RadioShack’s Fate Part III: RadioShack Meets the Makers, Again

Karl is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

“Gentlemen, we can rebuild RadioShack. We have the technology. We have the capability to build the world's first bionic retailer. RadioShack will be that store. Better than she was before. Better, stronger, faster.”

Introduction to the Six Million Dollar Man television show of the 1970’s (perhaps modified slightly)

As a young male, the Six Million Dollar Man was the greatest show ever conceived. Superpowers, technology, action, bionics, cliffhangers – it had it all.

As an adult, I now realize that it held another, deeper lesson.  That of rebirth.  Rebirth is an enduring element in our culture’s literature and arts; that anyone or anything can be remade into something different, even better.  Leaders and shareholders of companies are not immune from this belief, even if their belief is seldom realized.  The history of the corporate world is littered with the ruins of failed turnarounds, transformational mergers, and ill-conceived spin-offs.

Few retailers are able to transform once, let alone create a process of continuous transformation. If Kmart, Sears, Montgomery Ward, Gap, Boscov’s, Woolworth, and numerous others are any indication, the odds are against RadioShack. Walmart is among the few that seem to have figured out a formula for continued success. Even a retail expert who knows how to create modern retail experiences is having problems transforming JC Penny.

However, I believe RadioShack (NYSE: RSH) could be an exception.

This belief derives from the excitement that I once felt entering the store. “What?!”, you exclaim, “What on earth could have been exciting about RadioShack?”.  Years ago, RadioShack was a fascinating slurry of hobby essentials, with tools, kits and feedstock for a dozen hobbies.  Depending on the RadioShack / Tandy (Radio Shack was essentially cobranded with Tandy through the 1980’s) store you visited, even into the 1980’s you might find leather tooling equipment, CB and Ham Radios and early computers and video game systems. In fact, it was a leader in the consumer computing market when it sold the TSR-80 in the late 1970’s and early 1980’s. My visits were prompted by everything from the need for materials to complete Boy Scout merit badges to buying rechargeable batteries before they were ubiquitous. I still use the RadioShack purchased Heathkit battery tester that I soldered together over twenty years ago.

While RadioShack offered something special early on,  everything about RadioShack including its signage, uniforms, fixtures, lighting - even the products they carried - became increasingly dated in appearance if not function; as well as less exclusive into the 1990’s. The modern era’s faster product cycling demanded that stores, particularly small ones with limited selection, ever more swiftly refresh inventory. It did not, probably falling a decade behind at its worst point.

While no longer a decade behind the times, its challenges have left less slack (cash flow, credit worthiness) for reinvention.  These challenges have been many, including the rise of the big box and category killers, its own CEO resume fraud scandal, expanding dominance of Verizon and its exclusive retail outlets, and cheap Chinese import clones for virtually everything RadioShack sells.

Feed the Makers

The modern maker movement is not just about people who make things; it is about people who repurpose and remix objects using traditional and technological skills. Last year, 100,000 attended the seventh annual national maker event, Maker Faire, and at least that many are expected this year (looks like 120,000 attended).  DIY culture is clearly alive and well, but it has shifted.  Gone are the days where millions of Americans are focused on installing the perfect stereo, using RadioShack for their gold plated connectors and wiring.  Now, tens of thousands of new technology enthusiasts are building their own 3D printers, multi-purpose robots and musical instruments.

RadioShack has never abandoned this group, as you can see at from Shack’s DIY tagged blog postings. It even has a DIY site.   However, RadioShack must do much, MUCH more to become indispensible to this crowd. DIY items are seldom featured in weekly advertisements, nor is there much real infrastructure available to supporting that culture.  Yes, RadioShack sponsors an annual create competition, but it is only in its second year, another piece of evidence of how much catching up is has to do.  And only four of its blog posts feature ‘makerfaire’ as a tag. RadioShack needs its own maker blog, with prolific and charismatic Mr. Jalopy clones as writers. Other ways to enhance RadioShack’s DIY cred include:

School – Classes & Partnerships

Woodworking; metalworking; automotive and transportation technology; masonry and shelter building; breadboards and other electronics; and the wild riot of the computer world including hardware, software, sensors, programming and full systems design are all fair game for makers.  Why not partner with vocational technical schools (Vo-Tech), for-profit educational institutions, county colleges, and government and non-profit educational institutions to teach maker skills?  Co-branding, rebranding, naming rights, supply relationships, shared teaching and more could be considered.  Create your next generation of buyers.

Workshops

Perhaps full scale education and degree programs are a bit too ambitious? RadioShack could fill the gap more incrementally just as Home Depot fills the gap for various home projects.  Schedule an evening session in the store and lay out everything to make, for example, a home electricity generation windmill, and teach away.  Much of the material and many tools will be conveniently provisioned from RadioShack.  Even if the generator is a motor from a dead treadmill, a maker favorite, surely they could sell a few DC appliances to run off the windmill generated power?

WORKSHOPS, BABY!!!!!

A few classes at a pequenita storefront? Fuggedaboutit! How ‘bout beaucoup grande workshops with everything from computer controlled laser cutters to sewing machines, metal lathes to mills, sand blasting booths to spray painting enclosures?!  These exist in magical places known as TechShops and represent promise and peril to RadioShack.  Facilities such as these are big, capital intensive and will spread slowly; only about eight exist now with the expectation of 20 within three years.  But heaven forbid if Techshop decided to supply the makers. If TechShop will be the Kinko’s of the Maker movement, RadioShack needs consider its value proposition to the makers.  Supply house to the makers?

Festivals

If the Maker Faire can get 100,000, you can sponsor or create one or more of the “Mini Maker Faire” events already popping up around the country. Start small, innovate and whatever you do, don’t insult the group.  They will know when you are being disingenuous.  Know that if you offer a genuine experience to people, they will naturally gravitate to your products and services.

Paddler Peddler as Model for RadioShack in its Maker Makeover

A successful retailer in New Jersey is a great example of the kind of retailer RadioShack could become.  The Jersey Paddler, located in Brick, New Jersey is a fine paddlesport and outdoor gear shop on its own.  But they are much more.

Paddlesport, one of the largest canoe, kayak and stand up paddling shows in the United States, is run by the Jersey Paddler.  The store invites vendors to the show, allowing those vendors to sell direct to the consumer at a show discount.  Talks are given; demonstrations happen inside and outside in a holding pond next to the conference hall; watersport related movies are shown and premiered; and there are an abundance of experts available for Q&A.

Some weeks after the show, you have the ability to choose a few of your favorite boats to try out on the water near their store.  In warmer weather, they offer paddling classes in flatwater and ocean environments.

Paddlesport equipment has higher price points, and margins remain high, partly due to the difficulty in transporting large items and complexity of providing expert sales and service for these items.

Don’t think that catering to makers means RadioShack continues to focus on 50 cent connectors; the kits here and here show that there are plenty of higher priced items to be sold.

Feed the Makers and they will feed you, and your company, back.


Writer has owned the stock for a while, and intends to hold stock for a while more. As news flow and business models in and around RadioShack develop, the desire to hold may wax and wane. Since the writer is sure he missed some crucial points and great ideas and might have – EEEK!! - made mistakes in this write-up, he encourages you, no, BEGS you to jump in the Disqus discussion below with corrections, new facts, links to sources, back handed complements and insults, and heaps of additional speculation.

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