RadioShack-Sprint Deal Sends Mixed Messages, Could Confuse Customers
Sprint Corp (NYSE: S) plans to pick up as many as 2,000 RadioShack stores in the United States. The deal will not mean the end of RadioShack (OTC: RSHC); rather, the ailing retailer will live on by co-branding its stores with the wireless carrier.
"Retail is all about location," Agathe Blanchon-Ehrsam, CMO of Vivaldi Partners Group (a global brand strategy consulting firm), told Benzinga.
"While this is true, I wouldn't say the RadioShack network of stores is in premium retail locations by any stretch of the imagination."
"I also wouldn't say that people were lining up to go to RadioShack stores," said Blanchon-Ehrsam. "Changing the signage out front won't really change things overnight for Sprint.
"I think the old model of retail, where you had your retail locations and hoped people came to you because of some awareness or understanding of your product, is old and dead," she added.
No More Success?
As far as RadioShack is concerned, Blanchon-Ehrsam feels that this old model "is no longer going to succeed." Sprint might have an advantage in that it has a longer-term, multi-year relationship with its customers through its various contracts.
"They can capitalize on those relationships to bring people to the store," she said. "Sprint is doing more than, I think, doubling their stores. It's giving them a greater footprint. It's definitely not a slam-dunk for Sprint to make this work."
Retailer confusion can destroy a brand. RadioShack and Sprint need to remember that when their co-branded stores are released into the wild.
"RadioShack is going to continue selling basically what they're currently not selling," Blanchon-Ehrsam quipped. "You end up with possible confusion from some customers who are showing up and aren't clear. By association, what does this mean for Sprint?"
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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