RadioShack Checks Out of Blockbuster

RadioShack Corp. (Fort Worth, Texas) has announced that it is terminating its six-month trial to put vendor shops into Blockbuster video-rental stores.

“The bottom line,” ceo Leonard Roberts told The Wall Street Journal, “is we can't get the return on our investment. There are more cost-effective ways to extend our reach.” If the alliance had worked and the concept was rolled out to most of Blockbuster's roughly 5000 U.S. stores, it would have cost RadioShack between $200 million and $300 million. The six-month trial, in selected markets, cost about $10 million. There was no comment on the future of the existing shops.

Yesterday, RadioShack reported that December retail sales had decreased 2 percent for December — in a period when many consumer electronics retailers did well — and same-store sales at company-owned stores also decreased 2 percent..

Blockbuster (Dallas) said it had been pleased by the results and was surprised by the announcement, though it acknowledged some inefficiencies — such as having personnel devoted strictly to RadioShack products. Blockbuster must have been pleased enough by the existence of RadioShack consumer electronics products in its stores, because it announced earlier this month that it is considering adding video and game players and other home electronics to its merchandise offerings in addition to the (non-RadioShack) DVD players it has been selling in its stores for the last few months.

Roberts acknowledged that part of the problem was the different customer the two retailers target. He said that nearly 70 percent of RadioShack's customers are men, whereas Blockbuster draws more women and children.