As attention centers on Best Buy Co. BBY and how its new Chief Executive Hubert Joly can turn around the largest U.S. electronics chain, often ignored is its smaller rival RadioShack Corp.’s own revamp efforts.
Just like Best Buy, RadioShack RSH in February named its own new CEO as it seeks to reverse declining sales and stem losses. On Monday, the company unveiled on New York’s Upper West Side what it hoped will be an answer to turn RadioShack into an “electronics playground.”
Aimed to lure “tech-hungry” shoppers, the store highlights prominently popular brands including Apple AAPL , HTC and Samsung and mobile carriers like AT&T and Verizon. It also has more interactive features such as a “speaker wall” that allows shoppers to compare speakers by playing music from their own Bluetooth-enabled devices.
There are also touchscreens and apps for shoppers to do research on products. A service desk is featured. What the company is traditionally known for, including transistors and soldering irons, also remains in stores.
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Our goal “is to make our iconic brand relevant to new segments of the consumer market, while reinforcing our commitment to the strong and loyal base of customers,” said Chief Executive Joe Magnacca, who joined from drugstore chain Walgreen Co. WAG
RadioShack said it plans to open different prototype stores in New York, New Jersey and Texas over the next several weeks tailored to local market needs. They’ll then become the blueprint for future remodeling.
“This is an important and critical store for” RadioShack, analyst David Strasser at Janney Capital said, adding the new Manhattan store is “Applish.” “Similar to BBY, where new management is well on its way to an entire overhaul of the company’s culture, this store is a solid step in the direction of this overhaul.”
However, while analysts praised the new format, some said it’s far from being the winning ticket RadioShack needs.
UBS analyst Michael Lasser estimated RadioShack would have to spend about $100 million for every $25,000 needed to remodel each of the company’s 4,300 plus U.S. stores. However, he estimated it to generate only $3 million in free cash flow this year, largely because of non-recurring benefits like a $65 million gain from the exit of running mobile shops inside Target Corp.
“A wide-scale store remodel program would consume significant resources,” he said. “The prototype is far from certain and many questions remain.”
Date: July 2, 2013