Will RadioShack Be The First Retailer To Go Bust In 2015?

The New York Stock Exchange sent RadioShack Corporation RSH another letter last week after the firm's market cap remained below $50 million for more than 30 consecutive days. This was one more reminder that the company may not be able to survive in the highly competitive retail space, which has been heavily transformed by the advent of online retailers. But is this really the end for RadioShack? "There is a function for RadioShack and for Best Buy, but their business model has changed a lot and everything has moved away," Tigress Financial Partners analyst Ivan Feinseth told Benzinga. "Also, you could argue the fact that we no longer need GameStop. You could just be downloading the games online. In theory, you could argue the fact that GameStop would be the first one to go but they seem to be hanging in there." Cody Willard, chairman of Scutify (a financial social network), had just one thing to say about RadioShack: "Good riddance." "Isn't Best Buy next?" Willard questioned. "There are going to be thousands of jobs lost from both companies if they do end up [filing for] bankruptcy. Retail brick-and-mortar for technology is a tough proposition when you've got Apple Stores and Amazon."

Related Link: Can Best Buy Reinvent Itself As A Trendsetter?

'A Benevolent Act'

Several companies, including Samsung and Microsoft, pay money to have their items displayed in a specific section within Best Buy stores. "Samsung has a big showcase area," said Feinseth. "They were the first. Now Canon and Nikon. It's a place for them, and they are paying rent, so it's added revenue [for Best Buy]. It's a place for manufacturers to showcase new products and to get direct feedback." This could help keep Best Buy afloat, but it's not necessarily the right path. "It's almost going to have to be a benevolent act…by Samsung, Microsoft, BlackBerry, propping up Best Buy rather than a traditional business model of demand being there," said Willard. "That doesn't sound like something I would want to bet on. From Barnes & Noble to Best Buy, frankly, I think the large-scale chain has got problems ahead." Feinseth said that shopping is still a social experience. He doesn't see the cost advantage of selling electronics (a low-margin item) through Amazon versus Best Buy. "And for big items you have a shipping cost that cannot be, in many cases, negated easily," he said. Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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Posted In: Techbest buyCody WillardIvan FeinsethradioshackScutifyTigress Financial Partners
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