RadioShack Q3 loss widens; names Penney exec as chief merchant
Fort Worth, Texas – RadioShack Corporation reported a net loss of $112 million during the third quarter of fiscal 2013, compared to a net loss of $47 million in the year-ago period. It was the retailer’s seventh straight quarter posting a net loss. The company also named Paul Rutenis, formerly senior VP, general merchandising manager for the home division of J.C. Penney Company, as its new chief merchant.
RadioShack said its total net sales for the quarter were $805 million, a 10% drop from $898 million a year earlier. The chain attributed the decline to an 8.4% drop in same-store sales due to reduced sales for each of the company’s product platforms.
Joseph C. Magnacca, CEO of RadioShack, said the retailer is currently undergoing a process of reinvigorating and modernizing stores that will affect nearly all of its 4,300 locations. He also said RadioShack is improving its assortment.
"We are moving forward quickly and as planned with our turnaround efforts,” said Magnacca. “As we have said, we expect our work to take several quarters and during that time our results will vary quarter to quarter as we make strategic changes to improve our long-term financial performance. This quarter reflects our strategic decision to accelerate the improvements to the product assortment in our stores by removing duplicate and unproductive inventory."
RadioShack has secured a financial boost from GE Capital, securing a loan of about $835 million. The loan, backed by inventory and other existing assets, will help the chain refinance the company’s outstanding bank debt and free up cash for its ongoing revamp. RadioShack says it has strong balance sheets moving forward.
In announcing the appointment of Rutenis as senior VP, chief merchandising officer, RadioShack said he will be responsible for leading all retail categories, covering well known global brands as well as private branded products, and will work with the company’s executive leadership team to drive a clear merchant strategy and alignment with the retailer’s sales, marketing and operations divisions. Prior to J.C. Penney, Rutenis served in senior positions at Dick’s Sporting Goods and Foley’s Department Stores in a career spanning 22 years in merchandising.
RadioShack also announced the appointment of Janet Fox as senior VP of global sourcing. Fox has spent almost 30 years in retail sourcing, most recently as senior VP, sourcing, quality, materials and technical design at Under Armour.
"We are very happy to have Paul and Janet join our company at a critical point in our turnaround, Magnacca said. “They bring with them a demonstrated track record of success and will contribute to the execution of our strategic initiatives. Since the beginning of the year, we have brought on board six new members of our management team as we rebuild and enhance the strength of our executive leadership."
The company also announced today that Martin Moad, VP and controller, has decided to retire after 34 years with RadioShack, effective Dec. 27. RadioShack’s William R. Russum has been named VP and corporate controller and will serve as the company’s principal accounting officer.
Kohl’s to get jump on holiday shopping season
Kohl’s is the latest department store to announce that it will open its doors at 8 p.m. on Thanksgiving Day, as it kicks off its Black Friday event earlier than ever.
Stores will be open for 28 hours straight, from 8 p.m. Thursday, Nov. 28 through midnight Friday nationwide.
The retailer is also offering a digital variation on the photos with Santa tradition. Starting in November, shoppers can skip the long lines to visit Santa at the mall by taking a photo at Kohl’s Snapshots with Santa in-store photo opportunity in Kohl’s stores nationwide. Customers can snap their picture against a green screen display, select a unique holiday background with Santa and share via email and social media using the Kohl’s Snapshots with Santa app.
Also new this year, and in time for the holidays, Kohl’s iPhone app will feature a new savings wallet, giving shoppers the ability to track Kohl’s Cash right on their phone.
By Crosby Renwick, [email protected]
Sure, the Internet plays an aggressive game. It’s looking like the Internet business is trouncing the retail business. However vast an assortment or low the prices a retailer offers, the Internet does it better and cheaper. The prognosticators all say the same thing: What little growth there will be in consumer spending over the next five years is mostly going to happen online.
But, the bricks-and-mortar model can start winning again by leveraging its natural talent with the changing conditions.
Changing conditions? Well, that would be the aging of the marketplace. It’s a fact: Got to go with it. On the face of it, this changing condition looks threatening versus assistive because older people don’t spend as much on goods — they’ve pretty much already bought everything they really need. But they buy services. In fact, for several decades households have been increasing their expenditures on services while expenditures on goods as a percent of all spending have been going down.
