A Surefire Way to Save RadioShack(singularityhacker.com)
singularityhacker.com
A Surefire Way to Save RadioShack
http://singularityhacker.com/post/97313954530/a-surefire-way-to-save-radioshack
8 comments
- "I'm not even sure how I myself would utilise them"
Then you're obviously not the target demographic.
- "you're renting retail space and hiring staff"
RadioShack is already doing this.
- "inevitable demise"
I'm more into solutions and outside-the-box pivots, not inevitable demise kind of thinking.
Unfortunately, "inevitable demise" is often more economically-rational than "outside-the-box pivots," especially when talking about an organization the size of RadioShack Corp. The cost to pivot some 5,000 stores into an unproven, capital-intensive market that would require high-skill, high-cost employees would be far beyond the company's reach, especially since RS is totally beholden to its lenders for any kind of strategic change (they nixed plans to shut down some 20% of their stores, for example, since the cost to get out of those stores was higher than the lenders were willing to bear). Instead, the most likely scenario is a fast bankruptcy followed by a faster closing of stores -- or a total liquidation of assets, in the worst-case scenario.
I call this the "Blockbuster Paradox" -- the idea that a corporation with a large investment in assets, employees and contracts is often locked into an unsustainable path by virtue of past successes. Just as Blockbuster wasn't financially capable of disrupting its own business model, so too is RS incapable of a major pivot like the one you describe. After all, the maker market is a tiny fraction of the market for cellphones and personal electronics, and the company's structure and finances are based on the higher revenue expectations. (The company needs a minimum of $800m in revenue per quarter just to break even.) RadioShack, with only about $30m of cash on hand, would die of asphyxiation long before it could ever become the kind of large-scale TechShop you describe.
Having said that, I would absolutely agree that RadioShack and the maker community have great mutual potential, just not on a large scale. RS could create a small number of flagship stores offering equipment, access and expertise, as a rebranding of the company back into a more technically-oriented market. (It can be argued that a central RadioShack makerspace could provide ongoing sales and marketing support for smaller, retail-oriented satellite locations.) But RS will need both a new strategy that can keep them around $4b in revenue per year, and a set of new investors that are willing to believe in them. That's a very hard row to hoe.
I call this the "Blockbuster Paradox" -- the idea that a corporation with a large investment in assets, employees and contracts is often locked into an unsustainable path by virtue of past successes. Just as Blockbuster wasn't financially capable of disrupting its own business model, so too is RS incapable of a major pivot like the one you describe. After all, the maker market is a tiny fraction of the market for cellphones and personal electronics, and the company's structure and finances are based on the higher revenue expectations. (The company needs a minimum of $800m in revenue per quarter just to break even.) RadioShack, with only about $30m of cash on hand, would die of asphyxiation long before it could ever become the kind of large-scale TechShop you describe.
Having said that, I would absolutely agree that RadioShack and the maker community have great mutual potential, just not on a large scale. RS could create a small number of flagship stores offering equipment, access and expertise, as a rebranding of the company back into a more technically-oriented market. (It can be argued that a central RadioShack makerspace could provide ongoing sales and marketing support for smaller, retail-oriented satellite locations.) But RS will need both a new strategy that can keep them around $4b in revenue per year, and a set of new investors that are willing to believe in them. That's a very hard row to hoe.
> Then you're obviously not the target demographic.
Right. Who are the target demographic exactly? Two dozen people who turn up to a "maker event?" That cannot sustain a business.
Even most "geeks" and tech-heads don't know what they'd do with a 3D printer if they had one. They certainly need to be convinced if they're going to turn up at Radio Shack and pay to have something printed.
But regardless that is a tiny tiny market. No brick and mortar really exists just to service that group, they all want the lion's share: the general public.
> you're renting retail space and hiring staff
>> RadioShack is already doing this.
They're losing money at a staggering rate. They need new business which generates profit enough to cover their expensive rental and staffing costs. The they're "already doing this" argument only makes sense when it is a business that already has a profitable core, so rent is largely taken care of (e.g. Walmart). You cannot take a failing business, suggest a new very expensive pivot, and then entirely ignore how profitable it has to be so that business can actually survive.
> inevitable demise
>> I'm more into solutions and outside-the-box pivots, not inevitable demise kind of thinking.
