[February 26, 2015] As I was driving today in New York City listening to the car radio, I heard a joke about Radio Shack’s bankruptcy. It went this way, “I hate hearing about Radio Shack’s woes … where else can I get a radio-controlled toy car and new flip phone?” There are many who predicted their downfall, including myself, and the reasons are not surprising.1,2 But it was the lack of the heart of the merchant that really mattered.
Radio shack management failed to adapt to the changing electronics retail environment. Customer service suffered too and for all too common a reason. They treated their employees poorly, often firing more experienced and higher paid employees and hiring low pay, electronic novices. They were once innovators in electronics and always stocked the latest technological trends. Now jokes are made about their outdated technology being sold at full retail prices.
When I shopped at Radio Shack, often until about two years ago, I noticed how employees couldn’t answer basic questions – things that the average American will ask. The decline in quality employees and junior managers, purportedly to cut costs, was the nail in their coffin. This is why I say they lost the heart of the merchant.
Corporate headquarters can cut unprofitable stores and reduce staffing but losing the ability to provide quality customer service and have cutting edge technology (something they were known for) was their undoing. There are other factors of course but their failure to adapt to changing electronic trends certainly was a major reason for their bankruptcy.
The lesson of leadership is that when you lose the passion and fail to adapt it means you will not only fail but that those who are part of your organization will be hurt by losing their job. A true merchant that has heart is honorable, trustworthy, very knowledgeable about the economy, respectful, and even scholarly.3
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[1] http://www.forbes.com/sites/lauraheller/2011/04/26/why-radioshack-is-failing-or-attack-of-the-mbas/
[2] http://www.businessinsider.com/why-radioshack-is-closing-stores-2014-3
[3] http://kugnaemerchants.com/knowledge-of-wealth/heart-of-the-merchant-leeannder/