RadioShack lines up new products, ads, policies for critical holiday season
Not far from the scrums of backpack-lugging students at Tarrant County College, down two flights of stairs at RadioShack’s riverfront headquarters, sits a “model” store where product ideas are tried, scrutinized and refined.
On the walls are goods that carry the best hopes for RadioShack’s holiday selling season: affordable video-shooting drones, a $79.99 make-it-yourself robot kit and a smartphone-controlled robotic ball.
Walking through the store, Paul Rutenis, who took over as RadioShack’s chief merchant just over a year ago, says the 2014 holiday sales theme is “Gift Smart,” a nod to high-tech items big and small aimed at luring new customers like TCC students and setting the struggling consumer electronics chain apart.
He points out a cluster of items dealing with home automation, a mix of name-brand headphones including the addition of JBL along with house brands, and an array of drones “that will knock the socks off the market.”
And there’s more than merchandise to the company’s holiday strategy. Other seasonal developments include:
Christmas sales are important to all national retailers, but they come at an extremely critical juncture for the iconic Fort Worth company. After posting 10 consecutive quarterly losses, the consumer electronics retailer must prove its worth to new lender-investors that stepped up this fall to stave off a bankruptcy filing.
So RadioShack is pulling out the stops.
CEO Joe Magnacca, a Canadian with a jazz patch and a dynamic retailing record who took the troubled chain’s helm in February 2013, is gambling that free Samsung Galaxy S5 cellphones with a two-year contract (a $200 value), a $49 LG TONE Pro Bluetooth headset (regularly $79.99) and a host of remote-control cars, motorcycles, choppers and drones will draw crowds.
The future of the company is likely at stake. While new financing provided by a group led by a major shareholder, the Standard General hedge fund, added $120 million in liquidity to help the company stock stores for the holidays, a weak holiday season could leave the company vulnerable after the new year. In the first half of the current fiscal year, same-store sales have declined by 17 percent.
“This holiday season is especially critical for RadioShack,” said Dwight Hill, a Dallas-based consultant with the Chicago firm McMillan Doolittle.
“They have a cash infusion that should carry them through the critically important holiday season, but the underlying cracks still exist in their business model,” Hill said.
“They have too many stores that are too reliant on a highly competitive and low-margin category — smartphones,” the analyst went on. “They have so far managed to stave off bankruptcy which is good for them. But I believe if they don’t outperform for holiday, their ability to get needed credit becomes difficult or too expensive.”
Last week, the company generated buzz with news of its plan to open most stores at 8 a.m. on Thanksgiving Day, well ahead of other chains that plan to launch Black Friday sales at 5 or 6 p.m. that day. But the buzz wasn’t all positive as store workers complained about working through Turkey Day.
Two days later, the company backtracked in response to its associates, settling on an unusual bifurcated business day — open 8 a.m. to noon, then closed until 5 p.m., then open until midnight. (In comparison, it opened only a few stores on Thanksgiving last year.)
Will the revised pre-Black Friday hours work?
“As there are customers responding to the hype and lining up outside of stores earlier and earlier on Thanksgiving, the trend will continue. That said, an 8 a.m. Thanksgiving Day opening seems a little excessive for RadioShack,” Hill said. “Despite their scaling back the time, the damage has been done with their employees — a five-hour holiday is still no fun.”
Looking beyond cellphones
The retailer’s merchandise lineup reflects more than a year of work by Magnacca to revamp store designs and merchandise to put less emphasis on cellphones and rebuild the RadioShack brand. He has strengthened ties with Apple, added the Fix It Here mobile device repair service at hundreds of stores and forged relations with product developers through a unit called RadioShack Labs.
The result is a more diverse product mix that features both new tech and old standbys.
The chain is stocking “wearable tech” products like Fitbit Flex wireless activity and sleep bands ($99 + free $25 gift card). Then there’s littleBits. RadioShack is the only brick-and-mortar seller of the educational electronic modules (base kits start at $99.99) that allow kids and grownups to assemble an array of devices. With add-ons, they can be connected to the Internet.
But cellphones still matter greatly to the chain. Paul vRutenis, the chief merchandising officer, predicts that Apple’s iPhone 6 with its larger screen “will be a hot gift item,” especially coupled with RadioShack’s broad geographical reach and choice of service providers.
“That RadioShack can bring the iPhone 6 into your neighborhood will be key,” said Rutenis, a 22-year retail veteran (J.C. Penney, Dick’s Sporting Goods and Foley’s) who is part of a new team with road-proven credentials that Magnacca has managed to recruit despite the continuing crisis.
Rutenis hopes that RadioShack, which has long had a reputation for battery selection, will become the go-to store for portable power devices to juice up cellphones and tablets.
And online, he said, customers will find RadioShack’s website easier to navigate thanks to improvements made after the retailer enlisted Razorfish, a top online marketing firm, to help with the site.
“We want to be in the game,” he said.
This story was originally published November 16, 2014 at 4:01 PM with the headline "RadioShack lines up new products, ads, policies for critical holiday season."