The first computer I ever bought was a Tandy TRS-80 I got at Radio Shack (NASDAQ:RSHCQ) in the mid-1980s. There was no floppy drive, no operating system, no Internet connection, and no hard drive. I used a tape recorder to save data, but I still felt pretty cutting-edge, even if it was largely an expensive paperweight, since I had no programming skills and used it like a big calculator.
While those were also the halcyon days of Radio Shack, as its popular Super Bowl commercial last week indicated, the electronics retailer would like 2014 to be the start of a new golden age. Unfortunately, a funny commercial doesn't translate into a business plan, and though The Shack has lived several years beyond my prediction that it didn't have long to survive, you cant say it's been thriving.
Trailing sales of almost $4.1 billion are just as much as it generated 20 years ago, and last quarter they dropped more than 10% as same-store sales tumbled more than 8%. It's been spinning its tires and now is on a fast track down, which is partly the reason behind its reported decision to close some 500 stores.
If it continues on this path of trying to be nothing more than a mini-Best Buy (NYSE:BBY), of a consumer-electronics retailer chasing mobile phone dollars amid a general push for big screen TVs, headphones, and gadgets, then its future will be dismal. In the era of e-commerce and Amazon.com, Best Buy can't even be Best Buy anymore, let alone lesser competitors like Circuit City or Sixth Avenue Electronics. Radio Shack needs a bolder path, one that harks back to its roots of catering to the electronics hobbyist who wanted to build stuff with his own hands rather than buying pre-packaged goods.
Although diodes, capacitors, and electronic esoterica may seem quaint and part of a dying art, that same entrepreneurial spirit is still very much alive in the maker movement that's springing up all over. Management needs to visit one of the many Maker Faires around the country to understand the DIY electronic platforms arduinos and Raspberry Pis represent shouldn't be stuck in some obscure corner of its stores as they are now, but need to be brought ought front where they can displace the pushy mobile-phone salespeople customers are greeted by.
And additive manufacturing in particular will usher in a whole new revolution as it becomes more accessible to the general public, particularly those who are hip-deep in the maker movement when they have the tools of creation placed in their hands. It will indeed be a new industrial revolution, and Radio Shack can be at the forefront of its birth if it merely looks back to its own past and embraces it.
Instead of touting the latest calling plans, why doesn't Radio Shack offer 3-D printing services, printers, and supplies? Office-supply leader Staples and UPS both offer such printing capabilities and Office Depot is now stocking 3D Systems (NYSE:DDD) Cube line of of 3-D printers. Instead of prominently displaying the latest Beats headphones, why not provide customers with LilyPad arduinos that can be sewn into fabrics and textiles? Or give them the tools to develop robotics and electronics projects using Raspberry minicomputers and Arduino micro controllers?
3D Systems has partnered with Google (NASDAQ:GOOGL) on Project Ara to create a customizable, open-source, and modular smartphone platform. Privately held Optomec is developing electronic circuitry that it's already printed using Stratasys (NASDAQ:SSYS) 3-D technology. These are the technologies around which whole industries will grow and Radio Shack ought to be where its future begins.
It's the people most interested in these advances, the Makers, who also happen to be the ones that would be most likely to shop Radio Shack's stores.
The Shack's whole existence was originally predicated on the do-it-yourself guy building his own electronics in his basement. The modern industrial revolution will similarly arise out of basement and garage shops all across the country because of the technological tumult 3-D printing, additive manufacturing, and robotics will create.
Management says it's committed to remaking itself, but whether it will be this bold, new vision, or simply a pale shadow of paths everyone else has trod is the question that needs to be answered. Radio Shack can either be in the vanguard of change, or it can relegate itself to the dustbin of history alongside its Tandy computers. Which road do you think it will take?