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Right-Sizing the Footprint

Dr. Stephan Liozu analyzes what retailers can learn from the recent store closures by Staples and Radio Shack.

RadioShack has publicly announced that they are planning to close nearly 20% of their locations (1,100 stores) as the company’s share price continues to plunge. More than 90% of the U.S. population lives or works within minutes of a RadioShack location. “We are over-stored”, admits CFO, John Feray. Arguably, one of RadioShack’s largest flaws is their inability to compete on a multi-channel scale with other online retailers like Amazon. But RadioShack isn’t the only retailer struggling to keep their head above water. Staples has announced the closure of 225 physical stores as they continue to face steady competition from e-commerce rivals such as Office Depot. This isn’t a surprising shift considering that Staples has been actively trying to move towards a multi-channel strategy and away from a purely physical presence. What’s encouraging about this is that Staples is upping their game – they announced that they have more than 500,000 products (about five times more) for sale online, as compared to their 2013 assortment. Staples’ year-over-year online sales grew 10% in the fourth quarter of 2013, while in-store sales fell 7%. The evident difference between the two struggling retailers is that while RadioShack appears to be downsizing in defeat, Stapes is changing its strategy to reinvent itself.

The transformation continues for traditional business retailers. Retailers need to ‘right-size’ their footprint and realign their strategies to maximize their impact on consumers. Opportunity lies in the assessment and reassessment of a business. Retailers should be constantly reviewing both opportunities and threats for their business – in Staples’ case, boosting their online presence while downsizing their in-store locations. Contact 360pi to find out where your opportunities lie and how to beat your competitors to them!
About the Author
Stephan Liozu is the Founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation, pricing and value management. He also has a Ph.D. in Management from Case Western Reserve University and can be reached at sliozu@case.edu.