Why did Radioshack fail?

The personal computer revolution affected the company’s hardware sales badly. Personal computer sales weren’t money makers for the company because of the tough competition from companies like Dell and IBM.

After Radioshack stopped selling personal computers it moved to selling cellphones. The move was profitable but soon mobile operators started running their own kiosks thus putting more pressure on the company.

While e-commerce giants such as Amazon were rising, Radioshack’s site didn’t allow customers to shop online and instead it just referred them to shops.

According to critics, Radioshack stores had many bizarre items that most people weren’t looking for. This resulted in consuming more store space while providing less revenue.

The tough competition coming from online retailers such as Amazon has put tremendous pressure on traditional stores that sell directly to customers such as Radioshack.

According to Fortune, Radioshack spent up to $500 million to support the falling share prices by buying back shares whereas they should have accepted the new valuation and saved the money.

Radioshack had to borrow money to buy back shares. This resulted in increasing the company’s debt to equity ratio and putting it in a bad financial condition. (See How to identify a stock market bottom?)

Radioshack’s competitive advantage was the professional advice hardware enthusiasts used to get when buying items to make hardware. As the company moved to selling finished products this competitive advantage became non-existent and so the company lost to traditional stores selling the same items.

The company changed its CEO 7 times between 2005 and 2014. This unstable management environment could have contributed to many of the company’s missteps.

The creditors didn’t like the plans of the company to shut down more than quarter of its stores. This put the company in a very unstable financial condition. (See Why Soundcloud is failing?)

Radioshack tried re-branding itself as The shack but it got criticized for the fact that its problems had more to do than just its name.