February 6, 2015
RadioShack to sell stores after filing for bankruptcy
The worst kept secret in retailing is no longer a secret. RadioShack has filed for Chapter 11 bankruptcy protection and plans to sell up to 2,400 stores as part of its reorganization plan.
General Wireless, a subsidiary of Standard General, RadioShack’s largest shareholder has agreed to buy 1,500 of the 2,400 locations being put on the block. Sprint plans to open "store-within-a-store" operations in up to 1,750 of the locations. Sprint and General Wireless will open co-branded stores that will exclusively sell mobile devices from Sprint along with RadioShack products, services and accessories.
"We’ve proven that our products and new offers drive traffic to stores, and this agreement would allow Sprint to grow branded distribution quickly and cost-effectively in prime locations," said Sprint CEO Marcelo Claure, in a statement. "Sprint and RadioShack expect to benefit from operational efficiencies and by cross-marketing to each other’s customers."
RadioShack currently has 4,000 company-owned stores in the U.S. and 1,000 dealer franchise locations in 25 countries operated by its Mexican subsidiary. The company’s Asian operations are not part of the Chapter 11 filing.
Joe Magnacca, chief executive officer of RadioShack, said in a statement, "These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders."
- RadioShack Reaches Asset Purchase Agreement with Affiliate of Standard General to Acqiure up to 2,400 Stores – RadioShack Corporation
- Sprint Signs Agreement with RadioShack’s Lender to Expand Branded Stores – Sprint
- Fort Worth-based RadioShack powers down after comeback efforts fail – The Dallas Morning News
- Retailer to sell 2,400 stores – The Associated Press/Albany Times-Union
BrainTrust
Recent Discussions
Discussion Questions
What do you expect will happen as RadioShack reorganizes and eventually emerges from bankruptcy protection? Will the company be more likely to succeed as a much smaller retail operation?
Poll
I’m not even sure RadioShack will emerge from Chapter 11.
It’s like some type of Greek tragedy that Amazon may buy several of the locations as well. I predict this is a temporary blip for RadioShack, I don’t see how they would become stronger in consumers’ minds after bankruptcy.
A recent article about RadioShack pointed out that it is vastly over-stored, citing an example of six stores in a five-mile radius in one of its markets. Leaving up to 2400 out of 4000 locations in place doesn’t address that problem by itself.
The bigger question is whether a Sprint “inpost” is going to draw traffic effectively enough to salvage the brand. (And Sprint itself is not among the strongest cellular brands anyway.) Once a customer has finished buying or servicing a cell phone, is there anything else inside RadioShack that he or she will want to buy?
RadioShack’s perceived brand irrelevance to most shoppers isn’t going to be solved overnight by this new direction, if it can be fixed at all.
Sprint is also owned by Softbank who is extremely skilled at small-format technology retailing in Japan. I expect Softbank to be highly underestimated as a key player in the transformation of small-format technology retailing.
RadioShack will not survive unless it completely reinvents itself. Recent news indicates that they will be selling half of their real estate holdings, 2400 stores, to generate cash. Look for these locations to become wireless provider (Sprint) storefronts. RadioShack apparently was as blinded and mismanaged as Kodak as far as foresight and reality. Changing a logo and making a PR statement won’t solve your problems. Were they not paying attention to what has been happening in society for the past 10 years!? Maybe if they changed their name to Pandora Shack?
Sad to say, but they will all be phone stores and/or completely shifted stores. They just were not able to keep up with newer and innovative technology and their customers out-grew the need for their electronic merchandise.
I think RadioShack is done. The world has passed them by, with online giants taking much of their business, and the product selection has been lousy for years. I feel bad for the employees, but the best ones will always find work. Some of their prime locations will be filled for sure, the others will stay idle for some time to come.
I have been a fan and have worked with RadioShack for many years. It saddens me to read this, although it is not surprising after so many years of financial problems. My concern is that this has been an ongoing issue for so long, and the stores remain mostly empty. I do not see the inclusion of Sprint, who they have worked with for many years, doing much more than keeping the lights on until the end of another era. Sad ending to a retail icon’s life.
RadioShack is very fortunate to have some legitimate buyers for its stores and properties. However, RadioShack doesn’t own all of its store locations and I’m not overly clear on what happens to all the franchisees. RadioShack is a classic example of a company that failed to make smart adjustments and modifications in its own strategy over the years as times changed. Ironically, I recently visited a RadioShack to purchase a “radio” and they didn’t have one! Oh well!
You know what I would love? A store that I could go to that would stock a broad selection of accessories for my electronic devices. Cases, brackets, speakers, cords, external batteries, solar chargers: I can never get enough of this stuff. Everyone carries it but no one does it well. Big box stores have horrible selections and are often out of stock. I hate to order these items online because I want to see, feel and touch them first. I am pretty unlikely to showroom a retailer because I don’t want to wait a week to save 10 percent, usually only a few dollars per item. I think RadioShack missed the boat.
