ChiefsPlanet - Life Value your health? Then you better not return that speaker cable...

Quote:

Even CEO Can't Figure Out How RadioShack Still In Business

April 23, 2007 | Issue 43•17

FORT WORTH, TX—Despite having been on the job for nine months, RadioShack CEO Julian Day said Monday that he still has "no idea" how the home electronics store manages to stay open.

"There must be some sort of business model that enables this company to make money, but I'll be damned if I know what it is," Day said. "You wouldn't think that people still buy enough strobe lights and extension cords to support an entire nationwide chain, but I guess they must, or I wouldn't have this desk to sit behind all day."

The retail outlet boasts more than 6,000 locations in the United States, and is known best for its wall-sized displays of obscure-looking analog electronics components and its notoriously desperate, high-pressure sales staff. Nevertheless, it ranks as a Fortune 500 company, with gross revenues of over $4.5 billion and fiscal quarter earnings averaging tens of millions of dollars.

"Have you even been inside of a RadioShack recently?" Day asked. "Just walking into the place makes you feel vaguely depressed and alienated. Maybe our customers are at the mall anyway and don't feel like driving to Best Buy? I suppose that's possible, but still, it's just...weird."

After taking over as CEO, Day ordered a comprehensive, top-down review of RadioShack's administrative operations, inventory and purchasing, suppliers, demographics, and marketing strategies. He has also diligently pored over weekly budget reports, met with investors, taken numerous conference calls with regional managers about "circulars or flyers or something," and even spent hours playing with the company's "baffling" 200-In-One electronics kit. Yet so far none of these things have helped Day understand the moribund company's apparent allure.

"Even the name 'RadioShack'—can you imagine two less appealing words placed next to one another?" Day said. "What is that, some kind of World War II terminology? Are ham radio operators still around, even? Aren't we in the digital age?"

"Well, our customers are out there somewhere, and thank God they are," Day added.

One of Day's theories about RadioShack's continued solvency involves wedding DJs, emergency cord replacement, and off-brand wireless telephones. Another theory entails countless RadioShack gift cards that sit unredeemed in their recipients' wallets. Day has even conjectured that the store is "still coasting on" an enormous fortune made from remote-control toy cars in the mid-1970s.

Day admitted, however, that none of these theories seems particularly plausible.

"I once went into a RadioShack location incognito in order to gauge customer service," Day said. "It was about as inviting as a visit to the DMV. For the life of me, I couldn't see anything I wanted to buy. Finally, I figured I'd pick up some Enercell AA batteries, though truthfully they're not appreciably cheaper than the name brands."

"I know one thing," Day continued. "If Sony and JVC start including gold-tipped cable cords with their products, we're screwed."

In the cover letter to his December 2006 report to investors, "Radio Shack: Still Here In The 21st Century," Day wrote that he had no reason to believe that the coming year would not be every bit as good as years past, provided that people kept on doing things much the same way they always had.

Despite this cheerful boosterism, Day admitted that nothing has changed during his tenure and he doesn't exactly know what he can do to improve the chain.

"I'd like to capitalize on the store's strong points, but I honestly don't know what they are," Day said. "Every location is full of bizarre adapters, random chargers, and old boom boxes, and some sales guy is constantly hovering over you. It's like walking into your grandpa's basement. You always expect to see something cool, but it never delivers."

Added Day: "I may never know the answer. No matter how many times I punch the sales figures into this crappy Tandy desk calculator, it just doesn't add up."