Radioshack Plots Comeback After Twice Declaring Bankruptcy

Anyone who has seen James Cameron’s blockbuster Titanic—or knows the story of the Titanic’s 1912 sinking, period—will no doubt recall the wireless operator who stayed at his telegraph key sending distress calls even as the icy Atlantic encircled his feet. So here’s an additional cocktail party fact or two: The operator’s name was Jack Phillips. And his place of employ—the radio room on the boat deck—was called a radio shack. Most every ship had a radio shack by 1912, in fact. But if the slang sounds familiar, it’s probably because the wireless man’s post inspired the name for a certain retail electronics chain that made the news again late last year. RadioShack, the legendary electronics retailer, found its name and assets snapped up in November by a company called Retail Ecommerce Ventures. REV has since combined RadioShack with other ghosts of retail’s past such as Pier 1 Imports, Linens ’n Things and DressBarn to harness the power of well-known brand names while also creating a diversified shopping destination. “The ultimate objective here is really not reviving [the RadioShack] brand—it is to create a massive online shopping mall,” REV CEO Alex Mehr told Adweek. “Imagine the shopping malls that you and I grew up with. They had a lot of familiar brands, and the collective gravitational pulls brought people in. That's what we're creating.” Mehr’s task won’t be easy, but the familiarity and resiliency of RadioShack might help. The company has survived many a storm during its century in business. Yet, much like Titanic, it’s hit its share of icebergs, too. Brothers Theodore and Milton Deutschmann began RadioShack in 1921 as a place for wireless operators on ships to get parts for their sets. When the company began catering to the home radio hobbyist, it established a template that worked for the next 50 years. Well into the 1980s, RadioShack was the go-to store for capacitors, resistors, switches and wires. Expanding into home electronics, RadioShack sold one of the first home computers—the TRS-80—in 1977, and by the 1980s, it moved millions of Sony Walkman sets. By the 1990s, cellphones would make up half its revenues. Then things began to fall apart. Apple’s 2007 introduction of the iPhone left RadioShack flatfooted. As competitors built online shopping portals, RadioShack didn’t have one. And by the time it built one in 2006, it was too late. The company posted its last profits in 2011, then slid into bankruptcy twice—in 2015 and again in 2017. Now REV is giving RadioShack another shot, though the looming presence of Amazon would appear to shadow the odds. But Mehr said he’s not concerned. “Electronics is a huge vertical,” he said. “Best Buy is the seventh largest online ecommerce store in the United States. So what does that prove? That proves that you can have a successful online ecommerce brand and build a big business.” No item better embodies RadioShack's rise and fall than the cellphone. Back in distant 1987, RadioShack pioneered the segment, selling a 'portable' cellular phone with a battery pack that was the size of a shoebox at the dear price of $2,495—that's $5,869 adjusted for inflation. But by 1989, the price of RadioShack's CT-201 had dropped to $999. And as the 1990s dawned, RadioShack sold its CT-350 phone under store brand Tandy and bet the farm on mobile. Unfortunately, profit margins were slim, and before long, competitors such as Best Buy (and then the carriers' own stores) began to siphon off customers. When Apple unveiled the iPhone in 2007, the writing was on the wall. Wired for Sound — RadioShack's original 1921 shop (1) drew wireless operators from ships tied up in the Boston Harbor. In fact, the store took its name from the shipboard radio shacks (2) where wireless operators sent and received messages. As the chain grew, it helped lead the computing revolution by offering its own personal computer, the TRS-80, launched in 1977 (3). By the early 1990s, RadioShack was at its peak, with thousands of locations such as this store in a Canadian mall (4).

Perspective

After Declaring Bankruptcy Twice, RadioShack Plots Its Comeback

It joins the likes of Pier 1 Imports and DressBarn for an 'online shopping mall'

Robert Klara

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Robert Klara