RadioShack Suffered as Free Time Evaporated
wsj.com
wsj.com
According to the Economist [0], "American men toil for pay nearly 12 hours less per week, on average, than they did 40 years ago—a fall that includes all work-related activities, such as commuting and water-cooler breaks". The big caveat to that is that people with more education are working more, and those with less education are working less. That may have some part in it, but the truth is that if Radio Shack was selling products that enough people wanted, they would find the time for them. Lack of time didn't kill them.
[0] http://www.economist.com/news/christmas-specials/21636612-ti...
[edit: s/nice/niche]
I believe you meant "niche", not "nice", and I agree with that, though I don't think it's entirely their fault. The tinkering community has become much more technical, and has also moved online, all while consumer electronics became less user-serviceable.
Also underemployment: there are a lot of people working part time who would like to be working full time.
My main point, though, is that there is no shortage of leisure time, and that can't be a reason for Radio Shack's decline. How could there not be enough leisure time when the average American over 18 still watches 5 hours of TV a day? [0] Maybe unemployed people can't afford to shop at Radio Shack, but that's not the argument being made in the article.
[0] http://www.nydailynews.com/life-style/average-american-watch...
1. A drop in retail sales of electronics from in-person stores as the average consumer purchases more and more online, benefitting from the cost savings due to economies of scale and lack of overhead provided by online retailers such as Amazon.
2. A rapid fall in demand for the consumer products Radioshack offered: camcorders, cassette players, digital cameras, and prior to that CB radios. That trend accelerated as the functions of various devices were taken over by smartphones.
3. A failure to recapture the resurgent maker movement, despite a rather valiant last minute effort.
Radioshack used to be a vital resource for makers. Mostly they stocked breadboards, transistors, capacitors, etc. in at least one third of their retail space.
When I was a child, and my father first introduced me to electronics in the mid '90s, I loved Radioshack and visited at least once a week. The staff at Radioshack could give advice that my dad (a chemical engineer and MBA by education, civil engineer by profession, who built a simple computer out of transistors in the 1970s from scavenged parts from pinball machines when he was 13, so no novice) didn't know.
A few months ago a local maker space opened and I enthusiastically signed up for classes on their machines. Ready to jump in, I figured I would build out some software while I waited to be safety certified on the Tormach CNC and various 3D printers, but their inexpensive Raspberry Pi and Pi competitors were sold out.
Out of curiosity, I stopped into Radioshack, since there was one in the same mall. Lo and behold, most of the space formerly occupied by those parts was now filled with modern maker components: Arduinos, Beaglebones, shields to add capabilities, elegant project cases, various add-ons. I picked up everything I needed to get my project up and running on a Beaglebone Black.
It was so much more convenient than waiting for Amazon to deliver that over the next couple days I went back for more components. Radioshack, for the first time in years, seemed like a place I wanted to frequent, a stopgap between my local maker space and Amazon. But there was one essential element missing: expertise. The staff was mostly clueless about the differences between the products they stocked.
Radioshack failed because it failed to pivot to a more successful business model in time. They tried a scatter-shot approach, pinning their hopes on various experimental focal points: cellphones for a time, high end stereos, video games, etc.
Hours worked is simply an unlikely cause of the company's decline. Americans are still tinkering, and the mythos of the lone inventor is alive and well in American psychology.
Radio Shack should have been stocking things like the Raspberry Pi and the Arduino and offering classes, workshops, and opening maker space 2-3 years ago at least.
You've gotta hold a core market, and Radio Shack's was always the enthusiast. Consumer stuff was always secondary for them -- if not as a profit center definitely in terms of brand and customer loyalty.
My aunt's division was sold to the Canadian conglomerate/private equity firm Onex, and the employees for the most part retained their jobs.
Revenue has been flat at around $2.6 Billion, not having grown much under Onex, which as a PE firm focused initially on cutting costs (terrible strategy in the land grab that was medical imaging in the mid-2000s.)
Sure, Kodak made a huge strategic error, one that is common to older firms, to stick to its original bread and butter of film at the expense of new profit centers, even as that medium collapsed.
