RadioShack, the iconic electronics retailer, revealed this week that it's changing its name to simply "The Shack" in a bid to freshen up its image.
In today's cut-throat consumer electronics retail market, companies will do anything to get an edge over the competition, and RadioShack said the name change is just one way it's going to reinvigorate itself. RadioShack currently boasts roughly 4,500 stores and a vast online retail property.
As RadioShack prepares to transform into The Shack, here are five reasons RadioShack had to do something modern with its moniker.
1. No one really listens to the radio anymore: Does RadioShack even sell radios anymore? When RadioShack hit its stride, the radio was the main source for news and entertainment for most Americans. That was quickly phased out by television and then CD players, Apple iPods and the like. The radio is no longer the driving force it once was, and building a brand name around a technology flirting with obsolescence won't draw in new customers.
2. The Shack will focus heavily on wireless: About one-third of all of RadioShack's sales are wireless products -- cell phones, GPS gear and other devices. The name change illustrates that RadioShack is about more than just transistors. RadioShack is also adding T-Mobile to its roster of wireless carriers to boost its share in the mobile device market. Currently, The Shack sells mobile devices and plans from Palm, BlackBerry-maker Research In Motion (RIM) and Sprint-Nextel.
3. Drastic times call for drastic measures: Despite being a consumer electronics mainstay, RadioShack is not immune to the rough economic climate. The Fort Worth-based chain hopes that a name change could draw in more customers and spur sales. And at the moment, any help counts. During its second quarter, RadioShack reported a nearly 3-percent drop in total revenue with sales in stores open for at least a year down 4 percent from the same period one years ago. While second-quarter profits increased 18 percent, most of that was due to cost cutting measures, and analysts said sales were disappointing.
4. Nicknames are good for business, and for friends: Look at FedEx and Coke. Who calls them Federal Express and Coca-Cola? No one. So logic would dictate that dropping the Radio and keeping The Shack will help the brand live on. And executives for The Shack are tuned in to the idea. "Trust is a critical attribute of any successful retailer, and the reality is that most people trust friends, not corporations. When a brand becomes a friend, it often gets a nickname -- take FedEx or Coke, for example. Our customers, associates and even the investor community have long referred to RadioShack as 'The Shack,' so we decided to embrace that fact and share it with the world," said Lee Applbaum, RadioShack's chief marketing officer, in a statement.
5. RadioShack didn't want to be pigeonholed: Along with wireless products dominating RadioShack's sales, the company will change its name to The Shack to shake itself of the shackles that it sells simply radios, batteries and cables, three product segments that have become almost synonymous with the store's name. Instead, RadioShack wants to be everyone's electronics store, selling televisions, cell phones, stereo equipment, gaming gear, digital cameras, music players and electronics accessories, and, yes, radios, batteries and cables too.
