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RADIOSHACK REVAMPS STORES TO WIDEN APPEAL

BY MAURA K. AMMENHEUSER

The chain is making items more accessible, improving sight lines and brightening up its stores in an effort to lure younger shoppers and women.

Wander into any Jacksonville, Fla., RadioShack and you may do a double take.

“The look is supposed to be such that you walk in … and you walk back out and look at the sign and see if you’re in RadioShack,” said Stanton Hudmon, director of brokerage at Trammell Crow Co., the retailer’s local leasing agent.

“There is, no doubt, a radical difference,” agreed Andy Zeinfeld, senior vice president of real estate at the Fort Worth, Texas-based consumer electronics chain. “The store’s more exciting to be in, period. Color, design, lights — even the curves. It’s a sexy store.”

Sexy? RadioShack? The company rolled out this racy new look late last year in 20 Jacksonville stores (15 of them relocated, five remodeled in their existing locations). The design boasts bright oranges, blues and greens, more space (some 2,700 square feet, about 25 percent more than typical RadioShacks), wider aisles, better signage, greater access to merchandise and a help desk/point-of-sale that’s centered on the sales floor, not tucked along a wall.

The changes are meant to attract younger shoppers and more women, and they’re also designed to help employees.

Traditional RadioShacks look heavy, dated and, to the tech-shy, a bit confusing. “You see a gray store with a lot of dark product in it that’s not really exciting,” Zeinfeld said. A lot of the merchandise is kept under glass.

Not so in the new stores. “All the product is now accessible to touch, feel, play with,” Zeinfeld said. Improved sight lines allow shoppers and employees to have better views of each other, important for both customer service and security.

Design gurus grouped “families” of products together for better organization and self-service, placing cell-phone accessories next to the phones, for example, and ditto for personal digital assistant peripherals.

RadioShack also introduced sets of drawers to store and organize smaller products, an organized and eye-friendly alternative to hanging items on pegs and hooks. It not only looks better, but it allows for faster makeovers. Wall fixtures can be changed quickly to reflect new promotions or color schemes, ensuring that the design stays fresh.

The results? Customers can navigate the store and the merchandise more easily, fiddling with their favorite gizmos. RadioShack execs say they hope this will make the place more relevant to younger, more tech-savvy consumers.

Zeinfeld wouldn’t reveal the Jacksonville sales figures for the 2002 holiday season, except to say that they “outperformed” the chain’s typical store sales. He said he expects to open 200 to 250 more units with the same design in malls and strip centers throughout the United States in 2003.

“Landlords are very excited about it,” Hudmon said. “Every landlord wants us.”

Helen Ciesla, manager of the 1.5 million-square-foot Regency Square Shopping Center, Jacksonville, concurs.

“It’s a very clean presentation, [making it] very easy to identify any location of any particular product,” she said.

The redesign was overdue, according to another shopping center executive.

“If you walked into the old store, you could tell they hadn’t spent any money on the inside of the store,” said John Lewis, co-owner of Gateway Shopping Center, a 700,000-square-foot complex in Jacksonville. RadioShack’s been there 25 years and just moved to an outparcel.

“When you walk into the new store, it’s electric,” Lewis said. “It’s a great deal more colorful. The layout is much better.” The new design motivates employees in the same way that “moving into a new home excites people,” he said.

These changes have been a long time in the making. RadioShack redesigned 20 stores in Tucson, Ariz., in late 2000. It was a spare-no-expense effort, Zeinfeld said, with construction costs too pricey to replicate on a grand scale. The company tinkered some more with the design, replaced expensive building materials with more economical alternatives and — voilˆ! — created the current prototype. RadioShack unveiled this model in Jacksonville because of the area’s cross-section of demographics and its mix of mall, strip center and freestanding units.

The new design coincides with the company’s efforts to stay near the top of the consumer electronics heap, which is no small undertaking. Several 800-pound gorillas dominate the market. Eden Prairie, Minn.-based Best Buy consistently leads the pack and expects total sales to increase by as much as 12 percent in fiscal 2004, to about $25 billion. Richmond, Va.-based Circuit City and Wal-Mart have pulled in more electronics sales than RadioShack, which posted sales of $4.5 billion in 2002. Neither Circuit City nor Wal-Mart had reported 2002 sales at press time, but for 2001 Circuit City posted $12.7 billion in sales, while Wal-Mart’s consumer electronics sales were $5 billion. But RadioShack operates 7,200 stores, roughly double the number of units run by those top three electronics retailers combined.

American companies sold a total of $96.2 billion in consumer electronics goods in 2002, according to the Arlington, Va.-based Consumer Electronics Association (CEA), which credited digital products for the steady performance.

“Consumer electronics retail was doing spectacularly well until this summer [2002], when it hit a wall,” said Alan Wolf, senior editor of TWICE (This Week in Consumer Electronics magazine). It was among the few categories that performed well after Sept. 11, thanks to consumers’ urge to “cocoon” at home. National anxiety apparently also produced demand for cell phones, two-way radios, home-networking products and just about anything digital.

The sector’s not in major trouble now, Wolf adds. It’s merely experiencing the post-Sept. 11 letdown later than other retail. Auto dealers have also been blamed for the electronics slowdown. Zero-percent financing has meant that consumers spent their cash on wheels instead of electronic wizardry late last year. The industry seems unfazed, however. The CEA predicts there will be $99.5 billion in consumer electronics sales this year, a 3.5 percent increase over last year. RadioShack says it expects 2 to 3 percent gains this year.

RadioShack’s redesign aims to make the store easier to navigate.

Zeinfeld downplays competition from Best Buy and Circuit City.

“We’re all about convenience and service,” he said. “What’s more convenient [for shoppers]? Having 7,000 stores across the country,” or only several hundred? (Best Buy has about 500 stores, and Circuit City has roughly 600.) Company officials like to boast that 94 percent of Americans live or work within five minutes of a RadioShack.

But RadioShack tried taking on the big boxes about five years ago, offering stereos, PCs, large TVs and the like. It also launched Incredible Universe, its own oversize format. But these strategies didn’t work well, Wolf said, because consumers turn to RadioShack for basics, not for big items.

So by 2001 RadioShack had reverted to its historic strategy and gotten out of the car stereo and big-screen-TV business, for which it lacks adequate floor space. Instead, RadioShack concentrates on smaller items, such as cell phones, PDAs, digital cameras and, significantly, all the high-margin accessories, peripherals and parts that those gadgets require, such as batteries and printer cartridges. RadioShack also does well with novelty items, like ZipZaps, which are tiny, remote-controlled cars that were a surprise hit this Christmas.

“[RadioShack doesn’t] compete — they fill a niche the big boxes do not fill,” said Greg Kahn, CEO of Kahn Research Group, a Charlotte, N.C.-based retail researcher. “Rather than focusing on selling home theater systems, they focus on selling the pieces that tie the system together.” The company also plays up its customer service with its slogan, “You’ve Got Questions. We’ve Got Answers.”

“RadioShack reps act as troubleshooters, listening to the problem and explaining the solution,” Kahn said.

So will redesigned stores vastly improve RadioShack’s sales? Maybe not, but it surely won’t hurt. A new look alone doesn’t guarantee success, Wolf notes. But the company has already found a surprise benefit of the redesigned shops, Zeinfeld said. “[Customers] are seeing products in our store they didn’t know we carried before,” such as binoculars with built-in digital cameras. “…It’s out in the open, and a lot of it has to do with line of sight.”

As such, RadioShack hopes that a tried-and-true merchandising strategy plus the bold makeover will prove an electrifying combo.

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