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Radio Shack bankruptcy

RadioShack: Tragedy or Inevitable?

Image courtesy of Thinkstock.

In case you haven’t heard, RadioShack entered bankruptcy on February 5. We are about to lose one of the icons of electronics retailing. Could this have been avoided? Probably. Was it inevitable? Not really.

Virtually all companies go through what is probably a natural life cycle. They start up, become successful, go into a growth period, and experience several positive increases in size and/or profitability. Then they peak and move into a period of maturity where growth slows or flattens. Next there is a decline that often ends in irrelevancy and bankruptcy.

The classic case of this is Kodak. The company’s origins coincided with the beginnings of photography and film in the 19th Century, moving on into a real growth period. It continued its success with improved film, color film, movies, film processing, and cameras. Then along came digitization. As digital cameras were perfected and proliferated, Kodak lived on in denial; it then mounted a half-hearted effort in digital without much success, peaking around 1996. The company filed for bankruptcy in January 2012. RadioShack is following a similar pattern.

To remain viable and successful, a technology company must reinvent itself every so often. Electronic companies, more often than others, must evolve regularly given the rapid changes that never end. I have to wonder if RadioShack executives are just retail store gurus or if they really understand the electronics business.

RadioShack had numerous great successes during its tenure. For example, in the early years it sold tons of electronic educational project kits to kids, and also did an amazing amount of business selling TV antennas and accessories before cable TV came along. It were also big in audio before the Japanese companies captured that market. In the 1960s and 1970s, RadioShack profited handsomely from the booming citizen’s band (CB) radio market.

Later in the 1970s, it hit it big with its TRS-80 personal computer. Remember that? It was based on the popular Z80 microprocessor and ran the BASIC language. Millions were sold. The venture into the business computer market was not as successful, as the IBM PC and its clones came along and obliterated all the proprietary systems. More recently, from the late 1980s to the present, RadioShack became a reseller of cell phones and services. But with the all the churn in that business, it has not kept up. Thus, its current situation.

RadioShack is a victim of its failure to find its own unique niche. It also suffered from the growth of Internet sales outlets like Amazon and others that sell electronics. The big stores like Best Buy and Wal-Mart also made competing difficult. It was not possible for its more than 4,000 small, poorly stocked stores to compete with the mass resellers. What I wonder is why RadioShack never traded its small store model for a large box store model like Fry’s or Best Buy.

Now it is in the process of closing over 1,700 of its stores. Some 2,400 will remain, which may be bought by one of its lenders, Standard General. Those may eventually be taken over by cell phone companies like Sprint or other retailers looking for prime space. Whether this will be enough to save the company remains to be seen. While a Chapter 11 bankruptcy implies that the company will restructure and eventually emerge to continue in some modified form of business, what exactly that business may be is unknown.

Let’s hope that RadioShack will come back in some form. I would like to see it continue to serve the hobbyist/experimenter DIY maker niche. It has advertised in the popular Make: magazine, so it sees the potential. Maybe it will continue in that market segment with sales of Arduino and Raspberry Pi micros, electronic kits, and possibly even ham radio gear. Perhaps it can cater to the emerging Internet of Things (IoT), robotics, or drone movements. It could do all this as an online-only reseller. Granted, it would be a much smaller company, but it could still exist and serve those of us in electronics.

It will be interesting to see what RadioShack does. Hopefully it can save itself from total liquidation and closure. But as is the usual case with business bankruptcies, companies do too little too late.

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