I just read that as a classic "I'm an ideas man, it is up to other people to figure out if my ideas have any merit!" I'll grant it is an "out-of-the box pivot," but a solution I highly question for the reasons already outlined.
Right. Who are the target demographic exactly? Two dozen people who turn up to a "maker event?" That cannot sustain a business.
Even most "geeks" and tech-heads don't know what they'd do with a 3D printer if they had one. They certainly need to be convinced if they're going to turn up at Radio Shack and pay to have something printed.
But regardless that is a tiny tiny market. No brick and mortar really exists just to service that group, they all want the lion's share: the general public.
> you're renting retail space and hiring staff
>> RadioShack is already doing this.
They're losing money at a staggering rate. They need new business which generates profit enough to cover their expensive rental and staffing costs. The they're "already doing this" argument only makes sense when it is a business that already has a profitable core, so rent is largely taken care of (e.g. Walmart). You cannot take a failing business, suggest a new very expensive pivot, and then entirely ignore how profitable it has to be so that business can actually survive.
> inevitable demise
>> I'm more into solutions and outside-the-box pivots, not inevitable demise kind of thinking.
I just read that as a classic "I'm an ideas man, it is up to other people to figure out if my ideas have any merit!" I'll grant it is an "out-of-the box pivot," but a solution I highly question for the reasons already outlined.
My last visit to RadioShack was to try and purchase an overpriced plug adaptor from a sleazy salesman. I was in a hurry and knew I was paying too much, but it was for my parents and I was just wanting to grab one to get them sorted out and move on.
He had some lengthy offer of 'free batteries' that he incorrectly assumed I was willing to listen to, then refused to complete the sale when I refused to give my telephone number. Total scumbag. This was in Florida but I had nearly the same experience 2 years earlier at one in California.
This is representative of their culture for a while now and I know I'm not the only one they have alienated. New 3D gadgets or not, I'm not likely to ever set foot in the place again. If they are 'pivoting', they need to pivot that name, too, to disassociate the new venture from the toxic sales culture that they exhibit today.
He had some lengthy offer of 'free batteries' that he incorrectly assumed I was willing to listen to, then refused to complete the sale when I refused to give my telephone number. Total scumbag. This was in Florida but I had nearly the same experience 2 years earlier at one in California.
This is representative of their culture for a while now and I know I'm not the only one they have alienated. New 3D gadgets or not, I'm not likely to ever set foot in the place again. If they are 'pivoting', they need to pivot that name, too, to disassociate the new venture from the toxic sales culture that they exhibit today.
This is cool, but super naive for all the problems already mentioned and then some.
Warren Buffet said that some companies are already bankrupt, they just haven't run out of money yet. Sadly, this is true of Radio Shack.
Warren Buffet said that some companies are already bankrupt, they just haven't run out of money yet. Sadly, this is true of Radio Shack.
I'm not sure this would work, especially given the lack of funds that RS currently holds. But I think it could work, or could have worked. Radio Shack did start a marked move towards re-embracing the DIY/Maker community a while back, but it was hardly a wholesale pivot... I think it was just a case of "too little, too late".
Still, I wish this could, and would, happen. Ordering parts online is cool and all, but having a physical retail location nearby with a great selection of parts, supplies, books, tools, etc., would definitely draw me in.
Still, I wish this could, and would, happen. Ordering parts online is cool and all, but having a physical retail location nearby with a great selection of parts, supplies, books, tools, etc., would definitely draw me in.
Sure, and Borders should have pivoted from selling books that have already been published, to becoming an outlet for people who want to self-publish. I mean, hey, there's loads of people like that on the internet! It must be a viable business model. /s
Plus you're renting retail space and hiring staff but competing with companies like i.materialise, sculpteo, and so on, who can operate out of more inexpensive real estate and get the economies of scale, see Amazon. They also manage to bring together both the manufacturing and helping you find the things you wish to manufacture to begin with (which is a big problem with just setting up a 3D printer and hoping people will use it for "something").
It is a tiny market that is difficult to leverage. Far from a "surefire" anything, more likely to just accelerate their likely inevitable demise.
Let's not even talk about the huge limitations of 3D printing. It has come a long way, but realistically a lot of plastic items cannot be produced via a 3D printer because the resulting products are too fragile.