RadioShack

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RadioShack Corporation
Type NYSE: RSH
Founded 1921
Headquarters Fort Worth, Texas, USA
Industry Retail
Products Electronics
Revenue $2.24b (2006)
Employees 37500+
Website www.RadioShack.com
The exterior of a typical free-standing RadioShack store.
The exterior of a typical free-standing RadioShack store.
The exterior of a RadioShack store in a shopping mall.
The exterior of a RadioShack store in a shopping mall.

RadioShack Corporation (formerly Tandy Corporation) (NYSE: RSH)  is a chain of electronics retail stores in the United States, as well as parts of North America, Europe, Central America, South America and Africa. As of 2003, it has more than 6,000 stores in the USA and reported net sales and operating revenues of $2.24 billion. RadioShack briefly reopened stores in Canada after losing its former subsidiary InterTAN (independent since 1986) to a purchase by Circuit City in 2004. However, in December 2006, RadioShack Canada announced it would be closing its nine corporate stores to focus on strengthening its core business in the US. The head office of RadioShack is located in Fort Worth, Texas.

RadioShack's current proprietary brands include Presidian (audio and video equipment), Accurian (audio equipment and video equipment), Optimus (formerly PA/DJ equipment, now digital imaging products), Gigaware (personal computer accessories), VoiceStar (wireless phone accessories, including leather cases, holsters and hands-free headsets), MyMusix (MP3 players), Kronus (tools), Enercell (batteries and power accessories), Mio (GPS) and recently Envision (HDTV's). Discontinued brands include Realistic (sound equipment), Micronta ("scientific" and educational equipment) and Archer (wiring and antennas). RadioShack is also famous for sponsoring the Samsung/RadioShack 500 NASCAR NEXTEL Cup Series race at Texas Motor Speedway.

Contents

[edit] History

[edit] The first 40 years

The company was started as Radio Shack in 1921 in Boston, Massachusetts, by two brothers, Theodore and Milton Deutschmann, who wanted to provide equipment for the cutting-edge field of amateur, or ham, radio. Theodore and Milton Deutschmann opened a one-store retail and mail-order operation in the heart of downtown Boston on Brattle Street, near the site of the Boston Massacre. They chose the name "Radio Shack," which was a term for the small, wooden structure that housed a ship's radio equipment. The Deutschmanns thought the name was appropriate for a store that would supply the needs of radio officers aboard ships, as well as "ham" radio operators.

The company issued its first catalog in the early 1940s and then entered the high-fidelity music market. In 1954, Radio Shack began selling its own private-label products under the brand name Realist, but was subsequently sued and consequently changed the brand name to Realistic. After expanding to nine stores plus an extensive mail-order business, the company fell on hard times in the 1960s. Radio Shack was essentially bankrupt, but Charles Tandy saw the potential of Radio Shack and retail consumer electronics and bought the company for $300,000.[1]

[edit] Tandy Corporation

Main article: Tandy Corporation
Radio Shack's old logo, used from 1974 to 1995.
Radio Shack's old logo, used from 1974 to 1995.

In 1963, Radio Shack was purchased by the Tandy Corporation, which was originally a leather goods corporation, and renamed Tandy Radio Shack & leather. Tandy eventually divested itself of its non-electronic product lines.

Tandy (through InterTAN) also operated a chain similar to RadioShack in the UK under the "Tandy" name from the 1970s until the late 1990s. The stores were sold to Carphone Warehouse in 1999, and over the next few years were converted to that format, or sold off.

Tandy entered the Australian market in 1973. In 2001 Woolworths Limited acquired the Australian operations and merged them with their Dick Smith Electronics business.

During the 1960s and 1970s, Radio Shack marketed its free battery card; a wallet-sized cardboard card, free, which entitled the bearer to free batteries when presented at one of their stores. The bearer was limited to one a month, although many customers would frequent several stores with several cards every month. These cards also served as generic business cards for the salespeople in the 1980s; the "battery club" card was still used until the company-wide changes in the early 1990s.

