RadioShack Future in Wireless

Implications: Besides the low Sprint Nextel sales attributing to its revenue decline,  RadioShack lacks three factors:  1) Wireless subscriber base; 2) Mobile lifestyle branding; 3) Servicing mobile needs.

Analysis: RadioShack explains the 8% annual revenue declines being 80% attributable to slow Sprint Nextel sales.  The low demand for Sprint Nextel is shown by Sprint recently announcing the closing of 4,000 indirect points of distribution and 125 company-owned stores.  The question is whether Radio Shack can recover as a major player in the wireless space through AT&T presence in the stores.  AT&T already has over 20,000 points of branded distribution with company-owned and agent-operated stores. 
RadioShack’s wireless problems are beyond selling new activations.  The shortcomings are not holding a loyal wireless subscriber base and the branding image to service the mobile lifestyle.  The departure of Verizon from Radio Shack stores eliminated the potential to upgrade and cross-sell reliable customers.  Verizon won its position in electronics retailing through exclusive distribution at Circuit City.
With the U.S. wireless market almost at full penetration, the landscape has become upgrading devices for contract renewals or selling prepaid to low income subscribers.  The prepaid activation revenue is insignificant compared to the revenue and margins for servicing the higher end mobile lifestyle.  And RadioShack’s electronics identity means competing with larger players like Best Buy.  Best Buy is trialing an alliance with UK’s Carphone Warehouse Group for in-store and stand-alone outlets.  Radio Shack might need a similar format to compete with the latest mobile technology.