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A double-edged sword: did the iPhone preserve RadioShack…or kill it?

The day has finally come. It seems struggling electronics retailer RadioShack is finally dead. This doesn’t come as a surprise to anyone who has paid attention to the company at all in the past few years. The chain hasn’t turned a profit since 2011, and several attempts to reboot its image have failed miserably.

How RadioShack reached this point is also no surprise: it failed to keep up with the ever-evolving technology market, choosing instead to attempt to walk the line between DIY hobbyist and mainstream electronics.

While no one would argue that RadioShack’s insistence on keeping one foot in each world eventually led to its demise, it could also be argued that it’s exactly what kept the company around for so long.

 

You may have seen the image above at some point in the past year. It’s a full-page RadioShack advertisement that tries to sell buyers on products like a portable music player, a mobile phone, and an Internet communications device. These days just about every single product on that page can be replaced with a single iPhone.

That’s exactly why so many people point to the rise of the modern smartphone as a key factor in RadioShack’s slide into irrelevance, but that isn’t an entirely accurate assessment.

Aside from batteries, a large number of the other products in the store are pretty much useless to most people. As DIY customers tapered off, cell phones became RadioShack’s biggest moneymaker. Employees were regularly reminded of that fact by management and in turn so were customers.

I spent a year working at RadioShack from 2011-2012, which provided me with an up-close look at how the business operated during its last profitable quarter. I can speak from experience when I say that the company was absolutely interested in joining the modern technology market. Unfortunately no one in a position of leadership had any idea about how to do that.

You’ve probably heard horror stories from previous RadioShack employees, and I’m not going to dispute any of them. I have no doubt they’re mostly true, and I’ve got plenty of my own, but many of them come down to one basic fact: selling phones was the most important thing you could do when you clocked in. Employees were ranked every month, and those who sold the fewest phones got the boot.

The store I worked at was considered one of the best in the region in terms of sales, but we regularly went entire days with only one or two customers. At one point—out of sheer boredom due to the lack of business—I took a look at our sales numbers for the day and discovered that the store was losing money just by paying the three employees that had showed up to work that day.

That was a pretty typical situation for our store and many others—unless we managed to sell a phone, that is. Phone sales juiced our numbers more than anything else, especially if we had a couple or a family looking to switch carriers or upgrade their phones all at once, and even more-so if we could talk them into buying a bunch of accessories. We actually made money on those days.

[youtube https://www.youtube.com/watch?v=YpkixVDFpcI&ab_channel=DoFunky]

Unfortunately, RadioShack didn’t do a great job of embracing the smartphone revolution. Its pre-order process for new phones was so clunky and convoluted that to this day I don’t fully understand how it works (it involves buying $50 in RadioShack gift cards!), and the stock that we got was never what people wanted. Remember the HTC Status, that phone with the “Facebook button” on the front? We got a bunch of those, along with big signs for the windows advertising the availability of this incredible new handset (which we never sold). iPhones? We got like four at launch if we were lucky, and subsequent shipments didn’t come until we sold those—or long after.

While RadioShack was flopping on delivering smartphone, accessories and repair options to its customers, a bunch of specialty kiosks turned up in every mall in the US to deliver exactly those services.

An example of RadioShack’s inability to get the littlest things right can be found in a story from about a year or so after I quit. When the iPhone 5 launched, I bought mine through Apple’s online store, but a friend pre-ordered his through my old RadioShack (one of the best in the region, mind you). Not only did they manage to lose his pre-order device, but they never actually found another of the same model for him. After several weeks of back-and-forth they gave him one in the wrong color and told him that was the best they could do.

RadioShack has had some rough times

It’s not hard to see that RadioShack had no idea how to handle the smartphone business. As the company floundered to understand how to market the latest models, newer ones were being released. Customers quickly picked up on the fact that most employees lacked up-to-date information (thanks to incredibly bad training materials) and instead went directly to carrier or Apple stores.

But despite all of that, the advent of the iPhone (and the subsequent flood of similar devices) may have helped RadioShack overcome poor management and waning public interest in most of its products and stick around for a few years beyond its expiration date simply by providing a source of revenue that people actually wanted.