In 1978, three years after the famous MITS Altair, Radio Shack introduced the TRS-80, one of the first mass-produced personal computers that became a big hit. This was followed by the TRS-80 Color Computer designed to attach to a television for use as a monitor. In the late 1980s, Radio Shack made the transition from its proprietary 8-bit computers to its proprietary IBM-PC-compatible Tandy computers; however, shrinking margins and a lack of economies of scale led Radio Shack to exit the computer-manufacturing market by the mid-1990s.

Radio Shack had another big hit with products designed to take advantage of the Family Radio Service, a short-range walkie-talkie system. Since the mid-1990s, the company has attempted to move into the consumer small components markets, focusing on marketing wireless phones.

In 1993, Len Roberts became president of Radio Shack. The move came as a radical career departure for Roberts, who spent more than 20 years in the food industry, beginning with Ralston-Purina, where he served in various management and marketing positions.

In early summer 1995, it was elected that the name "Radio Shack" would be spelled in CamelCase as "RadioShack", and a new logo would be launched.

[edit] RadioShack Corporation

RadioShack tape recorder
RadioShack tape recorder

In May 2000, the company dropped the Tandy name altogether, instead opting for RadioShack contracted into one CamelCase word. The logo had been changed from the '70s-style bullethole lettering to the current stylized R in 1995.

Also in 2000, the company-owned Realistic and Optimus brands were discontinued when the company entered into an agreement to carry RCA products, although RadioShack hasn't made products under the Realistic name since the early 1990s. When the RCA contract ended in 2004, RadioShack added its own Presidian and Accurian brands, and then re-introduced the Optimus brand in 2005 on some low-end products. RadioShack still has its own brand of batteries, called Enercell.

A few RadioShack stores still carry products dating as far back as the 1980s. Older RadioShack products feature the old logo, or an older Realistic or Archer brand name. It is not uncommon to see a few generations of packaging variations on slower moving products.

Until 2002, RadioShack routinely asked for the names and addresses of customers who made purchases so they could be added to the mailing list. Personal information is still requested when purchasing a cellular phone, service plan, mail order part, Direc2U item (which is a fee-free special ordering of a product not in stock), returning an item, paying with a check, or opening a RadioShack Answers Plus credit card. The Seinfeld television program satirized this practice in one episode. As of February 2007, the company has again begun to request customer information on nearly all purchases, though the practice is not quite as strictly required of associates.

On December 20, 2005, RadioShack announced the sale of its newly built riverfront Ft. Worth headquarters building to German-based KanAm Grund. RadioShack will continue to lease the property for 20 years.

Charles Tandy also inspired the Tandy Kids, a duo of teen calculator enthusiasts who teamed up with the likes of Archie and Superman.

[edit] "Fix 1500" initiative

In a controversial and wide sweeping move, RadioShack in early 2004 introduced a program to "correct" inventory and profitability issues company wide called Fix 1500. District managers and administrators assessed the skill level of all store managers (5,000+ at the time) and put the 1,500 lowest-graded managers on notice. The strategy was revolutionary because employees were not included in the program because of parameters based on tangible store and personnel data. Instead, managers were selected by assessed skill deficiencies obtained in subjective one-on-one interviews between district and store management. What created more controversy was that the metrics of the skill deficiencies were graded in comparison to all other store managers, with a pre-determined number (1,500) of selections. Simply put, store managers were not selected for Fix 1500 based upon their own skill level, but in comparison to how the other 70% of store managers company wide were subjectively graded. [1]

Typically, a 90-day period would be established for the manager to improve his/her "grades" (thus causing another manager to then be selected for Fix 1500). As a result, a total of 1,734 store managers were reassigned as sales associates, or terminated, in a 6-month period. Also, during this period of time, RadioShack canceled the employee stock purchase plan. Although the stock price began to surge, by the first quarter of 2005, the metrics of skill assessment used during Fix 1500 had already been discarded, and the corporate officer who created the program had resigned.

