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Published On: Wed, Feb 11th, 2015

RadioShack Filing for Bankruptcy

Historic electronics and technology store RadioShack filed for Chapter 11 bankruptcy last Thursday. Founded in 1921, the company has sold hobbyist tools, RC cars and flying machines, games, consoles, electronics, and more. While the company has done its best trying to keep afloat, large online retailers like Amazon have simply been more successful.

Chapter 11 Bankruptcy

A year after RadioShack has an expensive  Super Bowl commercial , they are now bankrupt

A year after RadioShack has an expensive Super Bowl commercial , they are now bankrupt

For major corporations struggling with financial problems, working with the Chapter 11 bankruptcy courts is a solution. This type of bankruptcy will allow RadioShack to restructure and reorganize its finances by selling many of its assets and merging with other companies. According to a CBS MoneyWatch blogger, the RadioShack brand will live on.

What’s Going to Happen

For the electronics franchise, bankruptcy means that the brand will not disappear entirely. Instead, the company is no longer independently owned. As a result of filing for bankruptcy, up to 2,400 RadioShack stores will be bought by General Wireless.

For 1,750 other stores, the brand will be merged with Sprint, the wireless service provider. These stores will sell a combination of RadioShack goods and Sprint products and services. Called “stores within stores,” these new co-branded locations will do their part to keep the brand alive.

Another 5,000 stores are actually operated by independent franchisees. One store, located in Brattleboro, Vermont, is actually “doing pretty well,” according to its owner, Ira Brezinksy. These franchises are not included in the Chapter 11 bankruptcy filing. They include both RadioShack branded products and other electronics and technology, especially in small towns and rural areas. It’s unclear whether these stores will need to change their names and branding, or if they will be able to remain under the RadioShack logo.

Where They Went Wrong

A number of marketing mistakes led to RadioShack’s ultimate failure and need for restructuring. Even with many of the stores determined to stay afloat, several thousand others will be closed. Experts believe the bankruptcy occurred because of bizarre and often useless product offerings, uninformed employees, and poor marketing strategies.

In the 1980s and 1990s, RadioShack failed to keep up with trends in personal computers and with cell phones. While the offerings in cell phones were initially highly profitable, major cell phone carriers began to create their own competing stores. Additionally, many customers were frustrated by the long wait times for signing up at the in-store cell phone kiosks.

In addition to the lack of offerings for items that consumers really wanted and needed, RadioShack also offered a strange inventory of items like the CueCat, an infrared barcode scanner, or the Brum car, a toy modeled after a British children’s television show – which most American children had never heard of.

While some analyses point to RadioShack’s death as inevitable, fans will surely be sad to see so many of its stores close down.

Guest Author: Lolita Di

photo: TaxRebate.org.uk

photo: TaxRebate.org.uk

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