March 16, 2015

Why we tuned out Radio Shack

Frank Conte

In the end, Radio Shack didn't know its own identity. In what will most likely be a major case study in business schools, the once world-famous electronics chain has filed for Chapter 11 bankruptcy protection and will close most of its Central Massachusetts stores. Once noted for its do-it-yourself spunk, Radio Shack overextended its reach and forgot its roots. Sure, you could blame technology for its demise, but that's only part of the story.

In its final years, the firm that was established in Boston was known more for a tacky, self-mocking stuck-in-the-1980s Super Bowl ad than its batteries, cellphones, alarm clocks and pocket radios.

In the 1960s, my father and his cousin, the ultimate DIY duo, would travel from their always-in-renovation-mode triple-deckers in East Boston to the Radio Shack in Saugus. They were looking for wires, switches, extension cords, light fixtures, tools — anything that could help them build their American Dream. In those days, the ride up Route 1 was a field trip. But my father and his cousin were loyal Radio Shack customers. Many corporate marketing wizards today would like to capture that elusive "customer experience" of two immigrants walking into a store, enthralled at the wide array of gadgets and wires.

Over its long run, Radio Shack had the good luck to ride the tech waves surging beneath it: 8-track tape machines, CB radios, the first commercial PC (the TRS-80) and, of course, the VCR. And still it was the place you could go for batteries. Radio Shack was even one of the first companies with loyalty cards for — what else — batteries.

It's hard to believe today that, in the 1970s, as Bloomberg reminds us, the TRS-80 was more popular that Steve Jobs' twinkle-in-his-eye Apple IIs. Much of that had to do with the fact that Radio Shack had 3,000 storefronts from which to sell it. But the company's lack of vision and lack of ability to keep up with the torrent of hardware and software competition was an early stumble.

Years later, Radio Shack bet big on cellphones, cutting deals with major providers. The idea worked at first, thanks to its wide reach (in every mall in the U.S.) But I wouldn't think of buying a wireless contract from a reseller I associated with other products. It never seemed like a good fit when I could deal with Verizon or Sprint.

Today's major success stories are about expanding core offerings with other products. For example, Amazon is into robotics, film production and big data centers, and Google's stretch into driverless cars and wearable computers suggests it's not primarily a search engine company anymore. These firms thrive because they offer products you didn't know you needed. But the cores of their business models are still there.

Radio Shack was the first stop for the hobbyist and entrepreneur tinkering for the next big thing. Today, it's in bankruptcy court. In this age of turbulence, it won't be the only company of such stature to see its lights go out.

Frank Conte is a policy analyst and manager for the State Competitiveness Project at the Beacon Hill Institute at Suffolk University, in Boston.


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