RadioShack tunes into the needs of its customers. The company is a leading consumer electronics retail chain that operates nearly 4,400 stores in the US, Mexico, Puerto Rico, and the US Virgin Islands. Its shops and website offer a variety of products, such as wireless and residential telephones, computers, DVD players, electronic toys, and radios. For its mobile customers, the company sells third-party wireless calling plans from AT&T, Sprint, Verizon, and others. RadioShack stores also sell a wide range of electronics parts, batteries, and components. The chain runs about 1,100 dealer outlets and -- until April 2013 -- more than 1,500 wireless phone kiosks located inside Target stores.
Most recently the company organized its business into two reportable segments: US RadioShack company-operated stores and Target Mobile centers. The company-operated stores segment includes a network of 4,395 retail stores operated by the company nationwide under the RadioShack brand name. The mobile segment comprised 1,522 Target Mobile centers located within Target locations. However, in early 2013 RadioShack ended its relationship with Target. In fiscal 2013 the Target Mobile centers business will be reported as discontinued operations after RadioShack winds down the business by mid-2013.
RadioShack operates three US distribution centers that ship products to its US retail locations and dealer outlets. One serves as a fulfillment center for its online business and as a distribution center responsible for shipping store fixtures to RadioShack's company-owned stores in the US and Mexico.
Unlike its big-box competitors, RadioShack has built its chain with smaller but more numerous locations. (Its stores average about 2,470 sq. ft.) The company's kiosk business is an extension of that strategy.
When RadioShack lost more than 400 kiosks inside SAM'S Club in mid-2011 as the result an expired contract with owner Wal-Mart, the company compensated by significantly increasing the number of Target Mobile-branded kiosks inside Target stores from 850 at the end of 2010 to about 1,500 by 2012. That strategy will need to be revisited, however. Looking to amend its arrangement with Target in late 2012, RadioShack ultimately ended its relationship with the discount retailer in April 2013 and terminated their contract. While the partnership provided RadioShack with access to manage Target's post-paid mobility business, RadioShack did not manage the prepaid mobility business nor the wider range of accessories offered in Target stores.
Wireless continues to be the growth story at RadioShack, despite its hurdles. Demand for wireless products and services has given the chain, which is long known for gadgets and batteries, a profitable new line of business. It's working hard to establish itself as a leader in mobility products and services and update its stodgy image. RadioShack stores and kiosks offer prepaid and postpaid rate plans from most third-party carriers. The stores also offer smartphones, including Apple's popular iPhone.
Net sales for RadioShack dropped 3% in fiscal 2012 as compared to 2011. The retailer saw a 3% decline in same-store sales, partially offset by increased sales across its Target Mobile centers. Dips in sales of consumer electronics and mobility platforms at its US RadioShack company-operated stores were blamed for the sales misses. Net sales from Target Mobile centers, however, increased 25% and accounted for 10% of consolidated net sales. RadioShack's net loss for the same reporting period rose by 293%, thanks to a 14% decrease in gross profit driven by weaknesses in the company’s postpaid wireless business for its US RadioShack company-operated stores.
Based in Fort Worth, Texas, RadioShack operates its business globally with operations in the US, Mexico, Puerto Rico, and the US Virgin Islands.
Sales and Marketing
RadioShack is a multichannel business. It operates US company-owned stores and dealer-owned stores, as well as company-owned stores in Mexico. The retailer also enlists the help of international dealers to peddle its products and sells its items online through radioshack.com.
Now under the leadership of a turnaround specialist with experience at Safeway and Kmart, RadioShack undertook a major rebranding effort to update its dated image. It dropped the antiquated term "radio" from its brand and adopted the nickname "THE SHACK." It had also hoped to get some mileage from its sponsorship of seven-time Tour de France winner Lance Armstrong's cycling team in 2010, but Armstrong and his lucrative licensing deal lost their luster in 2012. The improvements sparked rumors that private-equity firms and Best Buy were circling RadioShack, but as yet no offers have been made.