| Lou@its.invalid 2006-07-26, 7:33 am |
| SMS wrote:
> Scott wrote:
>
> What happened with Radio Shack is that Verizon was unwilling to give
> Radio Shack the spiffs that Radio Shack demanded. Verizon prefers to
> sell as much as possible through their own stores and website, as the
> margins are much higher. Verizon knew that the number of customers that
> choose wireless service based on the retailer is low enough that they
> wouldn't lose all that many new additions if Radio Shack ceased to be a
> reseller. Who dumped who? You can say that Radio Shack got a better deal
> from Cingular so they kicked Verizon out, or you can say that Verizon
> wasn't interested in the Radio Shack business at the terms that Radio
> Shack demanded. It's all moot now, but Radio Shack is suffering mightily
> from their actions, while Verizon continues to gain market share and
> enjoy large margins, while Cingular continues to lose market share and
> has much lower margins.
>
> Radio Shack was doing very well with Verizon and apparently believed
> that they could continue at the same sales level with Cingular, but make
> more money due to the higher spiffs. They were very, very wrong. There
> are performance criteria that if not met would allow either party to
> terminate the relationship, but Radio Shack is caught between a rock and
> a hard place, as Verizon is not going to be interested in going back
> into Radio Shack unless Radio Shack settles for much lower spiffs.
> Verizon has the upper hand in the negotiations.
>
> Radio Shack managers were complaining about Cingular even back in
> January, because sales were so low compared with Verizon. The last two
> quarterly reports for Radio Shack show just how correct the managers were.
Radio Shack is closing something like 471 stores nationwide so are now in even
worse shape.
|