So yes, it’s fair to say that the iPhone replaced most of RadioShack’s products, and that the chain’s failure to fully adapt contributed to its eventual downfall, but perhaps it would be more accurate to say that the store already on the way out thanks to big financial mistakes and failures in its leadership.

In reality, the iPhone, no matter how poorly embraced by the company, may have (temporarily) served as RadioShack’s saving grace, but ultimately the smartphone and iPhone in particular destroyed RadioShack’s once successful business model.

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Comments

  1. taoprophet420 - 9 years ago

    I imagine the stores Sorint doesn’t buy will become AT&T,Verizon and T Mibile stores.

    Only thing I liked about Radio Shack was their trade in program. Other then that they couldn’t never catch up with the times.

  2. myke2241 - 9 years ago

    truly sad story of the of these once large market chomping stores meeting a fate like this because they because to big to adapt quickly to market trends. corp failure at its finest….

  3. I don’t know why any CEO worth anything would have said “let’s sell cell phones like everyone else… that’s the ticket!”. You completely sold out what you were once good at for a buck. Instead they should have continued to embrace the DIY culture and invested in things like Raspberry Pi, 3D printing and peripherals that integrated things like smartphones to your home and workplace. It could have been a mecca for HomeKit appliances, smart bulbs and innovation. Unfortunately you can’t do that when you hire people who could care less about technology and try to sell basic adapters you can buy on Amazon for $5 for $50.

    • ctyrider (@ctyrider) - 9 years ago

      I think the point is that “DIY culture” is mostly non-existent amongst the general populace.. and what’s left of it (Raspberry Pi et all) has moved online. I don’t think selling the things you mention via thousands of a brick-and-mortar locations is a sustainable business.

      • taoprophet420 - 9 years ago

        I fully agree with rider. The hobbiest culture is online now and is not viable as thousands of retail stores.

      • Well, it was always good to have a place nearby to get that one component you needed right away, and couldn’t wait for it to ship to you.
        I guess it’s all going to be online only once Radio Shack disappears. That is, unless they remain as an online store.

      • 89p13 - 9 years ago

        Agree with Rider as well – DIY means NewEgg.com to me.

      • jrox16 - 9 years ago

        Even decades ago when I was a teen, I couldn’t understand how Radioshack stayed in business. I always wondered, “who in the hell is coming here to buy this off brand stereo equipment, and how can they keep this store open selling $0.25 capacitors.” It just always baffled me that the sale of that stuff could be enough to keep those stores and those old men in suits paid. In my opinion, Radioshack somehow survived for many years past it’s expiration date.

    • rwanderman - 9 years ago

      Let me fine tune your comment because I had a similar thought reading the article.

      Instead of just catering to the hobbies culture, RS should have offered tech support for all kinds of devices and their own version of something like AppleCare for different kinds of electronic devices.

      There’s still a need for general tech support and while us Apple users like to think our products “just work” in fact many people who own iPhones and Macs need help and Apple genius bars aren’t always the best ways to get that help. This is true for all kinds of devices from all kinds of companies.

      It’s obviously too late for Radio Shack to do anything like this but I do think an opportunity exists and using at least some of Radio Shack’s prime real estate for “Geek Squad” stores or some such thing might be a good idea.

      • 2is1toomany - 9 years ago

        If RadioShack were to service an iPhone without being an authorized service center then the device would be considered “modified” or “tampered with”, nullifying any warranties, standard 1year or AppleCare. I know because it happened to me, I went to a small business that charged me $50 for a screen replacement on my iPhone and when my battery needed to be replaced I was told the Apple Store could not work on my phone because it had been tampered with. I asked how they knew and they showed me how some warning tabs had been missing and there was an extra screw that was actually loose inside the phone just dangling about. They were nice to me though and genuinely felt sorry for me since I didn’t know and offered me deal on a new phone so I took it.

        The way I see it, if RadioShack had invested in mobile repairs and did it the right way they would have needed extensive training to be pushed out to its stores. That training costs a lot of money if you plan on servicing more than multiple brands and multiple products. They could have started off with Apple products first but again, it would have been really expensive to retrain all their employees.

