Question

Provide a general summary of Consumer Electronics Stores Industry in the US like Radio shack. Why do they go out of business? Compare thheir past and future. Will they last long? Please provide a graph with growth and decrease.

Answer 1

Ans. Consumer Electronic industry encompasses electronic goods for entertainment (flat-screen TVs, remote controlled toys, music systems, video games etc.), home-office (computers, laptops, printers etc.), communication (cell phones, telephones etc.) and white goods (electronic goods used for housekeeping like washing machines, dryers, dishwashers, refrigerators etc.). The average annual revenue of the Consumer Electronic Store industry is approximately $85 Billion. This industry employs around 326,277 employees in US across 50,000+ businesses. Although there has been an improvement in consumer confidence as well as spends over the last years however due to fierce competition from other retailers (online, departmental and discount shops) the revenue is expected to fall by ~2.5% on an annual basis.

Pure play consumer electronic stores like Best Buy, Radio Shack are facing increasing competition from online retailers and department stores. These businesses are facing intense competition from many quarters all having different business models. In today’s era of technological revolution, well established brands and retail giants can be hugely disrupted by any nimble footed startup or organizations. Unless these companies leverage the new technologies and change the way they carry out their business they risk getting out of business.

Radio Shack was at one point world’s largest electronic chain with a formidable manufacturing setup where they manufactured everything from video tapes, TV antennas, computer software, wires etc. They were at one point (in 1990s) the world’s largest manufacturers of personal computers and one of the biggest OEMs selling hardware to Panasonic, GRiD, Digital Equipment Corporation and others. This gave them enough headroom for making very decent profits. However in June 1991 they restructured their business and divested all their manufacturing units and focused on Consumer electronics retailing which dramatically reduced their profit margin. Now with this model, it is imperative to be able to leverage economy of scale by being able to scale rapidly and sell to consumers globally which cannot happen in a brick and mortar shop only model. Soon RadioShack went bankrupt.

So, these companies can compete with Amazons and Walmarts of the world by being innovative and leveraging technology for scaling and improving customer experience.