Saturday, May 06, 2006

A Suggestion for Radio Shack

First some disclosures, yes I do own some Radio Shack common stocks. And even sent this suggestion by email to them. No response.
And on a side note I have started to look at NABORS INDUSTRIES LTD (NBR) as to add to my protfolio as some exposure in the energy market.

DVD Kiosks Soon at Wal-Mart? :
Wal-Mart (ticker: WMT) has been actively testing in its stores ‘music kiosks’ — booths that burn music to CD on customer’s demand. Now Wal-Mart, the world’s largest seller of DVDs, is considering DVD kiosks that would burn movies on demand, to alleviate a shelf-space problem and possibly spur lagging DVD sales.

But the question becomes is why should Wal-Mart be that concerned about floor space? A better place is Radio Shack, I believe. Radio Shack has had a long problem with getting into the intelectual properties distribution. Software for computers never was a hit. Music was only some stupid Christmas CDs that most stores could not give away. DVDs,CDs and software through the Radio Shack Unlimited (catlogue orders through the stores-12 catalogues in all) never got anywhere. And even the exclusive (forgot name) personal learning computer never sold enough units to justify the vast inventory of software that was supplied to the stores.

With the DVDs/CDs on demand then there is no need to stock anything except the blank discs, everything else is either included in the machine or is lifted off the intranet. And floor space is an issue since most Radio Shacks are 2000 to 3000 SF which includes office and storage space. Radio Shack has about 7000 stores which is in the ball park for the 9000 Blockbusters. And since many of the Radio Shacks are in more rural areas than Blockbuster this could wedge Radio Shack into that market.

This last assumption that it would compete with BlockBuster would assume that either the disks become disposable or low enough price that returning them is not an issue for the rental side. But the purchase side would still hold true in lots of markets.

Now from another perspective:
Print on Demand
Unfortunately, the article suggests that WalMart sees this as a ploy to keep customers in the store longer. That would increase the real cost of the service, but the "time rich" may not mind. I'm not sure how many of WalMart's customers are "time rich", but I do not see the value in keeping this segment in stores for longer.

True it may be time consuming for the burning process. But then again it could be called in or purchased on the internet and then picked up. And secondly, Radio Shack has always had a problem with customers being so narrowly foccused that many did not know what they had or what services they provided. Radio Shack was a destination place and was never a shopping spot. Now if the customers had to wait, they would have a chance to learn about all the great gadgets there.

Lastly check out:Wal-Mart and the Shanghai Pirates
Which confirms the prices could be as low as $5 for older videos and slightly higher for new ones. And the time is around 1/2 hour-just enough time to look at all the great gadgets at Radio Shack!

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