Sprint has a brand problem — and RadioShack isn't one to take notes from in that category
After some speculation, Sprint confirmed that it would be buying out 1,750 of RadioShack's stores in conjunction with that company's bankruptcy filing. Rather than clean them out entirely, Sprint will re-launch the stores as co-branded Sprint/RadioShack locations that devote one-third of floor space to selling Sprint's phones and service, with the other two-thirds being the same old RadioShack we all love (for nostalgia reasons) and loathe (for practical reasons).
It's a move that will dramatically increase Sprint's retail locations from 1,100 to 2,850, but I can't really see why this is any way going to fix the issues currently facing Sprint. Of all the things that the carrier could do to positively influence its placement in the wireless market, buying up a bunch of retail stores that just declared bankruptcy shouldn't be high on the list — let me explain.
Depending on where you live you'll have a different perspective of Sprint, but the overarching feeling about the carrier nationwide is certainly not a positive one. Following along with its Network Vision process moving at a snail's pace the past couple of years, customers and potential customers alike have been frustrated by the slow expansion of LTE and wide variation in network performance. Sprint's new CEO Marcelo Claure even admitted the quality of the network wasn't up to snuff, but vowed that upgrades will be coming (no, really this time) after it dropped its prices to be competitive.
At the same time, Sprint's plan pricing has been awkward and behind the times, although it has improved since Claure stepped in. It took far too long to get on the shared data train, instead clutching to its unlimited plans that weren't competitively priced and clearly didn't draw in enough data-hungry customers (and when you charge extra to use tethering on your unlimited plan, how can you?). It was late to the game on un-bundling of devices from plan prices, falling behind even Verizon and AT&T when it came to ubiquitous financing of devices and discounts for buying off-contract.
Sure its financial reports show customer gains, but diving deeper you see that a vast majority of new customers under the Sprint umbrella are actually joining its wholly-owned subsidiaries Boost and Virgin Mobile, which actually offer competitive prices albeit with often subpar phones. Half-assed attempts at bringing over customers from the other carriers, like the "cut your bill in half" promotion (which didn't actually cut your bill in half, but who's counting?), didn't seem to move the needle on folks coming over to the much more lucrative postpaid phone business.
Is a fleet of RadioShack stores a solution? Hardly.
So this brings me back to my main question — can buying up 1,750 RadioShack stores solve Sprint's issues? Of all the problems listed above, I'd submit to you that buying up more retail space solves not a single one. Sure this gives wider distribution for its Boost and Virgin brands, which continue to gain customers, but that in itself can hardly be worth it given the tight margins of prepaid. Of course this also means RadioShack won't be selling phones and service on AT&T, Verizon and T-Mobile, but I'd be willing to bet RadioShack wasn't a huge driver of sales for any of those carriers prior to today.
There's a reason why RadioShack is filing for bankruptcy — making the stores available to Sprint in the first place — and it surely isn't because they've been bastions of retail success. We're talking about stores that in 2015 still hold onto the notion that they can sell you a $3 USB cable for $25. That expect people to walk into their dingy store in the back corner of a mall to peruse far from cutting-edge electronics, cheap R/C cars and overpriced phone accessories.
Sprint has problems with its network. It has problems with its plan pricing. It has problems with keeping customers on its postpaid brands that make the most money per subscriber. And most importantly, Sprint has the problem of a tarnished brand, one that most people don't associate with high quality phone service and great value.
Flooding 1,750 RadioShack stores with Sprint, Boost and Virgin phones doesn't do anything to help those problems, particularly its poor brand image, and in many ways it hurts the Sprint brand to be associated with such an antiquated and poor example of what a retail store chain should be. We don't know how much money Sprint is dumping into these stores, but I can guarantee they're overpaying.