The Decline of RadioShack...What Happened?

[Music] this video is 100% a result of your requests the first time I saw the topic it was mentioned in the comments and I passed over it I figured I would cover it down the line because there were other topics I wanted to get to sooner then the request kept coming in to a degree where I figured there must be some things I'm not aware of and there must be a reason this is so heavily requested so I decided to investigate and I'll say right now it's shocking that this decline didn't Mack them out faster they're like a boxer that's just been taking hits from the first round and oddly enough they're still standing but the knockout punch can't be far I was quickly fascinated by their decline and honestly this was the first time in my life I'd ever had any interest in the company known as RadioShack the company was started all the way back in 1921 by two brothers in Boston and as the name implies they sold radio equipment it had the same name as today but back then RadioShack was two words today it officially seems to be one word though it's still written as to in a lot of places like if I searched RadioShack and Google their website result comes up as two words in 1995 they changed their logo from two words to one and I suppose that led to the slight name alteration of the entire company but it all started in the early 20s and everything went well for the next 40 years the company expanded and built some large store locations but by the early 1960s RadioShack was already struggling they were selling radios just fine but their costs were outweighing their sales and they just couldn't make the business work properly so a man named Charles Tandy who was strangely the owner of a leather company bought RadioShack and started making changes the biggest change was probably switching to smaller store locations the thinking behind this is that they would see which products they sell best and only sell them the products that weren't selling as well we're just taking up space without bringing them much benefit and it seemed to be effective this along with many other changes save the store and put them in a good position once again also in the 1970s CB radios became a big fad and not surprisingly this was a good thing for Radio Shack Charles Tandy passed away in 1978 but RadioShack was still owned by the Tandy company at 10 in the 1990s the decision was made to focus a little less on radio and electronic parts and a little more in popular electronic products they went pretty heavily into cell phone sales it was right around the beginning of the 2000s when RadioShack started to decline once again and they never recovered from this one this decline is the same one that they're experiencing today which is what's so shocking they've been on a steady decline for over 15 years and somehow still standing have you ever played a game of Monopoly where it's clear you've lost but you just refuse to let it end the opponent has hotels all over the board and all you have are a few houses and the two cheap purple properties you keep landing on bad spots and mortgaging things to pay it off maybe you get a good chance card or pass go and get $200 and that keeps you in a little bit longer you make some crazy trades to pay off some debts before you know it you've been playing for half an hour and all you've been doing is making little moves just to stay alive you haven't done anything that would help you come back and win this is what RadioShack has been doing they made deals with cell phone companies set up kiosks and Target rebranded themselves as the shack they did so many different things over this period but none of it was going to turn things around all it did was benefit them a little bit immediately but most of it ended up hurting them in the long term if you were trying to pinpoint a year where things went really bad for them I'd say 2012 is a good place this is the year they went into negative profits 72 million dollar profit in 2011 139 million dollar loss in 2012 and a 400 million dollar loss the year after between then and now everything spiraled out of control soon after they were taken off the New York Stock Exchange because their stock price went really low less than a dollar and they weren't trading enough shares to meet the requirements to be on the exchange their employees tried suing them for promoting their 401ks that were tied up in RadioShack stock the whole thing was a complete mess here's something else that stands out I showed you the negative profits starting in 2012 well negative profits means they're not making money to run their business so they have to seek money from elsewhere commonly alone they were able to get a loan from a place called Salas the 250 million dollar loan but as a condition for this loan RadioShack agreed that they wouldn't be allowed to close more than 200 stores in a single year without Salas approving well when companies are losing money the strategy is usually to identify the stores that are losing the most money and closed them down it makes perfect sense close those stores and you no longer have the losses from them and theoretically the overall profit should instantly start to increase we see it all the time so when RadioShack knew they were in a position where they would likely have to start closing stores it wasn't a great idea to give Salas this power that would prevent them from doing it but also remember RadioShack was in a terrible position and needed this money to maintain operations they may have gone out of business if they hadn't got in this loan they were backed into a corner so they agreed to these conditions fast forward a little bit RadioShack is losing money like crazy and desperately wants to start closing stores Salas doesn't let them Salas doesn't think this is the right way to go but RadioShack has reason to believe that they have too many locations and too close to each other and they're basically stealing customers from themselves so now we have RadioShack severely struggling and Salas won't even let them downsize with dignity by the way if you had any doubt about how much RadioShack was struggling I hope it's clear now in the beginning of 2015 RadioShack declared bankruptcy which now enabled them to start closing stores again this company is not at all I mean it traded for nine cents a share in the OTC pink sheets we already knew this is going to happen they immediately announced the closure of near eighteen hundred stores right after the bankruptcy a company called standard general bought RadioShack though I don't see why they would want it as if all this wasn't enough RadioShack filed bankruptcy again earlier this year it's closing one thousand more stores and now only 70 locations remain open they may linger on with a few locations but it's effectively out of most of our lives so the question remains where did they go wrong everything spiraled out of control over the past few years but how did they even get in that position there's three things I think most contributed to all of this and before you say it I'm aware of the management issues there was a 10 year period where they changed CEOs every year or two which certainly isn't a great sign but to me it's more of a symptom than a cause so eventually it does become a cause