RadioShack’s Dilemma

Online shopping, per the RFP, has not only made consumers more price sensitive, but has commoditized the customer service provided by RadioShack because questions can be answered online. While the company still emphasizes the knowledge of its store associates as a selling point, this has created a “brand relevance challenge,” per the RFP — one that will need to be addressed by its agency finalists.

“The amount of information available online has mitigated the need in many cases for a skilled sales associate, especially with younger consumers,” the RFP states.

As such, RadioShack is looking to reposition its brand under a marketing team that includes a new CMO — Lee Applbaum, former CMO at Schottenstein Stores — and vp of marketing Stephen Colanero, a former consultant who arrived in April 2008. It’s also conducting a “comprehensive brand positioning research project,” per the RFP, that will become the foundation for the retailer’s next big campaign. That project will likely be completed in mid-February, in time for the briefing of finalists in the review. Account revenue is estimated at $10 million.

RadioShack executives, meanwhile, are preparing to meet with seven shops that advanced to the chemistry-and-credentials round, based on their replies to the RFP. The meetings begin this week and continue next week, sources said. The shops include WPP Group’s Grey in New York; Omnicom Group’s DDB in Chicago; Interpublic Group units Deutsch/LA in Marina del Rey, Calif., and Lowe in New York; independent McKinney in Durham, N.C.; and the incumbent, Havas’ Arnold in Boston, said sources. The seventh agency could not be ascertained.

From that field, three or four finalists are expected to emerge. The process, being managed by Select Resources International in Santa Monica, Calif., is slated to be completed next month. The agencies either declined to comment or could not be reached; SRI and RadioShack also declined comment.

RadioShack has shown signs of modest growth, though 2008 fourth-quarter results aren’t out yet. Third-quarter same-store sales grew nearly 8 percent compared to the same quarter of 2007, RadioShack reported. Net income for the period totaled $50.2 million, or 39 cents a share, up from $46.3 million or 34 cents a share in Q3 2007.

RadioShack’s total annual spending in major media has shrunk in recent years and not just among traditional outlets like TV. Internet spending also has declined, though less significantly than other media. In 2004, interactive media spending approached $14 million; that figure totaled nearly $10 million in 2007 and more than $4 million in the first nine months of 2008, according to TNS Media Intelligence.

That said, the RFP states that “digital marketing is a key component upon which the new agency will be assessed. In short, [RadioShack] is looking to increase the relevance of their digital messaging and placement to capitalize on consumers’ strong behavior around researching electronics purchases online and then making visits and ultimate purchases in-store.”

While media planning and buying duties are not in play — and remain at Aegis Group’s Carat in Dallas — the RFP indicates that the client wants a creative agency with “strong talent” in communications planning.