5 mistakes that doomed RadioShack

When it comes to why RadioShack (RSH) is now preparing to hit dead air, there's a long rundown of problems that led to this point.

The company is nearing its last gasp after a series of self-inflicted missteps that set in play its money-losing decline. The New York Stock Exchange on Monday suspended trading in its common shares and started proceedings to delist the company, which has more than 4,000 stores across the country.

The company is preparing to shut down the chain in a bankruptcy deal, and is in discussions to sell some leases and locations to both Amazon and Sprint, according to Bloomberg News. Amazon is reportedly considering using some locations to show off its hardware, such as its Kindle Fire tablets, as well as pick-up locations for orders. In an email to CBS MoneyWatch, RadioShack wrote, "We decline to comment on any of the speculation at this point."

RadioShack was once the byword for the place to buy the latest in electronics, from CB radios (remember those?) to one of the first early home computers, the TRS-80. But after its heyday, from its success with ham radio enthusiasts through the early 1980s, the company made a number of missteps. Some of these involved failing to spot up-and-coming competition, such as Amazon, while others included confused marketing strategies and a poor mix of inventory.

After starting out in 1921 by selling supplies to radio officers on ships, the business expanded into retail stores in the Northeast, as well as operating a mail-order business for electronics. It was bought by Tandy Leather Company in 1963, with Tandy changing its name to RadioShack.

The next few decades marked a string of successes for the retailer, including riding the CB radio craze in the 1970s, as memorialized in pop culture classics such as 1977's "Smokey and the Bandit" and the 1975 hit song "Convoy," about truckers using their CBs to spark a revolt.

From there, RadioShack introduced the TRS-80, the first mass-produced personal computer. It ended up as a surprise hit for the electronics retailer, but RadioShack failed to leverage that into additional successes in the PC market. What happened over the next few decades is a catalog of poor strategies and missed opportunities.

The cell phone kiosk

While the TRS-80 was hugely popular, RadioShack failed to keep up with the personal computer revolution that was coming out from competitors in the 1980s and 1990s. The hardware business became unprofitable, and one former executive told Bloomberg News that he was told to keep computer sales to less than 10 percent of the business mix because it wasn't a money maker.

When RadioShack stopped making computers in 1993, it turned to an emerging technology to ride to profits: Cell phones. While that initially drew consumers into the stores, it also led to some serious problems for the company.

RadioShack's stores essentially become cell phone kiosks, but signing up customers took about 45 minutes per person, tying up store employees, Bloomberg notes. That frustrated the store's core customers, electronics enthusiasts, and weakened the brand.

Then, mobile carriers shifted away from relying on RadioShack and started operating their own competing stores, which caused RadioShack's revenue from mobile phones to drop.

Failing to ramp up on e-commerce

RadioShack made motions toward e-commerce efforts, including a ship-to-store model. But that program, which allows customers to order products online and pick them up at their local RadioShack, started in 2006, when Amazon was already a giant force in Internet retail.

In the late 1990s, while other companies such as Best Buy and Walmart were running early e-commerce sites, RadioShack's website didn't allow consumers to shop. Instead, it offered store locators and press releases, but customers couldn't buy anything.

RadioShack never plunged into e-commerce the way its competitors did, partly because it was dealing with store problems, Claire Babrowski, a former RadioShack CEO from 2005 to 2006, told Bloomberg.

Marketing confusion

Remember "The Shack"? This was one of the confusing marketing decisions coming out of RadioShack as it tried to find its way in a rapidly changing retail environment.

The company wanted to seem cool by referring to itself as "The Shack," but the move was widely ridiculed, with critics pointing out that the company had problems far deeper than its name. On top of it, tech website The Technologizer wrote in 2009, "The Shack is a lousy name," failing to create any connotations with the brand and sounding like "ramshackle."

Weird mix of inventory

RadioShack has an issue that big box stores don't have to deal with: Limited store space. With many of its stores crammed into smaller strip-mall locations, the retailer has to be careful about picking the right mix of inventory to draw customers inside and keep them buying.

But RadioShack's inventory was often just, well, weird. Aside from the basics that enthusiasts came in to buy, RadioShack would push glitzy-looking products at the front that often failed to win over consumers.

Take this account from Jon Bois, a former RadioShack store employee, who wrote about having to sell "unsellable crap." Once, his store was required to stock Brum cars, which no one in America had ever heard of. That's because they are based on a British children's television series that only aired on Discovery Kids. 

RadioShack's demise is "like retracing the steps and doings of a drunk person: okay, here's where he keyed the cop car. Wait, why'd he do that? I don't know, but his pants are lying here, so this is before he stripped naked and tried to rob the library," Bois wrote in SB Nation.

Failing to catch onto the Maker movement

While RadioShack was peddling mobile phones and selling remote-controlled cars, it seemed to miss a burgeoning movement growing right under its nose: the Maker movement.

This movement is gathering speed as DIYers apply their handiwork to tech- and engineering pursuits, such as making homemade robots. RadioShack has recently cottoned onto the movement, but Bloomberg News notes that it "apparently came too late." Customers are already going elsewhere for materials, and most of RadioShack's stores don't have the type of inventory the Maker enthusiasts are looking for.

"I wouldn't even call this a failure. I'd call it an assisted suicide," Scott Galloway, a professor of marketing at New York University's Stern Business School, told Bloomberg. "It's amazing it's taken this long for this company to go out of business."