Can DIY & makers help Radio Shack out of its rut?

Jason learns about 3D printing

Jason learns about 3D printing

Apparently Radio Shack’s turnaround efforts will involve more than self-deprecating Super Bowl ads.

After airing one of the big game’s more well-received ads a couple days ago, news came today that Radio Shack is  considering shutting 500 or so stores in its 4,500 retail store network. The move comes on the heels of a major debt restructuring and continued declines in overall traffic and revenues for a store which, as it’s new ad campaign plainly points out, is the product of an earlier era.

And what is management’s strategy? According the Wall Street Journal, it’s to refocus the chain on being a “a destination for shoppers looking for entertainment gadgets, like headphones and smartphone cases.”

My feeling is that this is a tough business, and by simply being a destination site for electronics and entertainment gadgets in an era when consumers also have Apple stores, Target, Costco and Walmart, electronics and entertainment won’t nearly be enough of a differentiator for Radio Shack.

So what could be? One option is to focus on DIY and makers. As it turns out, the company is already thinking something along these lines, as one of their tag lines for their new ad campaign is: “D.I.Y. has evolved. It’s time for D.I.T. (do it together)”.

Of course, there aren’t enough DIYers and makers out there yet to save a 4,000 store chain. In reality, they’ll need to continue to sell a whole lotta tablets and smartphones for some time. That said, there is certainly a void among national brick and mortar retailers when it comes to DIY and maker tech. Sure, you can find makerspaces for that, but long term there is an opportunity for some creative retailer in these markets.

The trick for Radio Shack will be balancing the current volume business of selling tablets, smartphones and Beats headphones with these newer, emerging categories until they become enough of a revenue line on their own to sustain the retailer outside of the more competitive electronics markets. Consumer 3D printing is a few years off from being a significant volume business, while other categories like robotics and drones  are also still not enough of a mass market today.

The other trick is battling online when it comes to these technologies. My feeling is that brick and mortar will actually have an advantage in some of these newer technologies as consumers learn about them over the next decade. 3D printing and maker tech isn’t nearly as consumer friendly as other computer technologies are today.

More than one observer has said technologies like 3D printing are in the same early stage today as home computing was in the 80s, which was not too coincidentally the last time Radio Shack was on the cusp of new technology revolution (remember the TRS-80?).

And now it looks like their new effort to modernize from being “that 80′s store” is one prong of a strategy to return the company to the success it had in that era.

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Michael Wolf

Chief Analyst NextMarket Insights

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