By May 2005, RadioShack (RSH) stock fell over 30%, and the company offered to buy back shares from former employees and managers at a comparatively much lower price than the original purchase. This predictably decreased earnings per share (EPS), but improved overall volume at that time. Stock options for district and regional management however were never revoked.

[edit] CEO résumé scandal

On February 20, 2006, the company announced that its CEO, David Edmondson, had resigned over questions raised about his résumé. The Fort Worth Star-Telegram discovered that he had not earned degrees in theology and psychology from Heartland Baptist Bible College as claimed on his résumé. [2] RadioShack's board of directors stood up for Edmondson, but Edmondson admitted to the errors, calling them "misstatements", and resigned.[3]

In wake of Edmondson's absence Claire Babrowski acted as CEO, chief operating officer and president for RadioShack. She had just joined several months prior, after spending 31 years employed with McDonald's Corporation, most recently as a vice president and Chief Restaurant Operations Officer. In August 2006, Claire Babrowski left RadioShack, later to become COO and Executive Vice President of Toys "R" Us.

RadioShack had also admitted that 2005 fourth-quarter earnings had fallen 62 percent after a switch in wireless providers led to an inventory write-down. The news sent the company's shares to an almost three-year low.

On July 7, 2006, RadioShack's board of directors announced it had chosen Julian Day, 54, to serve as chairman and chief executive officer of the company. Day has successfully served in senior leadership positions at several large publicly traded retailing companies in the U.S. and had played a key role in revitalizing such companies as Safeway, Sears and Kmart.

[edit] New strategy

RadioShack in the spring of 2006 announced a strategy to increase average unit volume, lower overhead costs, and grow profitable square footage. Many prior efforts involving supply chain management, store management liquidation, and excessive store display renovations had failed. Since the plan’s announcement in February, the company has closed 480 underperforming stores, consolidated its distribution centers, embarked on a cost restructuring program, and liquidated end-of-life merchandise to make room for a new product assortment.

[edit] Corporate layoffs

Despite these actions, stock prices plummeted within what was otherwise a booming market. On August 10, 2006, RadioShack announced plans to reduce its workforce at company headquarters by approximately 400 to 450 positions across its various support functions. Company officials said this action was necessary to reduce the company’s overhead expense and improve its long-term competitive position in the marketplace while supporting a smaller number of stores.

Most of RadioShack’s planned reductions occurred on August 28 at its headquarters operation in Fort Worth, Texas. Approximately 1 out of 5 positions were eliminated, and it affected employees at all levels of the company.

All employees at the corporate headquarters were informed of the impending cut 10 days in advance. As previously communicated to employees, an e-mail notification was sent on the published day and time to employees whose positions were terminated. They were given 30 minutes to finish packing up, say their goodbyes to co-workers and then attend a meeting with their senior supervisors. Afterward, a larger meeting with human resources allowed departing employees to obtain their benefits packages and ask questions. This move drew immediate widespread public criticism for its perceived lack of sensitivity.[2] There have been many profuse efforts by RadioShack Corporation to modify, minimalize, and in some cases delete reportage of this controversy.[citation needed]

[edit] International operations

[edit] Operations in Canada

[edit] Pre-2005

The Canadian counterpart of RadioShack, also known as Radio Shack, was run by a company called InterTAN, acquired in 2004 by Circuit City. However, RadioShack sued InterTAN one week after the purchase, claiming InterTAN had breached the terms of their agreement. On March 24, 2005, a U.S. district court judge ruled in favor of RadioShack and cancelled their agreement, meaning that all 950 RadioShack stores in Canada must stop using the brand name in any of their products, packaging or advertising by June 30, 2005. As a result, all of the InterTAN stores were rebranded under the name The Source by Circuit City and RadioShack Corporation planned to open its own stores in Canada under the RadioShack name.

