How RadioShack Could Become Convenience Store for Electronics
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RadioShack(NEW YORK) — Now that a bankruptcy court has approved a hedge fund’s takeover of RadioShack, the company may be rebranding itself as a sort of convenience store for consumer electronics.
With the blessing from a court in Delaware last week, Standard General is keeping open about 1,740 of RadioShack’s 4,000 stores, most of which will be co-branded with Sprint. The new strategy is described as a “bodega for batteries,” according to the Washington Post, including what the newspaper says is some of the company’s biggest sellers: hearing aid batteries.
Anthony Chukumba, a senior research analyst with BB&T Capital Markets who no longer covers RadioShack, said he has doubts about the new strategy that are akin to the doubts he had when RadioShack was a publicly-traded company.
“The idea of a convenience store for consumer electronics is interesting, or different, I guess, but ultimately the ultimate convenience store is the Internet,” Chukumba said. “What’s more convenient than not leaving your couch?”
And besides that RadioShack’s prices were not competitive with those of the Internet, there are other reasons Chukumba said he is “not optimistic.”
First, RadioShack is still operating in a competitive industry landscape, and even more than in the past. Chukumba points to “a reinvigorated” Best Buy and aggressive Amazon, Walmart and Target plus other online competition.
“The parts of the business that you think are unsexy are the ones that are doing great,” Soohyung Kim, Standard General’s managing partner, told the New York Times. “And the parts that you’d think are cool, the smartphones and the prime [retail] locations — horrendous.”
Standard General and RadioShack did not respond to requests for comment.
“With Standard General running and tweaking it, the competitive dynamics haven’t changed and certainly haven’t gotten better,” Chukumba said.
Second, RadioShack’s business had effectively declined because of the smartphone.
“People don’t buy as many digital cameras or MP3 devices, and that hasn’t changed either,” he said.
Chukumba said RadioShack’s one potential “saving grace” is that it will be a single phone carrier with Sprint, as opposed to supporting AT&T and Verizon.
“Sprint needs retail distribution and Sprint clearly has a very strong balance sheet, so they can afford to invest in these stores,” he said.
With the investment from Sprint, RadioShack will have more marketing support.
But while he said that’s beneficial, he said he’s still “not terribly optimistic that this strategy is going to yield significantly different results than the prior strategy.”
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