        If they hadn’t invested in the proper certifications then they would have created a mess for themselves with techs that weren’t properly trained working on devices that weren’t going to be repaired correctly.

        They could have done what staples and bestbuy is doing by focusing on PCs but they’d be too late to the game. PC industry has overall been on a decline and staples themselves just closed a lot of stores in the past 2 years due to disappointing sales of office supplies, computers and tech services. I only wonder how much longer Best Buy can keep turning a profit on computer and mobile by renting out their store’s floor space with the store-within-a-store concept.

        There was just too little room for RadioShack to survive in today’s market and their leadership team made too many bad choices and too little choices at all.

  4. rob nienburg (@robogobo) - 9 years ago

    Wall Street killed Radio Shack. If they had just kept to selling electronic components and cool shit for building and fixing things, they would have been fine. But investors expect growth, and selling $600 phones looks a lot better than selling $2 circuit boards and replacement switches. Radio Shack gave up a market they had cornered, forcing DIYers to online shops (not the other way around), and started doing the same thing everyone else did, and they were much worse at it. So now we have no walk-up counter for parts and they’re going bust. Radio Shack used to be awesome, with great shit and knowledgable staff. The past 10 years they got rid of anything useful and hired teenagers who never built or fixed a thing in their lives.

    • PMZanetti - 9 years ago

      You must have missed the part of the article where the market for DIY crap and over priced adapters evaporated.

      Selling high priced phones is the only reason why they are being delisted in 2015 and not in 2010.

    • jrox16 - 9 years ago

      It never made sense to me even 15-20 years ago how Radioshack stayed in business and I always jokingly assumed it was a front for mob money laundering or something lol…
      They sold strange stuff no one wanted (who bought those Realistic stereos??) and somehow survived selling nickle and dime electronics components. Well, how plays with those electronics components anymore anyway? They had to try to compete in the modern world. You seem to ignore the basic laws of business which is supply and demand. If people were really still buying all that crap and the store was actually turning profits, they would still be selling it. They didn’t give up the DIY stuff so it could go on line, they didn’t have a choice because they weren’t making money. Wall Street or not, a business has to be profitable.

      Another great example is the RC car world. There used to be a lot of RC car tracks, and now they are few and far between. That stuff used to be very popular back in the 80’s and 90’s, I know, because I loved it and raced it. But now, there are far fewer people interested since the newer generations have been born into a world of amazing looking video games. Kids aren’t interested in racing RC cars at some dusty track, but would rather spend the same amount of money on a gaming system and play hi-def racing games, even against other real people. I say video games killed the RC Car Hobby, and that’s just evolution. All the tracks around all the suburbs where I lived closed down.

      • paulthefencerfencer - 9 years ago

        I don’t know anything about RC cars. But you’re wrong about the stereos. In the 70’s and early 80’s Radio Shack had some astounding equipment that they sold under their “Realistic” brand name. The Realistic STA-2000 receiver, which i owned, was top of the line in it’s day. And even today to find one used or on E-Bay sells for around $400. So Radio Shack didn’t always sell “nickle and dime” electronics.

  5. Markus Galla - 9 years ago

    I think the biggest problem for stores these days is not the lack of customers looking for “traditional” equipment. It is the lack of trained professionals to sell these things and make the people believe that without this stuff they will not be complete. Look at Apple staff: the moment you hit the store they make you believe that you are the most important person in the world. Sometimes it is really hard to resist. Every time I visit an Apple store I have to talk to a staff member, because he wants me to talk to him. He shows me all the advantages I already know about, just to remind me. Just to make me believe. Just to sell this stuff. You have to tell people about CD-players, radios, replacement parts and tell them, that it is much better to play a CD on a dedicated player than with the computer or listen to MP3s all day. You have to tell people that with the cheapest alarm system they sell you can feel a lot safer than without it. The satellite dish will get you 57 channels, but nothing on (thanks, Bruce!), so make them pay for even more channels, because Pay-TV rules. You have to embrace the customer and make him believe. If you just compare facts, no Apple product is really that great. But advertising, promotion and the dedication to the customer and the product is great. And the store has to look great with just a few but well placed products. Every Apple Store looks very clean. Just few products with a very good display. Customers need room to walk around and you have to see the customers already in the shop from the outside to make more people interested in what’s going on in there. If you cannot see the customers walking between the shelves, you will think the store is empty. You cannot just sell iPhones, you have to present them in the right way. Otherwise you will fail.

