RadioShack Takes Its Concept Stores To The International Market

by Trefis Team
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In addition to opening several new concept stores in the U.S. RadioShack (NYSE:RSH), the consumer electronic goods retailer, opened its first international concept store in Kaula Lumpur this month. The company opened its first concept store in New York this summer in an effort to make a big impact on the electronics shopping market and improve the RadioShack customer experience by promoting an interactive experience in its stores. RadioShack concept stores offer interactive areas like the speaker wall, where shoppers are able to connect their mp3 players and other mobile media devices to experience technology, and interactive displays to find and compare products.

As a prominent player in the retail business for over 90 years, RadioShack has been struggling to survive in the industry as the level of competition has risen manifold in the last few years. It not only competes with other physical retailers such as Best Buy (NYSE:BBY) and Wal-Mart (NYSE:WMT), but also faces intense competition from online retailers like Amazon (NASDAQ:AMZN) and online auction sites like eBay (NASDAQ:EBAY).

The entry of online retail giants has altered the landscape for the consumer electronics market. Showrooming, a phenomena where customers use physical stores to check out products and gain hands-on experience with gadgets, but use online stores to make the purchase has negatively impacted sales of traditional brick-and-mortar retailers.

With eroding top line growth, declining gross margins, high inventory levels, a string of debt maturities and declining cash reserves, RadioShack has been working on devising a new strategy to turnaround its business. The main focus of its initiatives is on re-branding the chain and re-defining what it stands for.

The primary goal of RadioShack’s re-branding initiative is to make its stores more shoppable by providing a satisfying experience to its customers. The company has been reporting disappointing results for quite a while and we have yet to see any significant gains from its turnaround strategy. However, it claims to be making strong progress on re-positioning its brand, revamping the product assortment and reinvigorating its stores. (Read: RadioShack’s Turnaround Initiative Fails To Impress So Far)

RadioShack hopes to achieve higher operational efficiency and improve its financial flexibility in the future with these initiatives. The company claims that it will take several quarters of strategic changes to improve its long-term financial performance.

Expanding its international footprint is one of RadioShack’s key growth opportunities. It plans to complete the transformation of its second international store (the flagship Mid Valley Megamall store) by the first quarter of 2014.

With a price estimate of $2.79 for RadioShack we feel that the market assigns a fair valuation to the company.

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