Posted by: coastcontact | February 6, 2015

Radio Shack and the ever Changing Retail World

Even before the internet became the 21st century shopping mall major store chains saw their demise. The one thing that they all had in common was their inability to remain relevant at the time of their failure. There is no doubt that Amazon, E-bay and other internet sales companies have impacted the retail world but they only hastened those chain store closings. I believe there is more to the story than that.

A July 18, 1997 article in the New York Times offered this explanation for the closing of Woolworth’s 400 remaining five-and-dime stores. “Among discount stores, Woolworth is only the last, if the most prominent, victim of larger and stronger competitors like Wal-Mart and Target, which offer more selection, quicker checkout and often lower prices.”

Sol and Robert Price raise $2.5 million from friends and family to open Price Club on July 12th 1976. That was the start of a new wave of warehouse stores that offer limited selection but dramatically lower prices. Part of their success was their ability to negotiate long terms for payment of the merchandise that enabled them to obtain the money to re-pay manufacturers after the goods were sold to their member consumers. Costco’s year to date total return is already 8.43%. Last year’s total return was over 35%. That company has a web site but drop by their stores on a weekend and finding a parking space is a chore.

The latest big chain to enter bankruptcy is Radio Shack. I remember when the chain was known as Allied Radio Shack and its primary goal was serving electronic hobbyists. The chain expanded far beyond that formula and that was its mistake. The chain did not adopt a new formula. Their prices are high and their mix of goods is unimpressive. I am amazed they have survived. “Two brothers open the first “Radio Shack” in Boston, a small retail and mail-order business supplying ship radio equipment and “ham” radios” according to a Radio Shack website.

Sadly Sears will probably follow Montgomery-Ward into a fond memory. The just don’t appeal to the current expectations of retail consumers.

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Responses

  1. I am really with the good days.. I enjoy your post. Thank you

    rootiebar


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