RadioShack Attack at Blockbuster

RadioShack (Fort Worth, Texas) has entered an agreement to introduce concept shops within Blockbuster movie-rental locations. The intent of the alliance between the two Dallas-area companies is to create a more-full-service home entertainment destination within Blockbuster, while increasing RadioShack's reach and expanding its distribution network. As the two companies'ceo's put it, RadioShack will be able to expand retail square-footage and distribution; Blockbuster will be able to add more products and revenue streams; and each will be able to do so with a minimal capital investment.

“Having a retail presence in as many of the 5000 Blockbuster stores as possible opens up a new distribution channel for RadioShack, creating an enormous opportunity for accelerated growth,” said Leonard Roberts, RadioShack's chairman and ceo. “Our alliance with Blockbuster provides us access to more than 3 million Blockbuster customers each day, including more women and young adults, while using a capital-efficient way to expand our square footage and distribution network.”

“This alliance (benefits) our customers by giving them one-stop shopping for the best selection of entertainment and electronic products and services,” said John Antioco, Blockbuster chairman and ceo. “We're combining Blockbuster's domestic customer base of 48 million active member accounts and premiere store distribution network with RadioShack's high-quality products and expert electronics sales personnel. The results will be an extensively expanded home entertainment selection for our customers and entirely new revenue streams for Blockbuster with limited capital expenditures.”

The companies will launch Phase I of the concept in approximately 130 selected Blockbuster stores in four markets – Las Vegas, Norfolk, Va., Austin, Texas, and Tulsa, Okla. (A Phase II nationwide rollout of the remaining Blockbuster stores will begin in 2002.) Phase I completion is expected by this summer. RadioShack sales associates will manage the shops, which will vary in size depending on the size of the participating Blockbuster store, but will range from kiosks to approximately 600-square-foot sections. They will begin by offering a wide selection of RadioShack products, but specific inventory for the stores will be determined as the program moves forward. RadioShack will operate the shops and pay a license fee to Blockbuster for each location. In-store marketing campaigns and cross-promotional opportunities will becoordinated by both companies, and both will share in the cash flow and other economic benefits.

Blockbuster has 7700 stores worldwide. RadioShack itself has more than 7100 stores and dealers. (It has boasted that an estimated 94 percent of Americans live or work within five minutes of a RadioShack store or dealer.) It calls itself “the nation's largest consumer electronics retailer.