What: Electronics retailer RadioShack has filed for bankruptcy nearly 94 years after opening its first store. The retailer agreed with Telco Sprint to cobrand 2,400 of its approximately 4,000 stores. The wireless company will cobrand stores, with Sprint being the primary brand on storefronts and in marketing materials and RadioShack continuing as a “store within a store” concept in up to 1,750 of those.
Why it matters: The move may help Sprint to catch up with competitors T-Mobile, Verizon and AT&T and reach a larger base of Hispanic customers.
Electronics retailer RadioShack filed for bankruptcy, after nearly 94 years of having opened its first store.
The retailer has made a deal with Sprint to sell up to 2,400 of its approximately 4,000 stores.The wireless company will cobrand stores, with Sprint being the primary brand on storefronts and in marketing materials and RadioShack continuing as a “store within a store” concept in up to 1,750 of those.
According to RadioShack, its remaining stores are expected to close.The company’s franchise locations, as well as stores in Mexico and Asia, are not included in the deal.
This move will help Sprint’s aggressive Hispanic marketing ambitions by extending their physical footprint to thousands of Radio Shack stores.
“Today we are the carrier with the smaller amount of stores, we are lacking 500 or 600 stores less than T-Mobile and we’re like 3000 stores less than Verizon,” Sprint CEO Marcelo Claure told analysts on an earnings call on Thursday when asked about RadioShack.
“Sprint and RadioShack expect to benefit from operational efficiencies and by cross-marketing to each other’s customers,” Claure said in a statement.
RadioShack’s bankruptcy announcement is no surprise. The company’s marketing budget has declined in recent years. It spent US $78 million on U.S. measured media in 2013, down from US $88 million a year earlier, according to Kantar Media. Losses have increased and in its latest quarter sales plunged 16% from a year ago.The bankruptcy filing also, comes at a time when many electronics competitors such as Circuit City and Nobody Beats The Wiz died years ago or Apple have risen and consumers’ transition to wireless devices.
RadioShack’s losses have increased and in its latest quarter sales plunged 16% from a year ago.
Extra Point for Sprint
For Sprint, this a major opportunity to go against Verizon and AT&T, carriers with much larger subscriber numbers and retail locations. The carrier plans to add “at least 500 stores this year. Sprint employees will sell mobile devices and plans on all Sprint brands including Boost and Virgin Mobile.
What are the implications for the Hispanic marketing, particularly on how Telco’s pursue the coveted Hispanic consumer? “From my point of view this move will help Sprint’s aggressive Hispanic marketing ambitions by extending their physical footprint to thousands of Radio Shack stores. This move gives them increased awareness and distribution including in Hispanic neighborhoods, but most importantly puts more Sprint employees, many of which will be Hispanic, face to face with potential customers,”Lee Vann, CEO of Captura Group tells Portada.
Read our recent interview with Sprint’s Hispanic Marketing Manager Kymber Umaña.
Sprint’s third quarter results showed revenues of US$9 billion and an operating loss of US$2.5 billion. Sprint added 30,000 branded postpaid customers, an increase after several quarters of consistent subscriber loss.
Austin based LatinWorks had been RadioShack’s Hispanic agency. Sprint’s retail agency is Leo Burnett. Sprint is one of the nation’s largest advertisers, spending US$1.6 billion in the U.S. in 2013, according to Kantar Media.