But the real lesson is that the process for helping companies die is in dire need of study and executive education. There has to be a better way than the status quo.
Priceless.
Kodak's actions do indeed strike me as insane. I can't even fathom the reasoning that must have led to them. It must have emerged from some set of perverse incentives at the executive level, like pay based on sales numbers in the film business or some other kind of ham-fisted silly bonus structure.
The company is full of management who know the old way of doing business. A great many of them would have to be fired to switch to the new way of business.
Humans have incredibly loss aversion. The reason the story of Aron Ralston cutting his arm off to escape that boulder is so fascinating is that most people wouldn't do it. Give all the management -- not just the people at the top, but all levels down to store managers -- the option between facing the known pain of needing to cut a bunch of stores, or that Something Magical Will Happen and they and all their friends get to keep their jobs, and the second is the choice that will win, hands down.
>Just because the maker movement exists, it doesn't mean it's big enough for over 5000 stores.
Surely not. But as another commenter pointed out, Radioshack has always catered to the enthusiast, relying upon them to drive sales of more consumer oriented product.
The management was worked hard, we were worked hard. It was thankless work with many expectations any reasonably smart person would scoff at. Spontaneous 8-hour inventories announced the day of, maybe 4 hours in advance are merely the tip of the iceberg. What I saw there were young employees who desperately needed a job, any job that didn't require flipping burgers or working at refineries doing manual labor. They didn't know anything about the products we were selling. I became the go to guy in our store for all knowledge. I eventually couldn't take the abuse and left for greener pastures. The people who stayed were grunt labor, not the kind of people you want selling tech outside of a mobile-phone store; just smiling faces.
As the years went on I visited the store less and less as they just didn't have the stuff I needed, or when I did buy something there it would be of terrible quality and I would regret the purchase. I believe that had a lot to do with their slow decline, a need to modernize in the 90's coupled with a lack of knowledgeable people. You can't keep skilled talent if you treat them like slaves.
It may not have been you directly, but guys like you at Radioshack in the 90's made a huge difference in my life. So on behalf of myself and the others you undoubtedly helped, thank you.
It's really terrible that poor management drove people like you out instead of propelling them up.
When I was a kid, we'd go the RS pretty much monthly. It was the go to place for things like floppy disks, batteries, cables, stereos, etc. Sure, it wasn't pro-quality but it was good enough. Then pretty much all those items because obsolete or commoditized. Big box stores had all these things, and more, and usually cheaper with better brands than RS's in house and underwhelming 'Realistic' brand. Walgreens started stocking disks, CD's, cables, etc, which became easy as everyone pretty much standardize on the iPod and iPhone ten years ago. Hard to find stuff was easily gotten on the web and Amazon's big push to take on 3rd party sellers into their system meant you could find pretty much anything right there.
I see all this hand-wringing about how RS had a golden age where it was staffed with nothing but EE's and had everything you can imagine, but that seems an overly pleasant interpretation of their product and services. Even during the "golden age" there was never anyone who knew anything about the components I was buying and I was happy to be left alone. The stock there was largely unimpressive as well. I'm afraid nostalgia has taken over here for some people. Not to mention, the margins on components was pretty much non-existent. The idea that it could have trivially turned itself into a "Maker Supply" depot is questionable as well. The prices it would need to get by would chase off makers who knew they could get it for 1/10th the price on Amazon and with things like Prime shipping, it became a no brainer.
Brick and mortar retail is a cruel mistress. You have limited space and each shelf needs to bring in x amount of revenue if you want to stay open. How much space do you need to provide a decent experience to makers? How much would each one of those shelves bring in net everyday? Ten bucks maybe? Turning RS into a Akihabara-like component dumping ground just is financially unfeasible. Heck, the fabled Akihabara doesn't even exist anymore, its all video arcades and game and model shops as I learned during my trip there last year.
