This is why Radio Shack is going out of business

#12

Joined Nov 30, 2010
18,224
I have to vote for spinnaker.
The few times I have been to Radio Shack in the last 20 years was because gasoline for 6 miles and the gouge on the price was cheaper than shipping costs and a week faster getting the parts here.
 

wayneh

Joined Sep 9, 2010
17,496
Premium pricing for hobbyist parts did not do them in. The convenience and need-it-now aspect can support outrageous markups. I don't mind spending a couple extra bucks to have it NOW and avoid a freight charge. But if I make that bargain, I want a quality experience. Look at the iPhone 6 markup going on in China. Selling utter crap at premium prices with no tech support drove away parts buyers. But those buyers were probably not much of a factor anyway.

The bigger factor was that RS seemed to ignore a changing market and they failed to keep up with it. The average non-nerd had no reason to go to Radio Shack, and the average nerd was not terribly excited to visit either. Look at all the cool stuff showing up online at Make, Instructables and so on. Did Radio Shack contribute to that excitement? Not a bit.
 

GopherT

Joined Nov 23, 2012
8,009
Premium pricing for hobbyist parts did not do them in. The convenience and need-it-now aspect can support outrageous markups. I don't mind spending a couple extra bucks to have it NOW and avoid a freight charge. But if I make that bargain, I want a quality experience. Look at the iPhone 6 markup going on in China. Selling utter crap at premium prices with no tech support drove away parts buyers. But those buyers were probably not much of a factor anyway.

The bigger factor was that RS seemed to ignore a changing market and they failed to keep up with it. The average non-nerd had no reason to go to Radio Shack, and the average nerd was not terribly excited to visit either. Look at all the cool stuff showing up online at Make, Instructables and so on. Did Radio Shack contribute to that excitement? Not a bit.
Good point on RadioShack missing out on the whole Maker Movement. I thought a they could have taken the best projects off of instructibles or Make and selling kits - kit of the month club.
 

JoeJester

Joined Apr 26, 2005
4,390
Good point on RadioShack missing out on the whole Maker Movement. I thought a they could have taken the best projects off of instructibles or Make and selling kits - kit of the month club.
Go get the owner's permission and start doing it ....
 

wayneh

Joined Sep 9, 2010
17,496
I think the Radio Shack stores needed higher volume, higher dollar traffic than hobbyists could ever deliver, even if the store was nerd nirvana. Retail is scored on revenue dollars per square foot. (Apple leads the pack.) Trouble is, all the non-parts stuff I could imagine them selling is available somewhere else.
 

ErnieM

Joined Apr 24, 2011
8,377
And I'm willing to bet that HD takes losses on some small items to keep customers from going to the competition for those. Small stores like RS couldn't absorb losses like that.
Bingo. Lowe's and Home Depot and Ace Hardware sell these items as a loss leaders, something inexpensive to get your butt into the store where chances are you will spend hundreds to thousands on the thing you are screwing or bolting down.

I always felt bad walking out with that $1.99 potentiometer in my bag. No company could survive on the pennies I spent there.
 

Glenn Holland

Joined Dec 26, 2014
703
Radio Shack is just another example of a large company that eventually developed a severe problem with its business strategy.

However, it was a successful business for about 40 years so that is a testament to its original founders.
 

WBahn

Joined Mar 31, 2012
29,979
They tried to shift with the times, but I think that a number of things worked against them. They had an established niche market for hams and electronics enthusiasts and so most people didn't see them as a store they would find anything of interest in. So as they tried to become more of a consumer electronics store they faced a huge marketing challenge to overcome those preconceptions. At the same time, they started alienating their traditional market base by no longer serving their interests and needs as well. As a niche store they could survive in a small-store format that didn't have very much competition. But as a consumer electronics store they were going up against all of the large chains that had tons of floor space and could have high-ticket, high-margin, low-volume items to offset low-ticket, low-margin (or even negative-margin) items that got people in the door.

