In the words of esteemed Forbes contributor Larry Downes, Radio Shack is going out of business…slowly.
Today the company reported a loss of $21 million in the second quarter of 2012, and it suspended its dividend. Its debt was downgraded to CCC, which is two notches above toilet paper. The stock is down 30% this year to $2.50. It was $30 five years ago. In January it suspended its stock buyback program. The company has been mishandled over the years by cost-cutters and short-term thinkers, even supposedrock star turnaround types, and a devil’s pact with second-tier wireless carriers (hello, T-Mobile and Sprint) to re-sell their services and subsidize their handsets. “Our primary operating focus,” said its CEO James Gooch on Wednesday, “continues to be on stabilizing gross margins and aggressively managing our cost structure.”
No. Wrong answer. I have a modest proposal that could rescue the company (or at least put people back into the stores and put smiles on the faces of the downtrodden folks who work there). Stop selling phones. Stop selling TVs. Stop selling flat-screen TVs and crappy stereos. Stop with the tablets and cable boxes and game consoles and universal remotes and all of the other stuff you can get at Best Buy, Amazon or Wal-Mart for the same price or less.
The solution outlined at Forbes is all about go all-maker-all-the-time…
It’s time to get out of all the leases of the smallest locations (at some point having 7,300-plus locations is more liability than asset, no?) and narrow down to just your biggest locations. Then turn them all into TechShops. That’s right. TechShops.
..Radio Shack, you need to do this. Unleash innovation. Hire underemployed shop workers. Give skills to underemployed people. Become shop class for school districts that are cutting shop class. Host a few Obama-Romney photo opps. You’re already hip to the Maker movement, and have been all along since the first store opened in 1921. You already have your own DIY web site, you make the scene at Maker Faire and science competitions and you’re already sponsoring something called the East vs. West Hackerspace Challenge, with the winners getting a $1,000 gift card and prominent demo at the 2012 New York Maker Faire and a feature in the November 2012 Popular Mechanics. These are all moves in excellent directions.