Radio Shack: Private Brand Leader or Follower?


Radio ShackIn late February Dallas based RadioShack conducted its Q4 2012 Results – Earnings call which was former Walgreens and Duane Reade executive Joe Magnacca, the recently appointed CEO’s first chance to speak to the analysts and discuss Radio Shack in public. Both He and Dorvin D. Lively – Chief Financial Officer, Chief Administrative Officer and Executive Vice President gave an update on the iconic brand referencing its 90-year history and its unique Private Brand heritage. For those who have followed Magnacca’s career the emphasis on Private Brands will come as no surprise as he very powerfully created and leveraged a portfolio of Private Brand assets at Walgreens, Duane Reade, Shoppers Drug Mart and Loblaw’s.

When the call turned to the question and answer session Magnacca provided a bit of color on the retail brand and Private Brand opportunities ahead.

Daniel R. Wewer – Raymond James & Associates, Inc
Well, I remember back when John Roach was running the company back in the mid-80s and there was always discussions of maybe changing the brand to better line it up with the — what the business was evolving to. Do you have that kind of carte blanche to consider maybe even rebranding efforts with our stores?

Joseph C. Magnacca
I would say that we definitely have a blank piece of paper. But I would say the equity in the RadioShack brand is probably greater than we all give it credit for. And I think in some of our international businesses and discussions we’ve had, that comes through loud and clear as others consider the RadioShack brand in an extremely positive way. So that’s forcing us to really rethink some of the branding efforts we’ve made inside our business on our private brand portfolio as well. We moved away from RadioShack branding for the most part, moved to some other brands, so we’ll look at that as part of the overall mix. But I think there’s great equity in the brand and certainly, all the research I’ve read to date suggests that it won’t — it would get a very strong net promoter score from a brand relevance perspective.

David S. Strasser – Janney Montgomery Scott LLC
Joe, another question, just sort of stepping back. As you kind of look at the history of RadioShack and where they are today, and it’s been a — they’ve had the tremendous profitable past, where do you think things went wrong? Do you think it was internally related? Do you think it was environment? Do you think it was the changes in the market that weren’t figured out? I’m just a little curious, as you sort of look forward, where do you think some of the inflection points were that brought the company to where it is today?

Joseph C. Magnacca – CEO and Director
I think it’s all of the above that you just described. I’d say the external environment dramatically changed in terms of who entered into our space. Obviously, we made some decisions to focus on wireless in a pretty significant way as part of our mix, which you’re well aware of. And I think that internally, we became very focused on that wireless business and lost maybe some of the heritage that we had inside of our business, which was focusing on the do-it-yourself business. And the one that I think resonates the most is the focus on private brand in the development side of our overall business. And those are the things that we’re looking at today and saying, how do we return to some of those things as part of — in today’s environment? Certainly not moving back to where we were, but certainly leveraging some of our core strengths from the past and adapting them to today’s environment.

David S. Strasser – Janney Montgomery Scott LLC
Yes. I mean, of the many of them, was there anything that you think that really just stood out as you were sort of doing your due diligence that said, “Wow, this is big, good or bad?”

Joseph C. Magnacca – Chief Executive Officer and Director
Yes. I think — I mean, if I just — if you go through this exercise, and there’s an interesting website that looks back at the old RadioShack catalogs that we all grew up on, you will see it was a very, very different business and probably 60% to 70% of what was in that catalog was own brand, including Realistic and certainly the RadioShack brand and Tandy. So I would say that we moved from being a leader relative to technology development to a follower, and one that sorted quite differently inside our stores, which at that point, changed the dynamic and allowed others to certainly compete with us in a meaningful way.

SOURCE: Seeking Alpha


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Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.