RadioShack, Target to end mobile partnership
Target and RadioShack struck a deal a while back to take on the Blue and Yellow big ticket giant that is Best Buy Mobile, but it looks like that marriage is ending a tad early. The two parties have announced that a new agreement could not be reached, and that Target Mobile would no longer require the services of RadioShack.
RadioShack’s backing gave Target the ability to sell and manage post-paid contract customers at several of the nation’s biggest carriers, giving it the competitive edge it needed to keep up with the likes of Best Buy and Walmart. There were a lot of question marks associated with this deal when it was first inked, and it looks like we have our answer — it just didn’t make sense for either side.
Target, which specializes in clothing, consumer electronics, household wares and food, already headed up a modest pre-paid phone sales model, but the beast that is post-paid sales seems to have been too difficult to tackle.
RadioShack says in order for a deal to be reached it would have to be profitable for both sides, and when it couldn’t find the middle ground the two companies desired they agreed to part ways. RadioShack seems to have been on the lousier end of the deal as the company said it had no part of Target’s lucrative accessories sales business.
RadioShack will remain in Target stores (about 1,500 of them) until April 8th, 2013. Target Mobile employees are said to be able to keep their jobs, however, as Marketsource and Brightstar have inked deals with Target to keep the pre-paid side of Target Mobile afloat. Reports suggest Target Mobile employees will have the choice of either staying with Target or going to work for a RadioShack corporate store, but these reports are unconfirmed as of the time of this writing.
Many raved about Target Mobile’s competitive contract deals opposed to going to the carriers’ corporate stores, but it seems deals alone aren’t enough to drive the business required to make things work. Many felt Target’s approach of stuffing the mobile kiosk into the electronics section of its stores was to blame as this made for low visibility.
Compare this to Best Buy Mobile, which has an entire section for mobile at the front of most of its stores, and even some standalone stores. Of course, since Best Buy is a more specialized consumer electronics store it has the floor space to give its mobile business the visibility that it needs. Big marketing dollars doesn’t hurt, either — you’d probably be lying if you said you didn’t see at least one Best Buy Mobile ad somewhere throughout the holiday season.
You can still head to RadioShack corporate stores and RadioShack.com after this partnership ends if you prefer the way they do business as opposed to corporate carrier stores or Best Buy Mobile, but once August 8th hits you won’t be able to call Target your one-stop shop for everything if you preferred to carry out your cellular phone business in its stores. Read on for full press details.
RadioShack and Target Dissolve Target Mobile Partnership
FORT WORTH, Texas, Jan. 14, 2013 /PRNewswire/ — RadioShack Corp. (NYSE: RSH), today announced the end of its relationship with Target, where it helps operate Target Mobile in 1,500 Target stores, effective April 8, 2013.
The RadioShack and Target partnership provided RadioShack access to manage Target’s post-paid mobility business, but RadioShack did not manage the prepaid mobility business or the wider range of accessories offered in Target stores.
Since October 2012, RadioShack had been renegotiating the terms of the relationship with Target to establish an agreement that would be profitable to both companies. At that time, RadioShack executed a termination notice that would allow the company to exit the Target business if an agreement could not be reached.
“In order for RadioShack to have continued this relationship, we needed to establish a new agreement that would be financially appealing to both companies,” said Telvin Jeffries , RadioShack executive vice president, chief human resources officer, and general manager of retail services “Ultimately, we amicably agreed to dissolve the relationship.”