The rise and fall of Shack, and how to fix it

Wired has a nostalgic piece on the not-quite-late, not-quite-great Radio Shack. I think it’s a good article, but it glosses over part of the reason for the store’s decline.

It blames computers.But blaming computers ignores Tandy’s long and successful run in that industry. Most Apple fanatics and other revisionist historians conveniently overlook this, but when Apple launched the Apple II in 1977, Tandy and Commodore were right there with competing offerings. I don’t know about Apple, but Tandy and Commodore were selling their machines faster than they could make them.

As demand for home computers with color and sound grew, Tandy released its successful Color Computer line. And after IBM got into the PC market, Tandy became one of the early PC clone makers. They made businesslike PC/XT and PC/AT knockoffs, but their most successful machine, from a sales perspective, was the Tandy 1000. The Tandy 1000 started off as a clone of the IBM PCjr, but whereas the PCjr lasted about two years in the marketplace, the Tandy 1000 became a lasting standard for home PCs that could run IBM business software as well as entertainment titles with color and sound. It was everything the PCjr should have been, and it resulted in IBM software often being relabeled “IBM/Tandy” in stores.

In the 1980s, Tandy was definitely one of the big five companies. The first computer I ever used was a Tandy, in 1982. But the next year, I changed schools, and that school had Commodore 64s, so my allegiance changed. But I really think it was Tandy, more than any other company, that was the undoing of my favorite company, Commodore. Tandy’s computers weren’t any better than what Commodore had. And Commodore computers were sold at Kmart, but Tandy computers were sold at Radio Shack, and the prices were comparable. You had to go to St. Louis to buy a Commodore 64 or Amiga, or order it through the mail. But even in tiny Farmington, Missouri, which was a town of about 8,000 in the middle of nowhere, there was a Radio Shack on the edge of downtown where you could walk in and buy a computer.

Admittedly, the computer industry did change, and eventually it outgrew Radio Shack. By the early 1990s, when I did my stint selling computers at retail, the computer section of the store where I worked was larger than the typical Radio Shack store. Just the computer section. We sold four or five brands of computers and generally had at least four models of each brand, with an entry-level machine, something near top-of-the-line, and a couple of mid-range models in between.

If you wanted cheap, we had Packard Bell and Acer. Tandy couldn’t compete with them on price, though its machines were generally of better quality. But if you wanted quality, we had Compaq and IBM, which generally were better quality than Tandy, and by the mid 1990s, they’d gotten religion on price too.

And on the odd day that we couldn’t beat Radio Shack on price and or selection with the computers themselves, we had a much larger selection of monitors and printers, not to mention the aisles and aisles of books and software.

And if you didn’t live in the big city, another alternative sprung up in the early 1990s. You could pick up the phone, dial an 800 number, and order a computer from Dell or Gateway 2000. Just like ordering pizza, they’d build a computer to your specifications and deliver it to your door. You wouldn’t have it the same day like you would by going to Radio Shack, but you’d pay less, and you could get exactly the processor speed, hard disk capacity, and memory that you wanted.

There just wasn’t any way for the Tandy/Radio Shack model that had worked so brilliantly for about 15 years to compete with those two new models.

Eventually Tandy sold its factory to AST, a mid-range brand that fell by the wayside late in the decade but for a while was a retail juggernaut. Initially Radio Shack switched over to selling AST PCs, and later replaced them with Compaq and IBM, but there was never enough room in the store for more than one or two models.

In retrospect, I think the best thing Radio Shack could have done in the late 1990s would have been to go back to its DIY roots, selling computer components like cases and motherboards to people who wanted to build their own PCs rather than settle for what larger retailers offered off the shelf. It’s not a large segment, but it’s a niche that the large retailers have never had much success catering to. (The exception being regional chains like Fry’s and Micro Center.) And while the independent clone shops almost without exception can offer better advice, better selection, and, probably, better prices, Radio Shack is almost always closer, and the clone shops can’t compete with Radio Shack’s hours. Radio Shack is open on Sunday, and it’s open until 9 PM on other days.

I’ve lost count of the number of times I was tinkering with a PC in the evening or on a Sunday, needed something, and Radio Shack was the only place open. So I went, whether I thought they’d have what I needed or not. Sometimes they actually had what I needed.

If Radio Shack wants to reverse its sagging fortunes, I’m not sure that it’s too late to take that DIY road. Stock a book on building PCs and a book on upgrading and repairing PCs in order to grow that market. Limit the selection in order to accommodate the limited space in most stores, but carry one or two of everything that’s needed to build a PC, or to upgrade or repair a PC when the competition is closed.

Deciding exactly what to carry could be difficult, but a safe and non-creative approach would be to just pick a couple of price points and sell whatever they can find at that particular price point while remaining profitable. Keep it simple, using multiples of $25. Have computer cases priced at $50 and $75. Have power supplies for $25, $50, and $75. Have hard drives for $75 and $100. Have a motherboard for $100, and CPUs for $50 and $100. AMD or Intel? Carry both, or see if one or the other is willing to cut a deal to have an exclusive.

And this also opens the door to oddball gadgets and adapters, like 20/24-pin ATX converters, ATX power supply cable extensions, USB cable extensions, USB hubs, serial, parallel, and PS/2 to USB converters, and other small, profitable niche adapters. And if there’s room, of course they can carry an Ethernet switch, Ethernet cables in a variety of lengths, and perhaps even cable and DSL modems.

They can take the same approach to selling computer components as they’ve always taken to selling discrete electronics components. When I need a resistor or an LED, I can get it a lot cheaper by ordering it online or by driving to an electronics supplier. But I can be at Radio Shack in five minutes, and they’re open late and on weekends, so I usually end up going to Radio Shack and putting up with their cellphone pitches.

If they’re still able to eke out a profit selling resistors and heat sinks by virtue of being the most convenient option, I think they can do even better selling computer components the same way.

And that would still leave room in the store for cell phones, the odd adapters and components that no other major retail chain sells, and cheap R/C toys.

I think it’s a better plan than officially unofficially renaming itself to Shack (next door to Hut, where you buy pizza) and harassing customers about cell phones at the checkout.

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