The RadioShack Name: Worthless or Worthwhile?
RadioShack Brand Name Could Play a Key Role in the Company's Revival
After months of speculation, the bid for RadioShack by Soohyung Kim's hedge fund Standard General was officially approved in bankruptcy court, saving the ailing electronics retailer from imminent liquidation. While RadioShack's road to bankruptcy has been long and well documented (the company was last profitable in 2011), Mr. Kim sees promise where others did not.
Through Standard General, Mr. Kim has taken over approximately 1,700 of RadioShack's 4,000 stores. Mr. Kim believes that aspects of RadioShack's legacy business can thrive even today, and he seeks to position RadioShack as a neighborhood electronics convenience store. Rather than focus on the latest high-end gadgets like laptops, tablets, and mobile phones (a battle being lost to online retailers), it will move toward becoming a quick-stop shop for oft-forgotten or misplaced items such as headsets, chargers and other accessories we can't live without. He's betting on the fact that this aspect of RadioShack's business -- the less sexy side of electronics retail -- has real potential.
For all of Mr. Kim's faith in the company, though, the one asset conspicuously missing from Standard General's takeover agreement is the rights to the RadioShack name. So, Mr. Kim, why not include the rights to a 94-year-old, highly-recognizable brand name in your takeover agreement?
At first glance, the answer seems apparent and the decision justifiable. Beyond being linked to a well-publicized bankruptcy, the brand itself evokes connotations of yesteryear -- a store with a wide selection of cassette players and floppy discs. The name itself feels dated: The radio as a device is slowly being rendered obsolete by new online music sources like Pandora and Spotify -- it's a technology we associate more with FDR's fireside chats than any part of the 21st century.
Today, President Obama tweets, and we are increasingly and inexorably immersed in the cellphone age. A shack evokes imagery of a remote, primitive and likely decrepit dwelling. Despite these connotations, RadioShack previously attempted to reposition as "The Shack" in 2009, a campaign that was widely criticized and quickly retracted. Mr. Kim's decision to pass on the brand name appears to make sense. And in a recent AdAge column, Al Ries argues that the RadioShack name was part of the problem. But maybe they are wrong. AD UNIT 2