RS is probably a cautionary tale of over-specialization without the "boutique" level of added value, but even that is questionable. I have no idea what could have saved it and am highly skeptical that anything would have worked. It just doesn't seem like a business that makes sense in the modern world. A lot of the projection I see seems to be people with a hobby horse they're trying to insert into the argument. Sometimes businesses need to die. There's really nothing wrong with that. We don't get our shoes recobbled anymore or need someone to help us when ours cars get vapor lock. Things change, and usually for the better.
1964-1970 1,137
1971-1980 1,122
1981-1990 1,205
1991-2000 1,290
2001-2013 1,254Out of friendly curiosity, what're your data sources and methods? The OECD data seems suspect, especially since it has Japan at 1,745 hours/year, less than the US. [Ibid.] That just seems unlikely.
Edit: Yeah, that looks like hours worked per person employed
http://research.stlouisfed.org/fred2/series/USAAHWEP
It's blind to changes in the workforce (like women entering en masse) and isn't appropriate for measuring leisure time in society at large.
It was a crappy business decision from the top that just took years and years to manifest as catastrophe.
They sell a lot of stuff I and a lot of other people buy. Electronics parts, cables, kits, fun remote controlled vehicles, and yes, even cell phones. The problem is not that the market somehow evaporated out from under them. The problem is that they became a crappy place to buy these things compared to the competition.
How is such an explicitly market-based argument "somewhat Marxist"?
This company seemed to be having trouble even before the Internet. They seemed to run the stores like it was still the 50's?(demanding ties, while paying minimum wage=grouchy employees). The website was always terrible. Marketing was terrible. Seemed top heavy with assistant regional managers, corporate big wigs, etc.
My last time shopping there I bought a tube if Artic 5 to reball a faulty HP graphic chip. The price was more than 2-3 online competitors price. The nice guy helping me said, "You are not are typical customer." I knew what he meant, and I was sad. I walked past the garbage near the front entrance, the dissy array of phone plans, dodging marketing stands, and said goodby to the only lonely employee." I knew that would be my last time in a Radio Shack. (The only reason I can imagine why they loaded up the front of the stores with--crap, is because maybe we don't tinker as much as I want to think? I know you people do, but the average consumer--I've seen so many people roll their eyes when I tell them I can fix it. "Just buy a new one!" As to crafts, like sewing and leather work--I think people will get back into it, but right now it's just easier to buy because their is a lack of time. I will never forget the neck Ties and the perpetual help wanted sign though.
Societal changes producing changes in supply and demand, and that causing both the fall of old firms and the rise of new firms are traditional market forces. Its what proponents of capitalism point to as the manner in which capitalism, via the free-market, aligns the work done in society with its current needs and desires.
(That said: "Marxist undertone", really? It's certainly an awful undertone, that it's somehow the fault of potential customers for not consuming enough at Radio Shack, rather than the fault of Radio Shack for not selling what people want.)
They could have. I'm very unconvinced that strategy would have supported anything like the thousands of stores they currently have. After all, if there were an unmet mainstream need for that type of hobbyist store in every random shopping mall, I expect someone would have tried it.
There obviously are small niche firms that cater to the maker market without aggressively expanding. Of course they're not public companies--which investors do generally expect to grow.
If Radio Shack wanted to differentiate themselves, they could have turned into a hobbyist maker space. Look at the local gaming stores that have survived: they have space in the back to actually play games, and events going on every day. Imagine going down to Radio Shack to hack on something; they could have sold Radio Shack memberships, and gotten much of their revenue that way, reducing the need to rapidly move inventory. Bring your laptop or use theirs; borrow a soldering station; try out a 3d printer (and later buy your own) or a CNC milling machine; grab (and buy) a few spare components as needed; post a picture and how-to guide for the shiny new thing you built at Radio Shack.
They could have sponsored "Shackathons"; they could have provided an online community; they could have worked with high schools and universities. There's a lot of "they could have"s.
And sure, they could also help you buy a cell phone or laptop, and make some money that way; they could have developed the reputation as the place to go where you get opinions from the employees and half the customers.
