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The Radio Shack Problem

Many people wonder why Radio Shack is still in business. While I worked there, "Wow, Radio Shack is still in business?" was one of the most common inquiries made by customers. (It took a back seat to "Why do you need my name and address information?", though.) The only time any of the stores I worked at seemed to take in more than $2,000 per day in sales were around the holidays. Compare this to Taco Bell and it's easy to see most Radio Shack stores do not make much money. After working at three different, barely profitable, strip mall locations, I can say with some certainty that Radio Shack's existence hinges on its indoor mall locations. They carry the burden of the other stores that are barely profitable. Since Radio Shack employees are on commission, getting transferred to an indoor mall location is actually a euphemism for "promotion".

Radio Shack is well known for its poor relationship with customers. From high-pressure salespeople (Due to Radio Shack's "meet your quota or get in trouble" policies, great for improving customer relations.), to overpriced run-of-the-mill quality items, Radio Shack has one market cornered - customer distrust. Prior to the :Cue:Cat privacy fiasco, the largest customer complaint is the store's request for the customer's name and address. Each employee is actually required to obtain a daily average of 90% or more names and addresses, if the customer asks why, the employee is supposed to dodge the truth (mailing lists!) and say "It is for your benefit, so if you lose your receipt and need to return an item, we can look you up in the computer." While true, it is a guise for the more sinister reason for collecting the information. Employees are trained to approach you and ask if you need help finding anything. Employees are trained to ask if you're ready to check out, especially if you've just picked up a big ticket item. While employees are not required to ask if you want to change your long distance, ISP or whatever the current gimmick is, if they don't ask or no one buying it - it's still a statistic recorded the respective employee's profile by the point of sale system and low numbers can be a reason for a "talk with the manager".

While customer distrust of store policies and salespeople play a large part in Radio Shack's lack of customers, lack of understanding what the few customers they have desire from the store is a potentially more extensive problem. Radio Shack prides itself on being a vast resource of electronic components, even if the majority of them must be special ordered. This makes Radio Shack a convenient source for the DIY electronics repairman, hobbyist or geek. Unfortunately for Radio Shack (and its commissioned employees), a few packages of resistors, capacitors and some diodes are not going to keep the store in the black. Have you ever been ignored by the salespeople after they've seen you venture over to the parts racks? This is because the majority of salespeople do not want to ring up inexpensive items! It hurts their dollar-per-ticket statistics and damages their commission. Radio Shack's business model with these type of customers (DIY / hobbyist / geek) is fundamentally flawed. Of course a customer who is buying a $0.33 fuse to repair his 10-year-old VCR is going to be interested in your sales pitch for a brand new overpriced cell phone! He's probably intelligent, well read, has access to the Internet and has NEVER seen lower prices on the same item. Yea, right.

Even though Radio Shack seems like it should be more doomed than a turkey on Thanksgiving, "there's one born every minute" and they keep going to the stores. The rest of us can just go there to milk them for free hackable hardware, ruin the salespeople's dollar-per-ticket statistics by buying small packages of resistors, and using the free catalogs for their combustible properties.