Radio Shack Mistakes led to it Declaring Bankruptcy. Surprised? Nope.
By Tom Dougherty
Humans by their very nature are afraid of change. Retailers are too, but a failure to embrace change and anticipate it is exactly what has doomed many retailers in the past.
The Radio Shack brand is perfect example of that. It was once positioned as a leader in the retail technology, but has fallen on such hard times that it is reportedly up for sale with competitor Best Buy rumored to be a buyer. It should have never reached this point, but a lack of brand focus – and an inability to predict change – put the retailer in this position and serves as a case study for what retailers need to do if they are to remain relevant.
For many analysts, the impending failure of Radio Shack has been centered on operations. A failure to cut deals with manufacturers and coveted brands. A failure to expand. A failure to find a true niche.
All of those reasons are valid. They are among the reasons why Radio Shack has become unimportant to the average consumer.
But the reasons for failure are more related to its brand because brand affects everything.
The Radio Shack Brand is Lost
The Radio Shack brand is simply lost. It has tried to find a niche of selling cell phones, but the cell phone service providers realized they didn’t need to depend on a middleman, unless it was one of the big boxes (like Best Buy) that had huge consumer traffic.
Last year, Radio Shack branding attempted to rebrand itself as “The Shack” in order to get the old-fashioned term of “Radio” out of its name. It demonstrated (somewhat) that the retailer understood one of its problems – lack of an updated technology-based feel – but the execution was faulty.
Reasons For Failure
For other retailers looking to adapt to change, those execution flaws should serve as mileposts to whether you are adapting to change and remaining relevant to consumers.
1. “The Shack” wasn’t relevant.
The strategy to eliminate “Radio” was to mark a sea change in entering the 21st century (in technology terms), while building on whatever brand equity the old name had. The problems were that there was little brand equity and, most importantly, “The Shack” wasn’t meaningful to audiences either. It didn’t tap into the wants and needs of consumers, nor was it a reflection of them.
Most consumers, especially those shopping for technology, want control, simplicity and innovation. “The Shack” felt more like a hangout, which the Radio Shack brand retail stores certainly are not.
What most likely happened was that the retailer remained afraid of change, so wouldn’t go all the way. (In fact, many of its “Shack” ads still included the Radio Shack Brand and logo, and the retail stores themselves remain named Radio Shack.)
Also, the new name represented an inside-out perspective, not an outside-in one that is only about the consumer. It is only about the store.
For those wanting to adapt to change, there’s one simple rule: Strategize around consumers only, not about the sacred cows within the company. Change is true change. Not tepid change.
2. There was no true change.
Not that “The Shack” had a branding promise, but even if the re-branding was to remain in step with the times, the store itself had almost no change to fulfill a promise. It is still about batteries and cables – which consumers can get at Best Buy or Wal-Mart – and “dumb” technology.
Much of its new advertising has centered on cell phones, specifically adding T-Mobile to its list of proprietary phone brands of AT&T and Sprint.
The problem is those offerings are not unique. Those cell phone providers have their own retail shops, and they are available at other retailers as well. The Shack needed them more than the providers needed The Shack.
For those retailers adapting to change, change isn’t just a marketing tactic. It’s so much more than that. The new promise needs to be fulfilled, which often means cultural and operational change as well.
We tell clients that brand isn’t just about marketing. It’s about everything the company does and who it touches. The brand stewards aren’t just the marketers. They are everyone who works in the company, which is why brand training is such an important part of what companies must do. They must begin asking themselves what changes must be made or what priorities need to be re-arranged in order to become that brand. (Think of how Google and Apple culturally fulfill their promises. Or, to relate it to the retail world, Wal-Mart.)
3. It made a leap that simply wasn’t there.
“The Shack” was really a stretch, a stab at forcing a nickname that didn’t exist in the marketplace. It, frankly, makes you wonder if Radio Shack rebranding actually did consumer research, the basis for all successful brand building.
Think about this: Even if consumers were calling Radio Shack “The Shack,” that doesn’t mean it was a positive. Customers weren’t exactly flocking to the retailer if they were calling it that.
The rebranding of Radio Shack wasn’t believable. It felt contrived and imposed on consumers, especially when they didn’t see any real change.
For retailers, change comes in understanding what aspiration consumers want to see themselves as and reflecting that. To explain it in extreme terms, branding should be almost cult-like. As a consumer, because the brand reflects your aspirations and those reflections are fulfilled, you are incapable of choosing anyone else.
In those cases, consumers will even pay more for it and inconvenience themselves for it, a key result for retailers.
There must be a belief system, or aspiration, that exists in the marketplace that you tap into. The Apple Store has certainly done that, and its brand isn’t even about technology. (It’s about thinking differently.) Circuit City did not.
GameStop, Barnes & Noble, Petsmart, Nordstrom and others have. But Sears, Kmart, Foot Locker and others have not.
The important thing to know is that those who have not, still can. They just must embrace change now before it’s too late.