RadioShack Blames Brand Oversaturation For Closings

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FORT WORTH (CBSDFW.COM) – Fort Worth based RadioShack today announced plans to close some 1100 underperforming stores as part of the chain’s plan to return to profitability. Company officials say the brand is oversaturated—citing as an example, eight locations within five miles of CEO Joseph Magnacca’s Fort Worth home.

“We will continue to have a strong, unmatched presence across the U.S. with over 4,000 stores,” says Magnacca. “Our entire team is focused on execution as we work to improve our performance in the coming year.”

“Some of it has to do with oversaturation, but some of it also has to do with the demographics of the people nearby,” says Ed Fox, marketing professor at SMU’s Cox School of Business. “Maybe they’re not the target shoppers for RadioShack. Maybe they were many years ago, but they’re not today.”

The aging of RadioShack—both its customer base and merchandise—was the catalyst for a headline grabbing Super Bowl ad last month. A horde of 1980s icons descended upon a Radio Shack store after phoning in a warning that the 80s “wanted their store back.” The funny and self-deprecating commercial acknowledged the company’s dated image. But, experts say the retailer must deliver more than memories and laughs—young, tech savvy customers are looking for change.

As part of the turnaround, company officials are relying heavily on the success of what they’re calling ‘Concept Stores’—fresh, modern, and designed to deliver a better customer experience.

“That’s the direction they want to go, “ says Fox. “The question is ‘will they have the time to get there’.”

According to Fox, some closures were expected as the chain trimmed unprofitable locations, but the number—roughly one fourth of the chain—combined with disappointing fourth quarter results suggested that the retailer is in a deeper hole than many analysts expected.

“Given that their cash flow isn’t very good, will they be operating 5 years from now? I think that’s an open question.”

Connie Guy dropped by her neighborhood RadioShack store to get the screen repaired on her iPad and says she enjoys the convenience and hopes that her store is not one slated to close.

“They’ve been around a long time,” says Guy. “I like them.”

(© Copyright 2014 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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