And no, of course it wouldn't have been a "mainstream need", though it could have been a lot more mainstream by grabbing the attention of kids and parents.
However, it is also important to note that the evolution of consumer electronics was away from the "tower" PC you could easily build and modify yourself, and towards sealed devices with intricate and highly designed components like laptops and smartphones. Still possible, thanks to iFixit, but not quite as easy.
http://www.sbnation.com/2014/11/26/7281129/radioshack-eulogy...
I think this is a better explanation as to why RadioShack is folding
The very first story was getting rid of advertising in newspaper inserts, staffing up like crazy for Black Friday, only to sell maybe $200 worth of stuff that whole day. Other ridiculous things include stocking up on remote-controlled cars based on PT Cruisers and on Brum, which essentially no American recognizes. [1] Next to these, the CueCat seems like genius.
Unfortunately, this is how you make money. Getting more for your investment than you put in. RadioShack received far more back than they put in, and when that happens in a labor transaction it really is a zero sum game. What a great system we have in the US.
Make magazine, the movement’s bible, has a circulation of only 125,000, whereas RadioShack’s instructional manuals, sold in every store, were printed by the millions when America’s population was about two-thirds what it is now.
RadioShack could have been the home for the makers, but even if they doubled the size of the maker community, they would have to shrink by at least 90%. The maker market exists but it's not big enough to support 5000 stores across the country.
Shrinking that much might as well be death. All the stakeholders inside the company who are going to get squashed are going to fight back, refusing to believe the inevitable.
Sometimes you just can't win. Kodak invented the digital camera and was destroyed by it. They could have survived, but only as a much smaller company, because their entire film division was going to be destroyed.
RS management did a lot of stuff wrong, but that doesn't mean there was a right answer.
Really? I would think that anyone who had tried to purchase parts for a maker-type project in their local RadioShack would understand in the hour it took the clueless clerk to point the prospective customer past the displays of cell phones, $30 HDMI cables, and RC toys to the lone, dusty cabinet of mis-filed and comically over-priced components.
I have a soft spot in my heart for TRS, taught myself BASIC one summer on a TRS-80, bought every Forrest Mims engineer's notebook, loved my 50-in-1 electronics kit, and even today occasionally use a through-hole resistor from my collection of RS parts. I wish they weren't going away, but I sure as hell comprehend WHY they died...
Well, as it turned out, RS wanted as much for a suitable wall wart as it would cost to buy a complete new switch elsewhere.
This should also work:
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd...
http://www.radioshackcatalogs.com/html/1984/
before making conclusions.
I arbitrarily selected 1984 because my dad was occasionally working part time at RS between programming contracts and it was before the arrival of Best Buy and Walmart decimated consumer electronics sales. True, there were maybe one quarter of the pages of the catalog devoted to parts. However, consider the difference in commission between a 59 cent small signal NPN transistor, vs the commission on a $349.95 police scanner or a $279.99 dual cassette deck or even a $47.95 alarm clock radio. All that stuff came from Radio Shack before Best Buy or Walmart. I think we bought a TV from Sears once when I was a kid. I grew up with a Model 3 and Coco 1, 2, and 3 with microware OS-9 and the weird pre ansi early K+R C language compiler and all that. Radio shack scanners, even some ham radio gear.
The highest profit margin in the store was parts. The problem is nobody buys parts. So you make more money off one clock radio per week than 5 transistors per month. Youngsters in the HN readership don't understand that Radio Shack used to sell consumer electronics, so they think RS never did and it always lived entirely off 59 cent transistor sales. Not so. (edited to add business advice that when you have a main line and a side line and the main line goes away, that doesn't automatically mean you've always been a leader in the side line, and comically younger people are accusing RS of trying to become a best buy, when RS WAS the best buy before BB existed...)
Basically RS lost consumer electronics in the 80s to 90s with the arrival of the big box stores and then it was all down hill till this year. It just took them longer to die than the typical victim of the big box stores.
It was only when electronics became so mainstream, competition increased and profits became marginal they couldn't survive.
