The NY Times reports that Radio Shack has laid off 400 employees, and notified them by e-mail. The electronics retailer (and HP and Sprint/Nextel retail channel partner) cut the jobs mostly from its headquarters staff; it has also closed close to 500 stores has consolidated its distribution centers and product lines.
Aside from the HR faux pas, Radio Shack has been relatively savvy about how it uses technology to drive the company. But the company is suffering for the same reason that many small VARs are suffering–what was once a business that thrived on upgrades and tweaks and personalization has become a commodity business that is increasingly dominated by big box retailers and manufacturer direct sales.
Radio Shack’s move toward sales in stores based on a more broad appeal may have made sense a few years ago, but based on personal experience, I’m betting that it’s cut down on their retail foot traffic. In the past year, I’ve stopped going into stores because they no longer carry the kinds of cables, adaptors and other techie niche products that used to pull their core audience in–which in the past they had successfully converted into larger sales. All that specialty stuff is online now — which doesn’t help them any, because the whole reason Radio Shack got my business in the past was convenience (their ubiquity meant I could find one close by) and instant gratification (I could always get it cheaper someplace else, but I’d have to wait).
In other words, Radio Shack has picked the wrong customers to focus on, and the wrong way to interact with its best customers. Strikes one and two. How good are you at identifying your most potentially profitable customers, and making yourself indispensable to them?