Can Dr. Dre save RadioShack?

The dying chain is betting that the $400 headphones from the famed rapper can turn it around. That's a tall order.

By Aimee Picchi May 1, 2013 2:12PM

People walk past a RadioShack store in Manhattan on July 26, 2012 in New York City (© Mario Tama/Getty Images)It's been a tough year for RadioShack (RSH). Its stock has plunged 39% since last May, and an unexpected loss last fall led to a management overhaul.


Once the place to go for blank cassette tapes, electronics components and unusual batteries, the chain has sunk into an apparent abyss of irrelevancy. Even worse, it has continued to lose money, prompting shareholders to flee. 


Now, the company's new management has a plan to revive the brand by joining forces with one of the most popular electronics accessories, Beats by Dr. Dre


A line of headphones, speakers and other devices, Beats products aren't cheap. Its pro headphones, which its site says are used to mix in "every major studio," cost $400, while its earphones can cost between $100 to $150. 


The question isn't whether the new line is attractive to young consumers, however. The real issue facing RadioShack is whether teens and 20-somethings will even think to make their way to the fading retailer to pick up one of the sleek headsets. 


After all, RadioShack is better known for helping aging electronics aficionados than for assisting young music fans. And there's no lack of rivals selling Beats products. The brand is also available from its own website, as well as from RadioShack rivals such as Amazon.com (AMZN) and Best Buy (BBY). 


RadioShack is certain the deal will help with its "brand transformation," the company's chief marketing officer told Marketing Daily. The effort is part of chief executive officer Joseph Magnacca's plan for reviving its image. Magnacca, who is credited with breathing life into Duane Reade drugstores, last month vowed to refresh some New York City locations, Reuters notes.


"We need to broaden our appeal to be inclusive of Millennials who currently don’t know that they can find the hottest music accessories that they want in their neighborhood," marketing chief Jennifer Warren told Marketing Daily. 


The chain will get the word out by airing a spot featuring Robin Thicke's "Blurred Lines," with women dressed in bikinis and plastic wrap and adorned with RadioShack logos. The commercial will air on networks that attract younger viewers, such as MTV and Comedy Central. 


Whether it's enough to lure young consumers to cross its threshold won't be known for another quarter or two. If the effort fails, maybe it's time for RadioShack to pull the plug and call it a day. 


Follow Aimee Picchi on Twitter at @aimeepicchi.


More on moneyNOW

19Comments
May 1, 2013 3:49PM
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RadioShack used to actually carry cool stuff; now it's nothing more than a glorified cell phone store.
May 1, 2013 4:02PM
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The brand problem is two fold...

Nobody wants to shop in a Shack.  And kids today don't listen to Radios.

Adding a new vendor - who is not exclusive to your store - will not bring people in through the front door.  And if RadioShack can pull someone in off the street to buy a pair of Dre Beats... that is the only thing they will leave with.  I high priced, low margin, commodity.

RadioShack needs to fix their brand by sticking to what they are good at and embracing it.  RadioShack is a place you go to buy electronics - TO BUILD SOMETHING WITH.

RadioShack needs to switch gears and forget about promoting someone else's brands withing their stores.  They need to run a campaign to convince PARENTS to spend time with their KIDS - and build something TOGETHER.

RadioShack needs to be the heart and sole of where parents and kids come together to buy an electronics kit, and turn it into quality time.  Our kids know how to work every gadget and gizmo.  God forbid, they know how the gadget actually works.

You want to restart the education of math and science in America - RadioShack here is your opportunity for relevance again.


May 1, 2013 5:16PM
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Don't buy those "Beats" headphones...cheapest set I EVER had....actually broke after less than 2 weeks

May 1, 2013 6:25PM
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back in their salad days i'd be in there at least once a week picking up electronic components....you could almost build a junky nuke with their enormous supply...but as was said previously the place looks like one of those empty cell phone salons with staff instructing goons about cell phone use...i haven't been there in three years...the dre gear you can get on amazon...without goon stink
May 1, 2013 4:56PM
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radio shack ads had htc evo 3g for $99 and listed available online. false! they're so desperate to avoid bankruptcy that they're using bait-and-switch tactics! store clerks said they never had stock before or during the sale. wasted time going to local stores and calling others.
May 1, 2013 5:41PM
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I heard Dr. Dre just stole an old set of headphones from George Clinton and called it his own.
May 1, 2013 6:30PM
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Radio  Shack customer service is really bad. I contacted their headquarter once. Then the headquarter personnel redirected me to talk to the regional manager in NJ. That guy is really rude and doesn't care how customer shopping experiences. He was thinking I just wanted the $20 that they promise to give it to me when I traded in my phone and he didn't even want to hear what is the complain about. You know what.... I don't even go get the $20 and I NEVER go back there to shop. If the regional manager act like that. Imagine the employees who work under him... OF COURSE they don't care either. 
May 1, 2013 4:51PM
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"plug the plug"? Maybe pull the plug, or plug the chief marketing officer. LOL I didn't think they had marketing.
May 2, 2013 6:15PM
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Radio Shack could be a top contender of electronics if it would dump its cheap imports and apply reasonable pricing to its products.   Then if they focused a part of their budget on developing stores in small cities with a population less then 50,000.  They used to be known to me as a place to go get batteries, cheap electronic parts, phones, walkie talkies, a few TV's, stereo equipment and even computers.  In fact I purchased my first computer from them which was a Tandy 1000.  They should go check out GameStop and review its marketing program and the way they run their stores and the products that fill their stores every day.       
May 1, 2013 6:14PM
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Beats will just be a band aid fix.  These headphones are made way to cheap from some of the lowest grade plastic and a pair of Bose quite comfort sound better and are made better.  If you want to by a pair of $400 headphones the Bluetooth Parrot Ziks sound great, have noise cancelation, and are built solid.

 

May 1, 2013 5:16PM
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They are way too expensive,but they are sweet!!
May 1, 2013 6:11PM
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I stopped going to radio shack along time ago. There prices are sky high and they used to carry all kinds of cool electronics but no so much anymore. When I was checking out laptops I stopped into our local radio shack and saw one I had looked at, at other places It was almost identical to the one I saw at best buy, Wal-Mart, and staples the only thing was the ones at the other places all had 4g and were all almost the same price the only thing diffren't at radio shack was that it was 3g and twice as high as those other places. That was a few years back I may go into radio shack every now and then but I don't buy from there anymore. The last thing I bought was a weather radio because I had some coupon from opening a bank account and it cost me like 5 bucks total.
May 2, 2013 12:39PM
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One product line is not going to fix Radio Shack's issues.  The last time I was in a Radio Shack was to look for an odd battery, but other than that their product lines are not appealing.  They would need to revamp all of their products and a total reinvention of themselves to make any difference.  Since that is not likely to happen, Radio Shack is probably headed the way of the dinosaur, Extinct.
May 1, 2013 5:03PM
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Don't the sell CBs there?  "South bound and down"
May 2, 2013 8:58PM
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Ha ha ha, The woman in the photo is looking at the phone poster in the Radio Shack window, the men are looking at HER! Men are sloppy, happy, slobbering dogs. I know because well... I am one. God bless the women who put up with us.

May 1, 2013 11:10PM
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I doubt this will help...people used to think of Radio Shack as the place to go for everything electronics...now they've got some electronics and a lot of cell phones. I don't think adding $150-$500 headphones will make a difference...Target and Walmart already carry them.
May 1, 2013 6:40PM
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I walked by one a few months ago, the front window display was all toys and RC cars,,,,looked like a Toys R Us for nerds
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