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Mar 24, 2020

Today we’re going to talk about a company that doesn’t get a ton of credit for bringing computing to homes across the world but should: Radio Shack.

Radio Shack was founded by Theodore and Milton Deutschmann in 1921 in downtown Boston. The brothers were all about ham radio. A radio shack was a small structure on a ship that kept the radio equipment at the time. The name was derived from that slightly more generic term, given that one group of customers were radio officers outfitting ships.  


By 1939 they would print a catalog and ship equipment over mail as well. 


They again expanded operations in 1954 and would make their own equipment and sell it as well. But after too much expansion they ran into financial troubles and had to sell the company. When Charles Tandy bought the company for $300,000 in 1962, they had nine large retail stores. 


Tandy had done well selling leather goods and knew how to appeal to hobbyists. He slashed management and cut the amount of stock from 40,000 items to 2,500. The 80/20 rule is a great way to control costs. Given the smaller amount of stock, they were able to move to smaller stores. 


They also started to buy generic equipment and sell it under the Realistic brand, and started selling various types of consumer electronics. They used the locations that people bought electronics over the mail to plan new, small store openings. They gave ownership to store managers. And it worked. The growth was meteoric for the next 16 years. They had some great growth hacks. They did free tube testing. They gave a battery away for free to everyone that came in. They hired electronics enthusiasts. And people loved them. 


They bought Allied Radio in 1970.and continued to grow their manufacturing abilities. 


Tandy would pass away in 1978, leaving behind a legacy of a healthy company, primed for even more growth. Electronics continued to be more pervasive in the lives of Americans and the company continued its rapid growth, looking for opportunities to bring crazy new electronics products into people’s homes. One was the TRS-80. Radio Shack had introduced the computer in 1977 using an operating system from Microsoft. 


It sold really well and they would sell more than 100k of them before 1980. Although after that the sales would slowly go down with competition from Apple and IBM, until they finally sold the business off in the early 90s. But they stayed in computing. They bought Grid Systems Corporation to bring laptops to the masses in 1988. They would buy Computer City in 1991 and the 200 locations would become the Radio Shack Computer Centers. 


They would then focus on IBM compatible computers under the Tandy brand name rather than the TRS line. Computers were on the rise and clearly part of the Radio Shack strategy. I know I’ll never forget the Tandy Computer Whiz Kids that I’d come across throughout my adolescence. 


In the early 90s, Radio Shack was actually the largest personal computer manufacturer in the world, building computers for a variety of vendors, including Digital Equipment Corporation and of course, themselves . Their expertise in acting as an OEM electronics factory turned out to be profitable in a number of ways. They also made cables, video tapes, even antennas. Primarily under the Tandy brand. This is also when they started selling IBM computers in Radio Shack stores. They also tried to launch their own big box retail stores. 


They sold the Radio Shack Computer Centers to a number of vendors, including CompUSA and Fry’s, during their explosive growth, in 1998. They would move from selling IBM to selling Compaq in Radio Shacks at that point. 


Radio Shack hit its peak in 1999. It was operating in a number of countries and had basically licensed the name globally. This was a big year of change, though. This was around the time they sold the Tandy leather side of the business to The Leather Factory, which continues on. They also got rid of the Realistic brand and inked a deal to sell RCA equipment instead. They were restructuring. And it would continue on for a long time and rarely for the better. 


Radio Shack began a slow decline in the upcoming millenia. The move into adjacencies alienated the hobbyists, who had always been the core Radio Shack shopper. And Radio Shack tried to move into other markets, cluing other companies into what their market was worth. 


They had forgotten the lessons learned when Tandy took over the company and had more and more parts in the warehouses. More and more complex sales. More and more bigger stores. Again, the hobbyists were abandoning Radio Shack. By 2004 sales were down. The company started a high pressure plan and started hammering on the managers at the stores, constantly pushing them and by 2004 they rebelled with thousands of managers filing a class action suit. 


And it wasn’t just internal employees. They were voted the worst overall customer experience amongst any retailer for 6 years in a row. Happy Cows make happy milk. And it wasn’t just about store managers. They went through six CEOs from 2006 to 2016.And 2006 was a tough year to kick such things off. They had to close 500 stores that year. 


And the computer business was drying up. Dell, Amazon, Best Buy, Circuit City, and others were eating their lunch. 


By 2009, they would rebrand as just The Shack and started to focus on mobile devices. Hobbyists were confused and there was less equipment on the shelves, driving even more of them online and to other locations. Seeing profit somewhere, they started to sell subscriptions to other services, like Dish Network. 


They would kick off Amazon Locker services in 2012 but that wouldn’t last but a year. They were looking for relevance. 


Radio Shack filed Chapter 11 in 2015 after nearly 3 years of straight losses. And big ones. That’s when they were acquired by General Wireless Inc for just over 26 million dollars. The plan was to make money by selling mobile phones and mobile phone plans at Radio Shacks. They would go into a big deal with Sprint, who would take over leases to half the stores, which would become Sprint stores, and sell mobile devices through Sprint, along with cell plans of course!


And there were law suits. From former debtors, leasers, and even people with gift cards.


Only problem is, General Wireless couldn’t capitalize on the Sprint partnership in quite the way they planned and they went bankrupt in 2017 as well!


I don’t envy Radio Shack CEO Steve Moroneso. Radio Shack was once the largest electronics chain in the world. But a variety of factors came into play. Big box retailers started to carry electronics. The Flavoradio was almost a perfect example of the rise and fall. They made it from the 70s, up until 2001 when they began their decline. It was unchanged throughout all of that growth. But after they got out of the radio business, things just… weren’t right. 


With 500 stores, he has a storied history. A 100 plus year old company, one that grew through multiple waves of technology: from ham radios to CB radios to personal computers in the 70s and 80s to cell phones. But they never really found the next thing once the cell phone market for Radio Shack started to dry up. They went from the store of the tinkerer with employees who cared, to a brand kinda’ without an identity. If that identity will succeed, they need the next wave. Unless it’s too late. 


But we owe them our gratitude for helping the world by distributing many waves of technology. Just as I owe you dear listeners, for tuning in to yet another episode of the History of Computing Podcast.