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TK's MORNING BUZZ: Is RadioShack Ready to Meet the Best Buy Challenge?

12 Dec, 2000 By: Thomas K. Arnold

RadioShack is getting a little defensive, with its chairman assuring investors and anyone else who cares to listen that the mall-based chain of consumer electronics stores is fully prepared to meet any challenge that may result from Best Buy's acquisition of Musicland Stores Corp. and its stated intent to turn Musicland's mall stores into mini-Best Buys, selling consumer electronics hardware alongside its core mix of music and video software.

You can't blame RadioShack, one of the few chains that has steadfastly refused to enter the software market in any major way, even as its big-box peers like Circuit City have transitioned themselves into software sellers of some magnitude.

Depending on what Best Buy ends up doing with the 600-odd Sam Goody mall music stores it acquires, change may ultimately be in the wind at RadioShack, regardless of what it says, or does, at the present time.

The same may be true of other consumer electronics chains like the Good Guys, which is already toying with software at the Wow concept stores it is operating in partnership with Tower Records and Video.

It's a natural mix, and one that as convergence progresses will make more and more sense.

For years, hardware sellers and software sellers have stayed on their respective sides of the line, even though to consumers nothing, one would think, would be more natural than for all home entertainment needs to be fulfilled at one place.

That's one reason Best Buy is as successful as it is; when DVD was first launched, the chain was one of the first to carry a wide mix of both software and hardware and reap the resultant benefits. Best Buy in those early days reported that the average buyer of a DVD player bought 22 DVD discs as well--no small potatoes, and great for retailers like Best Buy that carried it all.

Circuit City recently chucked its appliances in favor of more software and home entertainment hardware, and while that decision has yet to pay off, I believe in the long run, it will.

Convergence is upon us, and the successful retailers of the future will be those that offer consumers a convergence of hardware and related software.

Consumers want convenience, and one-stop shopping makes as much sense for home entertainment merchants as it does for, say, supermarkets, a class of trade that has been busy adding all sorts of bells and whistles--from laundry service and photofinishing to fast food and banking--in recent years.

Comments? Contact TK directly at:TKArnold@aol.com

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