I'm feeling a little nostalgic today as I read about what looks like the imminent demise of RadioShack, at least as we currently know it. An old ubiquitous cartoon image popped into my head. You know the one of the forlorn looking guy wearing a sandwich board with the words “The end is nigh” on it, accompanied by a witty quip or an additional graphical element that made it funny?
The woeful financial state of RadioShack has been a long time coming, but it raised a couple of existential questions for me. My first question is “Will the stores be missed?” My second question is “How could they not see this coming?”
My take on the first question is “Probably not.” The last time I was in a RadioShack store was to buy a backup battery for our alarm system, and that was a couple of years ago. At that time, it was the perfect and logical place to go for obscure batteries, bulbs, antennas, coax and phone connectors, and odds and ends like alligator clips. In recent years, however, the stores have filled with toys, TVs, and mobile phones, but that strategy seems to have failed. All it did was push the old reliable merchandise into the back of the store.
It seems as though the financial press has pretty much written off the company. However, it is illuminating to look back on RadioShack's history and ponder my second question.
The first RadioShack opened in Boston in 1921. This was the golden age for the radio tube business, and a number of companies founded in that year still exist today, like Avnet, for example.
You may remember the Tandy brand name being associated with RadioShack. The Tandy Corporation was a family-owned leather goods company that was founded in 1919 and, over time, acquired a number of craft retail stores, including RadioShack in 1963. (In 2000, the Tandy Corporation name was dropped, and the entity became the RadioShack Corporation.) The 1960s and 1970s were probably the zenith (no pun intended) of the brand, with huge sales of audio amplifiers, CB radios, and the seminal TRS80 computer. (Let's not forget that Bill Gates himself wrote the BASIC operating system for the TRS80.)
By the 1980s, the company had pioneered the radio hobbyist era, CBs, stereos, and early computers, but — in retrospect — it's clear that the company made some fatal errors in strategy from which it could not recover. There was a time when the company looked like it was destined to become a force in the mobile phone business, but competing with the wireless carriers proved impossible. In hindsight, the smart move would have been for RadioShack to buy spectrum and become a carrier itself, but that would have been a radical — almost unthinkable — move at a time when the phone companies were buying the cellular licenses. Selling mobile phones on slim margins with no recurring revenue stream was not a path to success.
Another logical path to survival for RadioShack would have been getting into the catalogue business and then taking this online in the 1990s. This is the storied path that Digi-Key took, and Digi-Key is now one of the most revered electronics brands among working EEs in North America. In the 1970s, when Digi-Key launched, RadioShack had the resources and logistics to dominate the market, but it chose not to do so.
For the rest of the story, see EBN sister site EETimes.