Reporter's Notebook: from the floor; RadioShack ceo embraces basics, in lieu of recent diversification - Leonard Roberts, new chairman and ceo - Brief Article

DSN Retailing Today, Jan 21, 2002 by Laura Heller

LAS VEGAS -- Back in 1994, Leonard Roberts, who is now chairman and ceo of RadioShack, questioned the relevance of the company's core parts, batteries and accessories division. Although the company never abandoned the category, focus was shifted away as the wireless communications, audio/video and personal computing areas were built.

Flash forward to 2002, and RadioShack is back to basics, toning down the rhetoric about not-there-yet technology, such as broadband, and pumping the seemingly staid parts, batteries and accessories business. In fact, said Roberts, the hottest-selling item at RadioShack in December was none other than a RE modulator, thanks in part to heavy promoting.

"It proves we can move the needle when it comes to growing the parts, batteries and accessories business," said Roberts. It is also an indicator of where he wants to take RadioShack, as the company once again looks to tell a growth story

"We have a revised vision, to be the most admired growth company in America," Roberts said. "The current strategy is not going to achieve this vision." Rather, the future lies more in specialization, not just within the now-crowded CE retail group, but on a store-by-store basis, too.

The chain announced last month it was pulling out of several categories, including car audio, pagers and larger-screen TVs. It isn't just exiting categories, but expanding select ones based on store locations. For example, said Roberts, 20% of its stores produce 80% of the volume in wireless sales. Mall locations sell more gadgets and A/V items than strip-mall units.

By 2010, Roberts envisions a company made up of 5,000 stores that only sell parts, batteries and accessories, 2,000 to 3,000 wireless stores, approximately 2,000 mall locations largely selling RadioShack's "Cool Things" and potentially 1,000 units specializing in home connectivity, a concept that has yet to take off.

Management has not only done market research to determine specialization by location, but has built a model of what Roberts refers to as the "Accessory Shack" in its Fort Worth, Texas, headquarters store to help customize the product mix.

This allows for sales growth from not only a more targeted strategy but physical expansion as well, said Roberts. With more than 7,000 units, organic growth has been elusive. He had hoped to achieve it by locating stores within Blockbuster Video locations, an alliance that appears to be dead (see story page 1).

RadioShack also is developing a new prototype by reconfiguring its still-ongoing test in Tuscan, Ariz. "By 2003, it will be the new prototype. But we won't be aggressive in retrofitting existing stores," Roberts said. Between new units and relocations, 400 to 500 stores will reflect the new format in its first year.

As for a new growth vision, Roberts told DSN Retailing Today, it's a vision long in the making, but one he's hesitant to discuss publicly. Concern from Wall Street that RadioShack was a mature business "forces us to show our hand early," he said. "We've had a difficult time explaining our anchor strategy without this other piece: We do have a growth story."