Retail Retrenches!

Radio Shack

Faced with a Glut of Retail Space, Retailers are Finding it Difficult to Differentiate Themselves in This Sea of Sameness!

It’s been a bad week for traditional retailers. Staples announced closing 225 stores, 10% of its footprint, noting that 50% of the chains sales are now on-line. Meanwhile RadioShack announced that it was closing 1,100 stores or 20% of its footprint. The wildly successful Super Bowl commercial “The ’80’s called. They want their store back”  belies the new reality that many retailers are facing. If they’re still doing business like it’s the 80’s, they will not survive in today’s new retailing reality.

Sears announced the shuttering of 500 Sears/Kmart stores. Is Sears even relevant in the era of Walmart and Target?  In the ’50s retailers like Woolworth made the transition nicely from main-street to the mall, but the outdated five and dime format and merchandising was crushed by the technological prowess of Walmart’s supply chain and Targets fun/hip mass merchandising. Sears indicated this week that it will start curb-side pickup, this is too little too late for the retailer.  Sears can’t go back to its roots as a mail order catalog retailer, or the internet version of it, since Amazon owns that space. Sear’s is stuck in the murky middle, they are not differentiated in the marketplace, they have under-invested in their stores and as a result their financial performance reflects this reality. 

radio-shack Fort Worth PrototytpeTo stem the slide into irrelevancy retailers are going to have to differentiate themselves in the marketplace. They need to right size their stores, and reduce chain count to the best, most relevant locations. There’s 46 square feet of retail space for every person in America. This glut of space coupled with a persistent weak economy since the recession leaves no room for error in traditional brick-n-mortar retail model.

Bottom Line: How good was the RadioShack Super Bowl Ad? Amazing, its stock increased 7% the day after the ad. But that alone is not enough make Radio Shack relevant. The retailer has rolled-out new prototypes and brought in new C-Suite leadership including Joseph Magnacca as CEO and Michael DeFazio as head of store concepts.  These Walgreen’s veterans with strong merchandising and brand development backgrounds will be RadioShack’s best shot at relevancy and reinvention in this environment. So far the results are promising.  

Photo credit: Radio Shack

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