    • jrox16 - 9 years ago

      Ha, well, you’re right about the sales tactics and made your point very well and I agree with it, but I’d take issue with the “if you compare facts, no Apple product is really that great” part. That is just simply not true and quite exactly the opposite of reality. Obviously iPhones and iPads ARE great and its in the facts and details that makes that so. No amount of hand holding of customers or marketing (which there is actually very little of – how many iPhone commercials did you watch this weekend?) could sell 74 million iPhones in 3 months. People love the products because they really are great. Not perfect, but none are. You could instead say “Apple products aren’t life changing or don’t cure cancer” or something to that effect, and maybe that’s what you meant. But the way you put it makes it sound like you think so many people are fooled by just pure customer service and that’s far from true.

      It is a fact that iPhones actually contain the most innovative technology there is in a smartphone. The Fandroids’s heads would explode to hear me say that but it’s absolutely true, they are just stubbornly biased. No Android phone contains any advanced or innovative hardware beyond or matching the iPhone. Two simple and quick examples:
      Touch ID is very innovative and original and works extremely well and there isn’t a single example of anything close in the Android phone world. I can’t go back to an Android phone mainly because of TouchID (and I’ve gone back and forth in the past). I can’t go back to putting in passcodes every time I check my phone. Motorola tried it a few years ago with the Atrix and failed. Samsung just tried and also failed with the old and obsolete swipe style readers that work very poorly in comparison.
      iPhone’s were also the first to become a true 64-bit platform, which Fandroids downplayed claiming that means nothing since the phones don’t have over 4GB of RAM, but that ignores the very real and dramatic multi-core performance gains and why an old 2013 iPhone 5S still CPU benchmarks higher than newer top tier Android phones from 2014. The competition is still scrambling to catch up and there will be true 64-bit Android phones in 2015. I wonder if the Fandroids will downplay that too when it’s on their side??
      A fandroid might then say, “but but Android phones all have higher megapixels on their cameras”. To which I would respond as saying that Apple understands photography better than those manufacturers like I do being a semi-pro photographer on the side. Having high MP is great if you have a huge sensor and lens, but for a tiny sensor and lens like a phone has, you want a smaller MP count to allow for larger pixels. This will yield a better result, especially in low light, and allow for faster processing and focusing. This is why the iPhone’s cameras are always rated as the best. Sure, you can find sharper better looking photos online from other phones like Galaxys, but what those comparisons don’t point out are the facts and details of how the photo was taken. The iPhone will take a better picture faster and more consistently, and that makes all the difference in the world. Apple makes 8mp cameras in the iPhone by conscious decision, not because they want to save money or cut corners, but because they know that balancing every factor of photography is the way to get the best overall results for the majority of photo taking situations. Whereas the Android phones instead go for marketing or gimmick and do not create balanced solutions. HTC’s M8 has a dual lens gimmick for focusing after the shot few people care about, and weighed low light shots too heavily as a priority with the choice of a too low 4MP sensor resulting in very soft daylight images. Samsung’s Galaxy phones do have great cameras, especially the new Note 4, but tend to weight MP too heavily and therefore do suffer from some software over processing and inconsistency, but are the best if not equal contender to the iPhones.

      I know I’m nit picking your comment, and I’m not that much of an Apple fanboy as it would appear, but I always cringe when I see people claiming, or appear to be claiming, that Apple products sell only because of great marketing and customer service, because that does an enormous injustice to hundreds of millions of people as well as nearly all tech website reviewers and vloggers.
      I think more than anything I wanted to just use your comment as an excuse to get my points out, and am not at all attacking you. I apologize if it seemed that way, not my intent.

      • sircheese69 - 9 years ago

        I don’t think Apple trolls like you really should be calling others “fandroids”….

