RadioShack Bets on in-Store, Same-Day Repairs to Smartphones, Tablets

RadioShack has entered the smartphone- and tablet-repair business.

The Fort Worth, Texas-based retailer thinks it can increase traffic to its stores by becoming the first national chain to provide in-store, same-day service on popular mobile devices. Some repairs will be done in an hour or even while a customer waits.

“Fix It Here!” stations have been added to more than 284 company and franchise stores, as part of a pilot program. Results are encouraging enough to expand it to 700 stores by year-end, said CEO Joe Magnacca.

Without quantifying the impact, he said: “We are seeing a positive influence on our business. It’s a unique service and one that people consider us as a trustworthy source.”

The new service comes as RadioShack has been posting double-digit declines in sales, mostly from mobile.

The company reports first-quarter results on Tuesday. Analysts surveyed by Thomson Reuters forecast a first-quarter loss of 52 cents a share and a decline in revenue of 9.6 percent to $767.45 million.

In 2013, its revenue fell 10 percent to $3.4 billion.

With the new repair stations, the retailer also expects to gain new phone customers that it wouldn’t otherwise see. If phones can’t be repaired, or if repairs cost almost as much as a new phone because the customer is eligible for an upgrade, RadioShack has a chance to get that sale on the spot.

“It will be the customer’s choice. But in these cases, maybe the upgrade business wasn’t going to come to us,” Magnacca said.

A customer may weigh a $99 repair with a $150 upgrade charge for a new phone, he said. Prior management moved RadioShack heavily into the mobile business when it was more profitable, but as more expensive Apple and Samsung smartphones were introduced, those margins evaporated.

Smartphones have had a different impact on the repair business.

Repairs are about a $1.4-billion-a-year market, and it’s been growing about 5 percent a year, according to an IBISWorld report.

Growth in the repair business is coming from smartphones, which are more fragile and have higher price tags, the report said. That leads to more consumers repairing instead of automatically replacing their phones. But the research firm said demand for the service could stall whenever smartphones become cheaper.

That may take a while.

With the wireless-phone industry moving away from subsidized smartphones, the cost of the phone psychologically is going to feel more expensive, said Harry Wang, director of mobile research at Parks Associates.

“When people pay upfront for their smartphone or see the cost of paying it over 12 months, consumers will have a clear understanding of the price of their phone,” Wang said.

The “Fix It Here!” program also complements how Magnacca is trying to reposition RadioShack’s 4,300 stores. He wants consumers to view the chain as a place to find solutions. It has used a do-it-together theme in recent marketing as a play on the do-it-yourself movement.

“It’s also another interactive piece of the store, putting a behind-the-scenes repair out where customers can shop,” he said. The company is also adding interactive speaker walls and headphone displays in its stores.

In some of RadioShack’s mall stores, the fix-it station will be near the window to capture impressions from customers walking by.

More than 2,300 businesses say they repair phones, according to IBISWorld, but there is no company with a dominant market share. Some of the most common repairs involve cracked glass replacement, water damage, battery replacement, cosmetic damage and lost buttons.

RadioShack said its technicians are receiving 40 hours of training, and the company is guaranteeing its work for 90 days. It’s working on phones that no longer are under warranty from the manufacturer.

On Thursday, RadioShack said it’s partnering with Ireland-based PCH International to work with inventors and startups who want a fast track to the consumer market. PCH is in the business of bringing new products to market, helping inventors navigate logistics and other hurdles.

RadioShack’s contribution to the partnership will be special retail terms and access to up to 2,000 of its stores. Stores will give the products preferred positioning, and by year’s end, RadioShack said it plans to have the products in a dedicated space in its stores.

Magnacca has been saying that the company plans to develop more private-label and innovative products along with key national brands to help rebuild declining sales.

Magnacca was hired 16 months ago to fix the troubled chain. Shares of the company’s stock have been trading below $2. In the past two years, RadioShack has posted cumulative losses of $550 million, and sales have declined 15 percent in the past two years.

The service could help RadioShack with efforts to attract younger shoppers.

Nearly 40 percent of millennials would rather lose their car than their mobile phone, according to an annual survey by Zipcar. The younger generation chose their mobile phone over their car or computer/tablet compared with only 16 percent of those in the age 35-plus bracket.

This article appeared in print in the June 10th, 2014 edition of Hamodia.