It’s really a shame. RadioShack served a distinctive need in the marketplace but they never understood that. If they had listened to some of the smart ideas by RetailWire contributors they wouldn’t be in this mess. Years ago I thought about buying a RadioShack store and doing it up right. Should have done it.
Since it does not appear that RadioShack will be the draw, unless they come up with some products that wow and separate them, I can not see them surviving.
If you read me often, you all know how much I have loved RadioShack. If they could have gone back to their roots, I think they could have found a niche. Unfortunately they only did that half-heartedly.
I guess they thought my ideas were only worth my two cents.
Fact: Chapter 11 does not provide any value for stockholders, only bondholders. For the last 10+ years, RadioShack has been trying to find a workable retail concept. They have yet to find one. A smaller company will only make the next filing for Chapter 22 (chapter 11 twice) easier. Everything in a RadioShack store can be purchased online. To become the wireless store is too little, too late.
They should keep doing what they’re doing: sell off the stores to the phone guys or to Amazon. Keeping them is a pretty hopeless proposition, IMO.
I agree with one of the readers: interested in seeing what Softbank can do with the small-format concept.
On their own, RadioShack was caught in a no-man’s land—even their traditional strength on electronic components/accessories can be served elsewhere these days. Our local Fry’s is a far more of a tech-geek’s destination. Only way for RS to reclaim something distinct in its space is to test the economics of a true specialty-electronics / guru store, and not one where staff hardly can tell difference between AM and FM signal. Even if there’s sufficient demand in the market for this, it would require a drastic reduction in number of stores and concentration in high density metro areas.
It will become, first RadioShack/T-Mobile, then T-Mobile/Radio Shack, and finally T-Mobile (just what the world needs: more cell phone stores!). The rest will fade away into other names and uses.
Our final note on it—sometime in the next few years when the name disappears forever—will be the obligatory “could anything have been done to save them or was it an outdated concept?” question.
(I’ll answer that question preemptively: they could have become more of a general hobby store…but nothing would have been certain.)
Who says they will emerge from bankruptcy? This isn’t 1995. If they do get another chance, they need a CEO with a merchant’s vision and the ability to test, decide on, and roll out changes, given a restricted budget and short time frame.
The last two years have been an embarrassment to the RadioShack legacy. They are a “convenience store” and need to think like a convenience store retailer.
The electronics market is extremely crowded these days. In order to reinvent itself, RadioShack will have to position itself as unique, offering value that no other retailer can.
Another issue holding the retailer back is pricing. Amazon, Walmart and others have had super competitive pricing on electronics. In order to be considered, RadioShack will have to have similar prices or add value some other way.
I’m definitely interested to see if Amazon ends up buying some of the stores because it needs to be able to show its Echo/Fire phone, etc, to boost sales. It could be a win for both retailers.
Honestly… they need to make some massive changes to management at the top level. Changes that should have happened a decade ago.
RadioShack is dead. They have become irrelevant and the brand is so weak it’s not salvageable.
Nothing new will happen due to the reduction in the number of stores. The number of stores has never been the problem. The problem has been a reason for being: what purpose does RadioShack serve? If RadioShack would identify a valid purpose and advertise that it might have a chance. No one is going to make a trip to RadioShack so they can pay twice grocery store prices for batteries. Find something people need that requires some level of expertise and hang your hat on it. Why not buy the Harmony remote control business for instance, or concentrate on sound systems for televisions? Just think how many places Apple doesn’t have stores—fill that need! Honestly, nothing will change for RadioShack unless they find a reason for being.
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I’m not even sure RadioShack will emerge from Chapter 11.
It’s like some type of Greek tragedy that Amazon may buy several of the locations as well. I predict this is a temporary blip for RadioShack, I don’t see how they would become stronger in consumers’ minds after bankruptcy.
A recent article about RadioShack pointed out that it is vastly over-stored, citing an example of six stores in a five-mile radius in one of its markets. Leaving up to 2400 out of 4000 locations in place doesn’t address that problem by itself.
The bigger question is whether a Sprint “inpost” is going to draw traffic effectively enough to salvage the brand. (And Sprint itself is not among the strongest cellular brands anyway.) Once a customer has finished buying or servicing a cell phone, is there anything else inside RadioShack that he or she will want to buy?
RadioShack’s perceived brand irrelevance to most shoppers isn’t going to be solved overnight by this new direction, if it can be fixed at all.
Sprint is also owned by Softbank who is extremely skilled at small-format technology retailing in Japan. I expect Softbank to be highly underestimated as a key player in the transformation of small-format technology retailing.
RadioShack will not survive unless it completely reinvents itself. Recent news indicates that they will be selling half of their real estate holdings, 2400 stores, to generate cash. Look for these locations to become wireless provider (Sprint) storefronts. RadioShack apparently was as blinded and mismanaged as Kodak as far as foresight and reality. Changing a logo and making a PR statement won’t solve your problems. Were they not paying attention to what has been happening in society for the past 10 years!? Maybe if they changed their name to Pandora Shack?
Sad to say, but they will all be phone stores and/or completely shifted stores. They just were not able to keep up with newer and innovative technology and their customers out-grew the need for their electronic merchandise.