Given what has happened to almost all of the electronics surplus stores, it was pretty much inevitable that a business like Radio Shack couldn't make -- it's actually pretty amazing they lasted as long as they did.
 

takao21203

Joined Apr 28, 2012
3,702
I think the Radio Shack stores needed higher volume, higher dollar traffic than hobbyists could ever deliver, even if the store was nerd nirvana. Retail is scored on revenue dollars per square foot. (Apple leads the pack.) Trouble is, all the non-parts stuff I could imagine them selling is available somewhere else.
I'm selling small part for a while now. Its not just hobby purpose, also research, professional DIY, collectors, and commercial customers.

Compared to candy items, the parts take much less space, they dont perish, and the shipping weight is much lower.

But I think the overall density of electric parts customers is too low to sell these in retail shops.
 

takao21203

Joined Apr 28, 2012
3,702
Bingo. Lowe's and Home Depot and Ace Hardware sell these items as a loss leaders, something inexpensive to get your butt into the store where chances are you will spend hundreds to thousands on the thing you are screwing or bolting down.

I always felt bad walking out with that $1.99 potentiometer in my bag. No company could survive on the pennies I spent there.
It costs pennies.
 

spinnaker

Joined Oct 29, 2009
7,830
I can buy 20-30 of those for that same price.

Haven't had one component fail, from China.

Of what?? The thread was 30 posts long when you posted.

Doesn't really matter though. Already been covered as in how long do you want to tie up your project waiting for something to come from China?
 

debe

Joined Sep 21, 2010
1,389
Here in Australia im sure the market wouldn't be as big as in America, but we have Jaycar electronics & Altronics mainly catering for the enthusiast. These stores are Australia wide & some cities have several stores. They seem to do quite well in this market.
 

takao21203

Joined Apr 28, 2012
3,702
And when your costs equal your selling price your profit is zero.
prices are secondary what counts is the business model.
What really happens in certain real-world situations?
If you scare away a lot of customers, you get less new one's.

Do you know ALDI? They do have a business model such as:

-Only offer items which sell frequently.
-Directly pack the original cartons on the floor/shelves
-Buy all from a manufacturer for a year or two, get discounts
-Give away the cardboard from the products (you can pick up in the stores). Save costs for the disposal.
-Dont run TV AD campaigns
-No counter with staff hanging around
-No mailorder or home delivery or gift wrapping

They were well able to survive + expand.

Over time, each such business policy will have effects.
 

takao21203

Joined Apr 28, 2012
3,702
Hahaha, yes, never mind we're losing a nickel on each sale, we'll make it up on volume!
Yes. First sell with a loss, then source a larger amount at lower cost.

It can be more desireable to increase cash flow and move through inventory faster, if you for instance accept offers where you make less profit than selling individually.
Simply, you get larger amounts of cash in a shorter time.

Then you can focus more on items which are selling fast.

not loosing money, thats bad, but less profit. For retail, there is also a certain cost each month, like if the items were small tenants having to pay rent. That's how they should be treated.

Some shops do that, lump together unwanted items in large boxes + discount them, move them in corners and so on.

Also there are supermarkets who sell some items with only very small margins. typically, supermarket shoppers buy at least 10 items. There is a constant price war going on for decades.

Bad for Radio shack: They were the only chain with these kinds of products.
 

wayneh

Joined Sep 9, 2010
17,496
Bad for Radio shack: They were the only chain with these kinds of products.
The only retail chain. Better products were always available at better pricing elsewhere, but until the internet came along, the transaction cost - the cost to find, order and ship an item - for the average guy like me was too high and a trip to the Shack was the best or only option. Now it's easier and cheaper to order online than to head to town, even if I'm buying from someone's basement around the world.
 

killivolt

Joined Jan 10, 2010
835
Just went to Radio Shack; it's the only one closing in my town. Picked up a bunch of parts and only paid $30.25. 70% of electronic parts.

Full wave bridge rectifiers, LM324's, TIP3055's, 2 packages of 1/2 Assorted resistors, 2 Full Wave 25amp Retifiers, 4 TL555 low-power timers, 7805 regulators, NPN and PNP transistors, 7812 regulators, banana plugs, and an assortment of Red, and Green LED's 2.6, 5v, 3v.

Most likely I ripped off seeing a previous post that their markup is 3000%

kv
 
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