        “I’m not that much of an Apple fanboy” As you sit day and in day out defending them. You are so transparent it’s laughable.

  6. nsxrebel - 9 years ago

    Lucky for some of us DIYers, we have Fry’s Electronics where you can still walk in and find find components and other bits and pieces that one might need for a repair.

  7. Steve M. Cess - 9 years ago

    Next to go would probably be BestBuy. No one shops at my local Radio Shack and buying a simple cord is overpriced. It is why so many shop via internet – Amazon, my favorite place to buy whatever. Working in this kind of retail is a Bitch…… sell $$$ sell$$$ sell$$$$$ or your ass is out the door.

    • taoprophet420 - 9 years ago

      Amazon is looking at buying some of the Radio Shacks. Most likely for their demo stores for tv’s, home theaters and Amazon’s own products. Maybe some computer and electronic supplies.

      Amazon buying them up to sell video games would be good competition to Game Stop.

    • Ed Lucas - 9 years ago

      another that might go first is PC richard. in my area they moved into the old circuit city’s. I’ve been in there a few times and the place is sad. one time i saw like 10 sales reps just standing around doing nothing. we didn’t even get asked once if we needed help. I can’t see how this store is making any money

  8. standardpull - 9 years ago

    The Shack never figured out why they should have stores. They Threw away their purpose of being 20 years ago. They turned into a smaller, less helpful Circuit City.

    The iPhone had nothing to do with status of RS. It failed due to poor, risk-averse leadership and governance.

  9. Joel Medina - 9 years ago

    I worked for Radio Shack for 3 years. First of the downfall is they couldn’t afford to hire people who had the answers to consumers questions. I left when I learned more than they could afford. And took my knowledge elsewear. Over the years visiting RS I notice the employees would stand there with this look of grand befuddlement when I would ask if they had a resistor with ## ohms or I need a bridged relay or something crazy like that. They would just say we don’t have it and I would find that they do. It got worse over the years to the point that they are just useless sales people now. It’s just sad cause I respected them so much before.

  10. 89p13 - 9 years ago

    I would never go to RadioShack to buy anything. The stores in my area had the least knowledgeable employees and no stock on anything that I ever needed. It seemed to me that most of the customer base was the over 70’s set and they didn’t know any better. As bad as the knowledge base is at BestBuy – it was higher than RadioShack.

    It’s a shame that their management chain was so clueless and unable to adapt to the changing markets that have happened over the last 10 years. They are obsolete as dinosaurs – IMO.

    “Make way for the New Boss – Same as the Old Boss.”

    • Ed Lucas - 9 years ago

      you’re right. they’ve only survived this long in the internet age cause of their older customers, like my elderly mother. my mother would always run to radio shack anytime she needed help with her radio or batteries for something. as the older crowd dies off the past 20 years so have their sales. under 60 crowd more likely uses the internet

  11. degraevesofie - 9 years ago

    I’ve been in a Radio Shack maybe twice in the last decade, and every time was a disappointment.

    However, years ago, I’d go to a local “Tandy” store (which was by then also Radio Shack) and stare in awe at the TRS-80 machines that had popped up there. This was just as I was learning to program (I was a kid, lucky enough to have parents who knew about that stuff). I couldn’t afford an Apple ][ back then, but the TRS-80 model I seemed within reach at some point (though eventually I got a TI-99/4A). The people at the store were all too happy letting me play with the machines on display (I imagine I was a living ad for them: “It’s so easy even that little girl has no problem using it” :-).

  12. paulthefencerfencer - 9 years ago

    I’m going to miss Radio Shack. Or as they’re known in Canada, “The Source”. There’s one still open near me but I don’t know how much longer. I bought my first real stereo there in 1978. $1000 in 1978 dollars. I would go there all the time for accessories. Just recently I needed a cord to run from my detachable corded headphones to my iPhone. The problem was that these Panasonic headphones had a recessed jack where the cord would plug into, an no cords would fit. They were always just a little too wide to fit into the recessed hole. I searched everywhere (not including on line). I finally found one at Radio Shack. So I bought 3 of them. Radio Shack has always been good to me, although I do know what you’re saying. They’re not what they once were. But like all great things from my teens and twenties; they’re all fading off and being replaced by on line store. Which is fine as well. I’ve bought tons on line. But sometimes you want to see and touch something before you buy. Maybe it’s just me and I’m in the minority.