as well but I'm leaving it off my top three list a big contributor to all this was ready for the internet checking right but the internet hurt RadioShack more than most companies for multiple reasons one is that they were late to the party almost every store sells the products online any retailer you can think of go to their website and they probably sell stuff there it's been that way for about twenty years now but for RadioShack it's been that way for about ten years meaning they missed out on ten years of internet sales and right about that time when this became a big thing and RadioShack ignored it is right about when their trouble started and think about a lot of the stuff RadioShack sells electronic parts resistors wires fuses the kind of stuff you can easily order online and don't really need to see it in person before you buy it these kinds of products are perfect for online sales and on top of that RadioShack is known to be sort of small well if you need a specific part what are the chances RadioShack will have it who knows they're small so they might not but what are the chances the internet will have it nearly a hundred percent RadioShack is the type of store where you run in grab what you need and I remember a while ago I walked into a Radio Shack just to look around I expected it to be sort of like a Best Buy I expected to see the new televisions cameras computers DVDs maybe a video game demo all the fun stuff you see when you walk into an electronic store but all I found there were like trying to cart some alarm clocks a few cellphones which were fake by the way I mean the screen was just a picture glued to it there was nothing interesting to look at it's not that type of store I'd say like Diet Best Buy or low calorie best buy there's really nothing gained by going there and besides being able to get it a little quicker I don't see why someone would buy something there as opposed to online the internet seems like a perfect outlet for really most retailers but RadioShack especially yet they didn't do it they let the opportunity pass them for years and they suffered from it reason 2 is a bit of a continuation for reason 1 but it's the products they sell let's go to the RadioShack website an am/fm stereo headset but luckily there's a big deal going on and it's only 48 dollars here are some incredible flipz headphones 30% off which brings them down to 140 dollars are there people buying ncredible flipz headphones from RadioShack when they cost about the same as beats think in your head right now how much this might cost remember its 30% off the answer 33 dollars so you might want to go rush to the website and get it I'm just looking at the homepage this is what came up when I clicked on their site is it just me or is this a terrible selection of products and overpriced are there that many people tinkering with radios and electronics to merit such an emphasis on these products I don't really know what guess that's a problem I mean electronic part I go to the best buy site I get computers HD TVs video games people complain about Best Buy but from what I can tell they're golden compared to RadioShack RadioShack filed for bankruptcy last week let who's been in a RadioShack this month okay that's why reason three goes along with reason two which went with reason one reason three is their cellphone involvement in the 1990s they got into the business of selling cell phones and boy was this a bad idea but not at first cell phones were blowing up it sounds strange saying getting involved in cell phones in the 90s was a bad idea but it was a bad idea in the way they did it they were only involved in selling them in the 90s it was harder to get cell phones than it is today today you can't walk through a mall without being offered a cell phone contract but back then you had to kind of know where to go and to place many people knew where to go was RadioShack it was good at first so they really went all-in on it and started ignoring the rest of their business which may be why that part of their business is so bad today all of their staff was occupied by trying to sell these phones and spending a tremendous amount of time filing paperwork once the sale was made they neglected the customers looking to purchase other products then after a few years all the service providers opened their own stores Verizon Sprint AT&T whoever your provider is chances are you bought it from their store not a RadioShack RadioShack pushed aside the type of products that they were once known for to sell these cell phones and now people are getting their cell phones elsewhere what became essentially half their business became pointless and as we saw in our first two reasons the other half of their business is also sort of pointless as well when we combine all this we have to ask ourselves does RadioShack sell anything that I wouldn't rather buy somewhere else the answer for me is no the electronic parts I would sooner go to Amazon the cell phones I would sooner go to the provider and most else of what they sell I don't even want maybe I would buy some batteries from them if the sale was good but it's hard to maintain a business based on that how did they go break what did they do with all the money I spent on Triple A batteries nine years ago like I said as of today RadioShack is pretty much done they lasted nearly 100 years and who knows may technically hit that 100 year mark a 20 year decline that involved two bankruptcies not to mention the financial trouble they had over 50 years ago yet they're still standing but for everyone watching this they might as well be gone unless you're one of the lucky few to live near one of those 70 locations they're out of your life altogether I can't say I have any positive memories of the company in fact I only really have that one and it was rather disappointing but I'm sure that's because I'm just not old enough to have experienced the company at its peak and I'm sure this is why I initially passed over this topic my experience was well after this massive decline began but if you had the opportunity to experience them in one of their better years let me know what it was like or if you experience them in one of their bad years especially toward the end or even today I'd like to hear that too I'd like to hear what you have to say thank you for watching [Music]

Channel: Company Man

Views: 1,812,592

Rating: 4.8178282 out of 5

Keywords: RadioShack, Decline, What Happened, Company Man

Id: JFivtOmXPPM

Length: 14min 30sec (870 seconds)

Published: Wed Aug 02 2017

Reddit Comments

[u/JK_Business_Casual]

This feels familiar.

[u/xXx_Bacalhau_xXx]

This channel was a nice find, thanks OP.

[u/Senno_Ecto_Gammat]

They could save themselves maybe by going hard in on something like for quadcopters. Like really hard. There is a community that needs a place like RadioShack.

[u/darexinfinity]

I imagine the rise of DIY software hurt them too. Hardware projects kinda seem like a thing of the far past.

[u/turnip-soup]

Relevant Onion Article http://www.theonion.com/article/even-ceo-cant-figure-out-how-radioshack-still-in-b-2190

FORT WORTH, TX—Despite having been on the job for nine months, RadioShack CEO Julian Day said Monday that he still has "no idea" how the home electronics store manages to stay open.