News

RadioShack pulls plug on Blockbuster project

February 18, 2002

FORT WORTH, Texas - RadioShack Corp. (NYSE:RSH), saying it could find more effective ways to enhance its sales, has canceled a project to place store-in-store retail kiosks at Blockbuster Inc. (NYSE:BBI) film rental stores throughout the United States. The project is being shuttered following a six-month trial in 130 Blockbuster stores.

Under the concept, Blockbuster customers could purchase RadioShack products, including cellular phones, home electronics, Internet service, and satellite systems. The electronics company would pay Blockbuster a licensing fee and share all revenues under the agreement. If successful, RadioShack planned to deploy store-in-store boutiques at the majority of Blockbuster's 7,700 U.S. stores.

But RadioShack chief executive officer Leonard Roberts told the Wall Street Journalthat the project had not met expectations.

"The bottom line is we can't get the return on our investment," Roberts said. "There are more cost-effective ways to extend our reach."

He did not disclose what would happen to the 130 boutiques involved in the trial program.

Demographics may have hindered the project's chances for success, Roberts said. He told the Journalthat about 70 percent of Radio Shack's customers are men, while Blockbuster caters to a more well-rounded demographic, including more women and young people.

Blockbuster officials expressed surprise at RadioShack's decision, saying they were still in conversations with the company concerning the kiosk project, but noted they would still consider selling consumer electronics at their video stores.