How RadioShack has managed to stay open in the modern retail world has remained unanswered for a long time. After filing for a second bankruptcy and effectively being reduced to a pop-up store in a few HobbyTown’s across the US, their survival is baffling even from an insider’s perspective.

Big-box retailers like Toys “R” Us usually take a sharp decline and last a year or less on their inventory before their liabilities catch up with them. Specialty and mid-sized retailers are even more at risk, and are usually bought and liquidated before the next quarter after they go bankrupt.

Following suit, RadioShack is being slowly whittled down to less than 100 stores since their first bankruptcy and acquisition by Sprint. Their prospects were dim, with predictions putting their official closing being less and less generous as time went on. After it was removed from the NYSE and they stopped releasing earnings reports, it seemed like they wouldn’t make it past 2014. After all, even Blockbuster is still trading at a penny.

Despite this, RadioShack is still around and kicking. How it’s able to stay afloat while being left behind by a changing retail environment isn’t immediately obvious. But the truth is that RadioShack isn’t selling itself to consumers, they’re selling themselves to investors.

The Last RadioShack Earnings Report

To get insight into what happened to RadioShack, we can look at their last earnings report from Q3 of 2014. Not surprisingly, they were hemorrhaging almost $40 million every quarter, with a majority coming from paying their liabilities. Unlike other retailers, RadioShack was quick to cut stores and lessen their inventory as they struggled to pay off their debts, which enabled them to survive in the short term. While this also lowered their overall revenues, these under-performing stores were bigger liabilities than they were assets.

What is most striking is the striking amount of investment, even as they prepared for their removal from the NYSE. They continued to take out loans and receive financing even into their first bankruptcy, and were shopped around until Sprint finally picked them up the following year.

Despite their heavy losses, they still had a lot in assets and capital, which made it attractive to potential buyers. Their stores were in prime locations, they had the infrastructure to make a comeback, and they were cutting losses where they could. The question, however, isn’t how they made it to 2014, it’s how it made it to 2018.

The Promise of RadioShack Coming Back

The unending conveyor belt of bad news that comes from RadioShack’s press releases, like Sprint dropping their acquisition, would scare off most potential investors. However, RadioShack has been able to garner attention from venture capitalists and private investors in spite of the popular perspective. They have rolled out multiple concept stores in the past to act as pilot locations for rebranding efforts. RadioShack has also been noted for being responsible for the “tinkerer” trend making a comeback thanks to a few of their pilot stores.

These stores followed omnichannel strategies, which could help bring in the much-needed customer traffic that RadioShack was starving for as customers turned to online or specialty retailers for their needs. These included brighter and less cluttered stores, focused inventories, integration with their digital side, and deploying novel technologies to drive foot traffic into the store.

Though these efforts were somewhat successful, the biggest problem for the company is that it’s a major liability. That is, RadioShack comes shackled with an amount in debt that hasn’t been made public. However, going by 2014 figures, it could be in the hundreds of millions. Consistent sales aren’t enough to cover that kind of debt, it needs a major jump-start to succeed and stay open.

RadioShack has been able to use its capital investment to make its current debt payments, but inevitably has new creditors and investors to pay off before long. Its second bankruptcy seemed to alleviate parts of that, and with its new rebranding efforts, it appears that it may be trying to find a niche among hobbyists and cut its capital expenditures way down.

RadioShack’s Survival in Summary

Beyond all of the numbers and financial elements at play, the answer to RadioShack’s survival is simple: it has been able to consistently attract new investors in spite of its debts and poor operational choices dating back to 2008.

How it attracts these new investors is no mystery either: it’s already been noted that venture capitalists are eager to capitalize on emerging technologies and avant-garde startup efforts. RadioShack has been able to market itself to institutions, companies, and venture capitalists alike with the same concept: the idea that “The ‘Shack is Back” and it’s bringing emerging tech to the forefront of its design.

If RadioShack can survive for half a decade by adopting emerging tech and omnichannel strategies, such restructuring can certainly help your business as well. Worldlink Integration can support your IT department in implementing your latest project, whether you are revamping your current locations or testing new concepts in a number of pilot stores. Contact us today to learn how you can Win With Worldlink.