Rebuilding The Shack: Radio Shack Remodels its Brand Without Tearing Down its Legacy

Can a 90-year-old brand with a name that evokes both your great-grandfather’s mass medium and a backyard shed get hip?

Fort Worth-based RadioShack thinks so. The company, born in 1921 to sell parts to ham radio operators and a prime source of tech for computer tinkerers in the ’70s and ’80s, sees a chance to make itself relevant again by cutting back on the radio-controlled cars and alarm clocks in its inventory and highlighting the quality and breadth of its products in a few key growth areas — primarily mobile phones, Internet devices and connectivity accessories.

“When I got here, stacks of research said this was an old, loved, trusted, iconic American brand,” says CMO Lee Applbaum, who hired on with the chain in September 2008. “Even words in the data like ‘geeky’ and ‘nerdy’ spoke to our affinity for and knowledge of consumer electronics. We get a lot of credit for that, and the credit is well deserved.

“But we also found a gap in consumer awareness of the products and brands that we sell. We were certainly known for the parts, the pieces, the wires, the batteries — the things that make things work better. But there’s been a massive gap in consumer awareness that we sell leading national brands and innovative products in mobility, for example, and specifically iPhone and Blackberry. The aided awareness is staggeringly low for the products and brands we carry.”

Phone Connections

Before Applbaum came to RadioShack, the company had identified a few product categories as ripe for retail domination by a newly energized Shack. Foremost among these: mobility products, and specifically mobile phones. They made sense as a product specialization for a number of reasons beyond the ever-increasing consumer demand. For one thing, shoppers were changing their buying habits. Where once they went to carrier-branded stores to see phones available in their specific network, in recent years they have switched to multi-brand retailers where they can see a broader array of the handsets available (and the calling plans associated with them).

There was another reason mobile phones made sense as an organizing product category for RadioShack: They’re small. The average RadioShack store takes up about 2,000 sq. ft., and many are located in mall interiors or in strip malls with limited display space.

“As mobile and convergent devices or smartphones began their explosive growth two, two and a half years ago, this company saw an opportunity,” Applbaum says. “The beauty of these converged devices is that they work very well in our store format — unlike, say, large plasma TVs.”

In particular, since the rollout of its iPhone 4 a year ago, Apple has been aggressive in cutting retail prices on the earlier 3G model and partnering with retailers like RadioShack, Walmart and Best Buy to get those into the hands of users who want the apps and functions of an iPhone without the price tag of the most current model.

That development, and the concurrent rise of Android-based smartphone models, played to RadioShack’s strength in staff expertise. “Smartphones are very challenging for consumers to use, particularly early in the adoption lifecycle,” Applbaum says. “It takes a one-on-one, hands-on, in-store experience for consumers to get them activated and to understand how to get the most out of them. We saw an opportunity to get right back on this innovation bandwagon.”

To build toward mobile-phone dominance, RadioShack is striving hard to be carrier-agnostic. “Our value proposition is that you can walk into our stores, find the best solution for you across a range of carriers, a range of plans, and a range of devices,” Applbaum says.

Trouble on the Line

There have been some obstacles to achieving that carrier agnosticism, however. While RadioShack stores sell equipment and plans for three of the Big Four U.S. wireless carriers — AT&T, T Mobile and Sprint — they offer only prepaid plans for Verizon Wireless, a large gap in coverage that became a lot more problematic this year when Verizon gained the ability to sell Apple’s iPhone 4. And the T Mobile business is currently mired in a dispute over an alleged (but unspecified) breach of its contract with RadioShack.

Perhaps the largest question facing RadioShack’s mobile sales category is its attempt to branch out and become the mobile expert for big-box retailers by running kiosks in other brands’ stores. A subsidiary of RadioShack operated some 400 mobile sales kiosks inside Walmart Stores’ Sam’s Clubs last year. But in January the company announced that Sam’s would run out the contract for those operations by June 30, 2011, and would instead bring the kiosks under its own management.