    • bdkennedy11 - 9 years ago

      Well, the corporate office is closing so I would have to say The Source is going to be closing soon.

  13. My wife and I wanted to buy our first smartphone/iPhones. We went to an AT&T store and it was jammed. then went to the mall, passed by Radio Shack and it was empty. we walked in and out with new phones within an hour (my iPhone 4 her iPhone 3GS). However, I opted for pre-ordering my iPhone 6. she walked into a AT&T store to talk about a purchase for someone else and traded in for a 5.

    but I had not been into a Radio Shack since 2010, I guess. Maybe I went in looking for something/tiny gadget thing that only they’d have and they didn’t carry that anymore so i left.

  14. b9bot - 9 years ago

    Let’s not blame Apple for RadioShacks poor business policies and lack of innovation in sales. Apple has nothing to do with them. They sell lots of products not just the iPhone. This makes no sense.

  15. bdkennedy11 - 9 years ago

    3 years ago, I took my mom to Radio Shack to get her a free iPhone 4. The employee wanted to charge us a $50 setup fee. I told him, we can go to the Apple Store an not pay a $50 fee, so we left.

    2 years ago I went to buy a 6ft. audio cord. It was $15. No way in hell I’m paying that because I could get it for $6 at Fry’s.

    I never went back for anything again. So it’s not just about smartphones.

  16. Ed Lucas - 9 years ago

    as far as i’m concerned the beginning of the end of RS was the start of the internet age. I think the old timers who run the place never caught on or took too long to understand and realize the power of the internet. Not just the products that people use, but the power that internet shopping has become

  17. rsnyder6 - 9 years ago

    I remember in the mid-60’s being excited about the yearly shopping trip to an Albany (NY) mall because it has the nearest Radio Shack, (60 miles away). A few years later the small city near me got one. I used read through their flyers, and the “Flyer-side chat(s).”

    I was a regular at the Shacks near me from then on, until about 10 years ago, and even then I went in 10-15 times a year. I’d guess in the past few years I’ve been in maybe once a year to look for closeouts. They just didn’t offer anything special. The parts selection became never quite complete enough to supply what I needed, or make the trip worthwhile. (I still have junk draws of resisters, caps, ICs, but now usually buy online.)

    I’m just not sure who they saw as their customer. It can be worth it to pay more to shop locally and brick and mortar, but the salespeople need to know their stuff, and that changed greatly over the years.

    I do have a number of Radio Shack branded items I still use, some quite old but still working. I have a heavy duty clock/timer/switched outlet from the seventies I modified a little that I still use. A number of a couple decade old X-10 modules and switches. A few pairs of these nice little metal speakers that were a bargain back then, used for me secondary systems that still sound good. Back then I was soldering my own computer circuit boards, so I never got into the TRS computers, (put down as the TRaSh-80, but not that bad).

    Little bit of growing up for me gone.

    • paulthefencerfencer - 9 years ago

      I’m the same as you. I wasn’t clever enough to build my own stuff, so the majority of the parts held no draw for me. But back in 1978 I got my first “real” stereo system which was the Realistic STA-2000 receiver, that came with Realistic Mach One speakers and Realistic turntable. Best stereo I’ve ever owned. And it was $1000 in 1978 dollars. About 15 years ago I gave my receiver away. The speakers and turntable died years before. Now that I’ve gotten back into vinyl again after getting rid of all my original records, I’m dying to get that receiver again. Radio Shack had some quality products back in the 70’s and early 80’s. I miss those days. And I’d much prefer shopping in the store than buying, and taking a risk, with something online without having seen or heard it first.

  18. Leif Paul Ashley - 9 years ago

    I was very surprised that Radio Shack has lasted all these years. I honestly don’t have a clue where their revenue came from.

    Sadly this is like COMDEX or Computer Shopper going out of business.