It's too bad, but if we're smart instead of over-analyzing this, we'll should keep our eyes peeled for the next industries that will go under.
The 3D printer revolution is something that could have brought them back to their roots, but it's not big enough (yet) to sustain such a huge company. And unless you accidentally walked past a store, you'd have no way of knowing what's on offer - they haven't been a compelling destination for a long time too.
This is simply not true. You may choose not to build your own computer, but the components are no less available than before -- in fact, commoditization has made them more affordable than ever before.
It was to make a ready, local supply of necessary parts for electronics that were unreliable and burned out frequently, in the days when end-to-end service or "just hire a professional" weren't the way people addressed technology failures.
My grandfather made regular trips to RadioShack because the bloody vacuum tubes on his TV burned out all the time. This wasn't 'hobby,' nor was it really a chore he enjoyed.
RS's transition into cell phones, a mass market commodity, was perhaps the only possible decision that could have maintained their enormous real estate footprint. But with neither low prices nor excellent customer service, their demise was just a matter of time.
The internet's capability to serve the long tail has enabled a golden age for makers, with manufacturers and distributors of every scale providing products, and forums where every manner of making is supported. What RadioShack and your local electronics part counter was ever able to supply, even at their peak, is pathetic compared with the present situation.
Yeah, we can't walk in and idly browse around for ideas and inspiration. That's what your browser is for.
I just don't understand the lack of creativity when things start going south. People try to hang onto what's not working until everything fails. Look at all the spinoff retail opportunities there are. Convert these radio shacks into this, and keep these like this. Then whatever works works, works and what doesn't try again. Otherwise what is the point of selling cables for 50x markup than having cash to keep on inventing.
RadioShack hasn't catered to the hobbyist market in the better part of 20 years. I worked for RadioShack around 2001, and they'd already jettisoned almost all the parts by then. The focus was on pushing cell phones, overpriced TVs and PCs, and extended warranties for everything.
They were trying to hard to compete with Best Buy in their attempt to sell cell phones and contracts. Poor business decision that led to them being taken advantage of by the mobile carriers who increased market share with RadioShack's assistance, but offered little in return.
By the way that they treated me, my manager and my fellow employees - I'm not sad to see them go.
With individual components being so cheap in quantity, people (hobbyists/professionals) are only looking to solve an immediate problem, and will then go place a larger order of assorted stock so that problem never happens again. Radio Shack would have had to be a lot more intelligent about which components they carried to ever function as anyone's "stock room". And that possibility is further shot as the last of peoples' uncomfortableness with online shopping fades.
I think there's perhaps still some room for selling a fewer skus of large assortments (lower margin/overhead), but as part of a larger store that covers the fixed costs and provides impulse buyers thinking about getting into the hobby.
Yes, there is a healthy & robust community of builders, hackers, & gadgeteers - but they're outside of the mainstream, different from when people at large built things out of boredom.
Now let's compare to say a home store. There are a lot of home stores, big and small. Some do better than others, many try really hard to compete with Lowes and HD by stocking really smartly. And they can keep people in through relationships. Hiring old experts who can tell you how something is done, and younger apprentice hands who can absorb a lot of info as well as lift 100 lbs into your car like nothing. (again service mindset). Also big box home stores do rentals and they also have classes. Camera shops also offer classes.
Radio Shack certainly sold *some cool stuff over the years but they never could be a place I could trust or rely upon to carry anything specific. I never felt like I got a good price on anything let alone a deal. The only time I ever felt I paid regular price was when they happened to have a little cable connector, it had no price and the manager was like eh just give me 1.99. He made up the price according to what he thought it was worth, the same price I thought it was probably worth. But you can bet had it had an active sku, it would have been 7.99.
Radio Shack had so many opportunities to be a provider of cool things. They could have even become a refurbish tech dealer selling lots of refurb game systems and controllers and probably done well. I mean you look at it like, what the hell were they even thinking for so long.
Not a direct descendant, anyway. Forrest is a parental role model for my own parenting, at least WRT science and hobbies. Cool dude.