Instead, RadioShack will accelerate the rollout of the kiosks in Target stores which began with a 100-store pilot last year and should reach the majority of Target’s chain by the end of this year. Labeled Bullseye Mobile, the in-store islands are meant to serve as “mobile boutiques” for Target shoppers; they’re not branded with the RadioShack logo, but the staffers were black shirts reminiscent of the electronics chain rather than Target’s red ones. The kiosks offer both prepaid and post-paid calling plans, a wide range of handsets for multiple carriers (including Verizon), and mobile accessories.

The open question for RadioShack’s kiosk tactic is this: If Bullseye Mobile becomes a profit center, will Target simply take the operation inside as Walmart did?

Frequency, Innovation

Besides pressing for a new, higher profile in mobility, Applbaum and the RadioShack marketing team are also determined to reconnect the brand to its tinkerer/hobbyist roots by stressing the sale of parts, components and connectors, all those aftermarket sales that electronics shoppers may not be able to find at a big-box retailer like Best Buy.

In fact, RadioShack has elevated power sales into a prime product category, incorporating an elaborate interactive Battery Finder into its website. Consumers can click on any icon of any of 15 product lines, from cameras and MP3 players to hearing aids and watches, and drill down a list of brand names and then specific model numbers to find the battery that they’re looking for.

“We’ve got these signature heritage categories in the back of the store for the traditional DIYer,” he says, “The parts, cables and batteries are really important because they drive frequency and recency — something you don’t get from mobility, where the customer can sign up for a contract and then not come back in for two years.”

Nevertheless, when those mobile users are ready to come in, RadioShack has built some features to encourage their visits. Chief among these is Trade & Save, a cellphone recycling program that gives customers store credit when they hand in a usable older-model phone. Operated year-round in partnership with electronics recycler CExchange, the program lets customers bring old units into stores for evaluation or do a self-appraisal at the Shack website, then receive a gift card that can be applied to a new phone purchase. (CExchange then resells the old units on eBay and other auction sites.)

Best Buy offers to recycle for credit too, but its program is limited to items bought in its stores. RadioShack is aiming to get first-time shoppers, so it’s casting a wide net.

So phones in the front, batteries and other staples in the back. In the middle of the store lies perhaps the toughest product terrain: consumer electronics and connected devices, including digital cameras, MP3 players, small-panel TVs and laptops.

“This segment is the most reliant on innovation, changing constantly, and it requires that our marketing and merchandising divisions stay on top of ever-evolving trends,” says Applbaum.

For example, tablets fall into this category at RadioShack. “A year ago, they would have been zero in sales, and yet today it’s arguably the hottest category in consumer electronics,” he says, both for makers and for retailers. “CE is currently the trickiest area in our stores.” For example, while the chain offers other tablets, it’s still in talks with Apple to roll out sales of the popular iPad.

A New Messaging Spin

New marketing channels are definitely part of RadioShack’s reinvention campaign. For example, the company has given its traditional freestanding newspaper circular a digital makeover. Consumers can now get the print version on the website or delivered to their inboxes in a format that lets them search it by brand or category and share with their friends.

“We’re working with partner ShopLocal on enhancements to the e-circular that will allow more dynamic content delivery,” Applbaum says. “You want to be able to serve a consumer deeply interested in mobility a cover that’s full of the hottest mobile items, while serving another cover to the shopper interested in digital imaging. While that’s impossible in print, it’s difficult but doable through a versioned e-circular.”

As befits a retailer so dependent on mobile sales, RadioShack has also reaffirmed its faith in mobile commerce by revamping and optimizing its website for mobile viewing. And the company has also seen big branding success in real-time marketing on the Twitter platform. Last December, it ran a 24-hour #UNeedANewPhone campaign using Twitter’s Promoted Tweets platform, in which brands can pay to have their tweets ride at the top of subscribers’ rolls rather than sinking below messages that come after.

The result was a hefty 65 million views of the hashtag, which linked to a promotion for the Trade & Save program. Twitter followers for the brand grew 38% (that total is now more than 27,000), and the campaign reportedly exceeded impression expectations by 8%.