What Can Be Learned from RadioShack

When a household brand name, such as RadioShack, has sustained its business for decades, a curious crossroads can appear on its horizon. On the one hand is the tried-and-true direction the company has always taken, while on the other hand is something that would be altogether new.

The angst in this decision is choosing between what has worked for years and trying something that is new and different. Because the problem is so critical and has such enormous consequences—not to mention these types of decisions often need to be made quickly—there is a huge pressure on management.

The older the brand, the tougher the decision

Over the years I have observed, and consulted with, a good number of venerable brands that were tearing themselves up because they could not come to a cohesive decision on which way to go.

• Their technology had changed.

• The market wasn’t buying their type of widgets anymore.

• There were new players in their key markets and on their key customers’ doorsteps.

• Direct sales distribution had always been the primary sales drivers of the brand, but their customers were moving to online ordering and didn’t want any direct sales people in their offices.

On and on the stories would go, with no resolution or decision in sight.

Why does this happen to some companies and not to others? I would argue that it happens to all companies that have been around long enough, but that’s not the real problem. The real issue is how well the company has stayed in touch with its customers throughout the years. That is usually the critical mass to their continuing success.

Hard as it is to accept, many companies are simply not up to the task of reinventing themselves, preferring to stay with what has always worked and go down with the ship.

Let’s look at RadioShack. The company has tried just about everything:

• Kiosks in Target Stores selling cell phones and wireless products.

• Selling cell phones in its stores nationwide.

• Selling wireless products along with wireless plans and mobile phone services in its stores.

• Selling iPhones in its stores despite the low margins Apple imposes.

But what’s wrong with this strategy might be that company’s brand name—RadioShack—and all that it stands for, has not been successful in its own stores so why would it be successful in other retailers’ stores? It’s one thing for Apple or Starbucks to place their brand name product on another retailers’ shelves where the power of their image can make a dent, but it’s quite another for a lagging brand to think a new venue is going to change its image.

All companies face this same challenge. To keep their brands refreshed in substance, not just image, based upon what their customers need and want. The brands that do this regularly can make any transition that is required without disruption to their businesses. But if a company has gotten out of lockstep with its customers, it will inevitably find itself on the outside looking in.

The issue before RadioShack is what should be its next “big idea.” What should it become?

It should be apparent that the Shack-ness of RadioShack is not working in the face of retailers like BestBuy. Circuit City found that out the hard way. It is not easy to compete against a brand that knows its customers well and gives them what they want.

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