RadioShack Looks to Make a Comeback with HobbyTown Deal
To be clear, RadioShack has never actually fully gone away. The 97-year-old consumer electronics chain has gone through bankruptcy twice in the last three years and is certainly a shell of its former self—down to some 400 stores last year compared to 4,400 prior to the first Chapter 11 filing in 2015. But the company is still looking to make something of a comeback, and they hope to do it with a little bit of help.
Last week, according to a report in the New York Post, RadioShack and HobbyTown USA signed a deal that will bring “express stores” to 50 HobbyTown partner stores. The deal could expand to 100 stores and, if successful, to all 140 HobbyTown locations across the country.
According to the Post, the first express stores will start to open this week.
One such store in Mooresville, North Carolina, will carve out 500 square feet of its 6,000-sqaure-foot store for the express location. The area will include RadioShack signage inside and outside of the HobbyTown store. That store’s owner told the Post that his employees will operate the express store.
Per the deal, HobbyTown will purchase RadioShack merchandise—including tools, wires, and other accessories—and offer it to their customers. The win for HobbyTown is that the express stores will add those products and the brand name to their locations, as well as other services like cellphone repairs, which they previously could not offer. It’s a way to differentiate themselves from other local competitors.
For RadioShack, the benefit is that they can increase their physical footprint without having to worry about the cost of rent. And after its most recent bankruptcy filing, the chain was left mainly with rural locations. The HobbyTown stores will bring the retailer, in one form or another, closer to more densely populated areas.
Prior to its most recent bankruptcy filing last year, RadioShack had struck a similar deal with Sprint that saw the wireless carrier open branded “express stores” in RadioShack locations. Sprint was to pay rent and commissions to the chain and had to operate those locations within the RadioShack stores. That deal eventually fizzled out and resulted in a RadioShack lawsuit against Sprint.
RadioShack emerged from its Chapter 11 filing earlier this year with its 400 locations, its ecommerce business, and a single distribution center. General Wireless CEO Steve Moroneso told the Post that the company’s strategy today revolves less around owning its brick-and-mortar locations. General Wireless is an affiliate of the hedge fund Standard General, which purchased RadioShack in 2015. Moroneso went on to say that they’ve received “plenty of interest from dealers” who want to open their own full-line store, but the company seems quite content leveraging partnerships to help get its name back out in the marketplace.