[edit] Post-2005

After preventing InterTAN from using the RadioShack trademark, RadioShack announced its intention to re-enter the Canadian market itself with a Canadian division. InterTAN pursued court action to prevent RadioShack from using the trademark in Canada until the original 2010 expiry date of the original licensing agreement. The company had planned to have 20 to 30 stores operating in Canada as RadioShack by the end of 2005, mostly in the Toronto area, but progress was slower than anticipated. As of September 2006, nine company-owned stores had been opened and 16 dealer stores were operating under the name RadioShack, signing new agreements with RadioShack Corporation.

In January 2007, RadioShack Corporation announced that it closed its nine company-owned stores in Canada in order for the company to refocus its attention and resources on strengthening its core business in the U.S. [4].

[edit] Operations in Australia

InterTAN Australia ran Tandy stores until 2002, when it was announced that Woolworths Limited would acquire them for AUD$114 million and merge them into their existing Dick Smith Electronics business. After the merger, Woolworths found Tandy to be in poor condition and has been trying to rejuvenate that part of the business since. Various Radioshack & Optimus branded stock continue to be sold exclusively in Tandy stores, but these are continuously being superseded by DSE branded stock.

[edit] Operations in France

InterTAN operated Tandy stores in France, selling standard RadioShack brands, Realistic, Optimus, and Archer. Sales people sometimes came from the French-speaking Québec. The French subsidiary went bankrupt and closed by the end of December 1993. Sales representatives blamed this on the practice of selling non-store brands (such as IBM laptops) with margins that were too low.

[edit] Operations in Belgium

Tandy stores were introduced in Belgium in the early 1970s. The opening of a Tandy store was usually accompanied by a publicity campaign where free 5-D cell flashlights were given away, with free batteries available through the Tandy battery card. Initially, the Tandy stores only sold their proprietary brands such as Realistic, Archer or Optimus. By the mid-1980s however many Tandy stores had closed and by 1990, Tandy had disappeared from the Belgian market. In the last years of operation, they also stocked mainstream brands, which made the stores lose a lot of their peculiar character.

As at 2007, one Tandy store remains open in Merksem, claiming to be the only remaining Tandy store in Europe.[5]

[edit] Other operations

[edit] Corporate citizenship

RadioShack's charity of choice is the National Center for Missing and Exploited Children, a nonprofit organization. The organization's store presence is the StreetSentz program, which is a child identification and educational kit readily available to families free of charge.

RadioShack's green initiative involves the Rechargeable Battery Recycling Corporation, in which end-of-life rechargeable batteries are dropped off in-store to be safely recycled. End-of-life wireless phones can also be recycled.

[edit] RadioShack and other retailer partnerships

In August 2001, RadioShack opened new kiosk-style stores inside Blockbuster outlets. The project ended in February 2002 when CEO Len Roberts announced that the stores did not meet expectations.[3] A more successful venture for RadioShack has been the wireless kiosks the company has been operating since 2004 within Sam's Club discount warehouses. RadioShack purchased the kiosk operations from Arizona-based Wireless Retail Inc. Kiosk employees are contracted through RadioShack Corporation, and no RadioShack-branded merchandise is sold.

[edit] References

  1. ^ RadioShack Corporation. RadioShack History. Retrieved on September 11, 2006.
  2. ^ 101 Dumbest Moments in Business. CNN. 2007. Retrieved on January 23, 2007.
  3. ^ Blockbuster pursues CE, as RadioShack deal dies - Consumer electronics launch in 2002 - Brief Article | DSN Retailing Today | Find Articles at BNET.com
  • Irvin, Farman (1992). Tandy's Money Machine : How Charles Tandy Built Radio Shack into the World's Largest Electronics Chain. Chicago: Mobium Press. ISBN 0-916371-12-3. 

[edit] External links

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