Later when I studied electronics, I heard older friends complain about how bad it became in the end. No parts, clueless sales people,...
We bought at Cotubex and Triac, ok at the time, but they also failed 15 years ago.

Strange those electronic companies refused to invent ebay or webshops themselves.
Same thing now. The shops I know refuse to (sell new DIY things and get margin by being inventive), hoping to keep their margin on old parts and products.

I order everything online now. The webpage is more intelligent than every shopsalesguy, It costs less and I don't have to go to those stinking cities to find a store.

[Vgkid]

Im looking forward to this. I will stock up on transformers, and project boxes.

I have one about 8 miles away in the next town over.  It will be interesting to see what the prices will be.  I am sure that I will load up on anything useful.

I have one that is 3mi away, and 2 more in a 15mi radius.

[mtdoc]

I hope they unload inventory locally before they close up and don't cart it away for some centralized auction.

I was in the Radio Shack in my town just a week ago and asked about any pending closure - they said they'd heard nothing. But that was before this deadline was missed.

[nctnico]

We have developed relationships with many of the same manufacturers that RadioShack use both today and in the past so that we can offer identical products to those sold by Tandy and RadioShack using the same catalogue numbers. As we are working at re-establishing Tandy in the UK and Europe we have a lot to do in building up the product range. Our product range is growing in two directions simultaneously, on the one hand we have a number of new products such as useful development modules from companies such as Adafruit. On the other we are re-introducing as many products from the Tandy back catalog as we can.

That's a bold move in an era where electronics shops are almost non-existent and Ebay is a treasure trove with any component you can think of at rock bottom prices. I think you'll have a hard time competing with Conrad from Germany and to a lesser extend Farnell (if you jump through a hoop they will sell to individuals).

[dannyf]

In fact we have found that ... US customers who are unable to find the help they seek and are familiar with the link between Radio Shack and Tandy have come to us for assistance where we have gladly provided help where we can.

I would be very surprised that

1) there are sufficient US customers who long for Radioshack parts; and
2) anyone in the UK can rely on that as a meaningful part of its business.