Natural talent of retail? That would be service. Yes, service. Haven’t bricks-and-mortar retailers been in the service business all along? Especially mom-and-pop stores, who buy, edit, arrange, display and demonstrate an array of products while bringing them close to the customers. That’s service, I think. It’s a natural talent missing from the Internet; you can’t click and order services. Services most likely require in-person experiences within bricks-and-mortar.
Services for the aging population already happening at retail
We’re already seeing a lot of healthcare coming to retail — from walk-in clinics and urgent care centers to large insurance companies opening storefronts to counsel on health policies. Even laboratory testing has gone this route: AnyTestNow, a national chain of walk-in labs offering any blood or urine tests without a doctor’s prescription, already has over 100 retail sites.
But the explosive growth of the senior population brings with it opportunities that go well beyond storefront medical and insurance services. Here’s just a few of the concepts that could help fill some of those vacancies on Main Street, in malls or in strip centers:
Senior Social Clubs
One of the biggest services retail can provide is bringing like-minded people together. Just like those yoga fans who flock to Lululemon for classes — and, of course, the store’s yoga wear — lots of seniors are going to be looking for company. Here’s the idea: group senior care packaged as “Senior School” or “Senior Social Club” — complete with a gym, reading class, art programs, a woodshop, talent shows. Where do I sign up?
But why locate in retail space? Couldn’t this be done in a church basement or on any other location besides Main Street? Yes, but by being front-and-center, by being at the core of a community rather than hidden away, you increase awareness and acceptance. By being in the center of it all with retail locations, the Senior Social Club doesn’t get forgotten — it’s right in front of you everyday. Drive by, walk by and you’re reminded it’s there. And when Mom or Dad have left the stove on again, the solution is right there.
Simple idea: Look at what Whole Foods Market has done to the supermarket industry by specializing in pure, natural and/or organic. The boomer generation fell for it hard and fueled their growth. In comparison, “conventional” supermarkets now look a little un-natural.
The same opportunity exists in the drugstore business. All the big drug chains turned themselves into convenience stores in the past 20 years. Pharmacy is still a major part of their business, but nobody specializes in it anymore. And, what a giant, dependable business it is. Indeed, the elderly average six prescriptions per person, to be taken every day for the rest of their lives.
The people who shop at Whole Foods, Trader Joe’s and the like are believers in “integrative medicine” — the best of both the eastern and western worlds of healing — naturopathic (plant-based) remedies combined with western pharmaceuticals. The problem is those folks won’t find any national or regional chains that could be deemed ‘The Whole Foods of drug stores.’ To those shoppers, a drug store featuring a ‘natural’ front end amply stocked with herbal remedies, teas, vitamins, supplements, and organic beauty/personal care items, the clinical pharmacy department would appear safer, better, smarter. Staffed with knowledgeable people, an “Integrative Pharmacy” could be a national hit.
Senior Living Superstore
If you’re over 50, you or one of your friends is likely thinking about moving to a house that is more “senior-friendly” — more accessible, no stairs, higher toilets, showers instead of tubs, etc. A Home Depot-type store that could help you modify your existing house could potentially save you thousands of dollars. This one-stop emporium would be a place where you can get a stair lift, grab bars, motion-sensitive lighting or even arrange to have an elevator installed. While we’re at it, let’s surround these home-modification products and services with the thousands of items that have been specifically designed for an aging population — from large-type books to invisible hearing aids. Today, the only retail place where you can access even a modest assortment of these products is a hospital supply store. It’s probably located on the wrong side of town, it’s grey, badly lighted and there’s a wheelchair and toilet seat in the window — and probably a dirty window, to boot. Instant downer.
The opportunity is to bring it all together under one roof, clean it up and make it a pleasant place to shop.
When you think about it, the only place where the Internet beats bricks-and-mortar is on low prices for commodity goods. Who wants to be in that business anyway? Let ‘em have it and let’s get on to targeting growing markets with high-margin services.
Let’s apply what retail really already does better — servicing its clientele — and focus those services on the exploding aging population.
Crosby Renwick is executive director, Strategy, at CBX, the New York-based brand agency. He can be contacted at [email protected].