I think RadioShack is done. The world has passed them by, with online giants taking much of their business, and the product selection has been lousy for years. I feel bad for the employees, but the best ones will always find work. Some of their prime locations will be filled for sure, the others will stay idle for some time to come.
I have been a fan and have worked with RadioShack for many years. It saddens me to read this, although it is not surprising after so many years of financial problems. My concern is that this has been an ongoing issue for so long, and the stores remain mostly empty. I do not see the inclusion of Sprint, who they have worked with for many years, doing much more than keeping the lights on until the end of another era. Sad ending to a retail icon’s life.
RadioShack is very fortunate to have some legitimate buyers for its stores and properties. However, RadioShack doesn’t own all of its store locations and I’m not overly clear on what happens to all the franchisees. RadioShack is a classic example of a company that failed to make smart adjustments and modifications in its own strategy over the years as times changed. Ironically, I recently visited a RadioShack to purchase a “radio” and they didn’t have one! Oh well!
You know what I would love? A store that I could go to that would stock a broad selection of accessories for my electronic devices. Cases, brackets, speakers, cords, external batteries, solar chargers: I can never get enough of this stuff. Everyone carries it but no one does it well. Big box stores have horrible selections and are often out of stock. I hate to order these items online because I want to see, feel and touch them first. I am pretty unlikely to showroom a retailer because I don’t want to wait a week to save 10 percent, usually only a few dollars per item. I think RadioShack missed the boat.
It’s really a shame. RadioShack served a distinctive need in the marketplace but they never understood that. If they had listened to some of the smart ideas by RetailWire contributors they wouldn’t be in this mess. Years ago I thought about buying a RadioShack store and doing it up right. Should have done it.
Since it does not appear that RadioShack will be the draw, unless they come up with some products that wow and separate them, I can not see them surviving.
If you read me often, you all know how much I have loved RadioShack. If they could have gone back to their roots, I think they could have found a niche. Unfortunately they only did that half-heartedly.
I guess they thought my ideas were only worth my two cents.
Fact: Chapter 11 does not provide any value for stockholders, only bondholders. For the last 10+ years, RadioShack has been trying to find a workable retail concept. They have yet to find one. A smaller company will only make the next filing for Chapter 22 (chapter 11 twice) easier. Everything in a RadioShack store can be purchased online. To become the wireless store is too little, too late.
They should keep doing what they’re doing: sell off the stores to the phone guys or to Amazon. Keeping them is a pretty hopeless proposition, IMO.
I agree with one of the readers: interested in seeing what Softbank can do with the small-format concept.
On their own, RadioShack was caught in a no-man’s land—even their traditional strength on electronic components/accessories can be served elsewhere these days. Our local Fry’s is a far more of a tech-geek’s destination. Only way for RS to reclaim something distinct in its space is to test the economics of a true specialty-electronics / guru store, and not one where staff hardly can tell difference between AM and FM signal. Even if there’s sufficient demand in the market for this, it would require a drastic reduction in number of stores and concentration in high density metro areas.
It will become, first RadioShack/T-Mobile, then T-Mobile/Radio Shack, and finally T-Mobile (just what the world needs: more cell phone stores!). The rest will fade away into other names and uses.
Our final note on it—sometime in the next few years when the name disappears forever—will be the obligatory “could anything have been done to save them or was it an outdated concept?” question.
(I’ll answer that question preemptively: they could have become more of a general hobby store…but nothing would have been certain.)
Who says they will emerge from bankruptcy? This isn’t 1995. If they do get another chance, they need a CEO with a merchant’s vision and the ability to test, decide on, and roll out changes, given a restricted budget and short time frame.
The last two years have been an embarrassment to the RadioShack legacy. They are a “convenience store” and need to think like a convenience store retailer.
The electronics market is extremely crowded these days. In order to reinvent itself, RadioShack will have to position itself as unique, offering value that no other retailer can.
Another issue holding the retailer back is pricing. Amazon, Walmart and others have had super competitive pricing on electronics. In order to be considered, RadioShack will have to have similar prices or add value some other way.
I’m definitely interested to see if Amazon ends up buying some of the stores because it needs to be able to show its Echo/Fire phone, etc, to boost sales. It could be a win for both retailers.
Honestly… they need to make some massive changes to management at the top level. Changes that should have happened a decade ago.
RadioShack is dead. They have become irrelevant and the brand is so weak it’s not salvageable.
Nothing new will happen due to the reduction in the number of stores. The number of stores has never been the problem. The problem has been a reason for being: what purpose does RadioShack serve? If RadioShack would identify a valid purpose and advertise that it might have a chance. No one is going to make a trip to RadioShack so they can pay twice grocery store prices for batteries. Find something people need that requires some level of expertise and hang your hat on it. Why not buy the Harmony remote control business for instance, or concentrate on sound systems for televisions? Just think how many places Apple doesn’t have stores—fill that need! Honestly, nothing will change for RadioShack unless they find a reason for being.