Napa Sonoma SBDCSanta Rosa and Napa, California

“The help from the SBDC has been invaluable in the whole process of thinking through the expansion process, negotiating the new lease, preparing for the loan application, expanding merchandise, targeting customer segments, and mapping out advertising. The SBDC has given direction and focus to our future. Everyone who I had talked with before we first met spoke of their SBDC involvement with the highest praise.” 

Electronic Solutions - Radio Shack Dealer

Background

Electronic Solutions targets electronic products and services the Cloverdale area in northern Sonoma County California. The community of 8,450 is located in the rolling hills along the world famous Russian River wine region.

Jim and Susan purchased this Radio Shack store in September of 2004. At that point the store was practically empty (all that remained was $20,000 in inventory in the 1,000 sq. ft. store).

Radio Shack is one of the nation’s most experienced and trusted consumer electronics specialty retailers. The company has a presence through more than 6,000 company-operated stores and dealer outlets in the United States. Operating from convenient and comfortable neighborhood and mall locations, RadioShack stores deliver personalized product and service solutions within a few short minutes of where most Americans either live or work.

Challenges

The challenge was to give this retailer a larger presence and to increase traffic and sales.

The Radio Shack store was cramped and uninviting. In the 1000 sq. ft. store, 800 sq. ft. was showroom for the products. Because of the size, the products areas that did have merchandise did not have much assortment or much depth. Large items like flat panel TVs just took up too much room.

The store could not capture customers with hobbies because there was not enough merchandise in any particular hobby to satisfy the need for breadth of selection or in the consumables used in their hobbies.

There was no space to sit down and have a private conversation with a customer who might want to plan out a purchase. There was very little communication to the Cloverdale community either in advertising or in partnering. Radio Shack had relied on its brand recognition and location to drive traffic.

Actions taken

An expansion plan was mapped out for the additional space and new merchandise was considered. A $100,000 bank loan (Exchange Bank) was applied for and funded which covered the additional merchandise, shelving, advertising and transition costs.

A lease was signed to double total space and boost showroom space from 800 to 1700 sq. ft. (a 113% increase in space). New shelving was installed and an island checkout and service center was installed which opened up the new space and made it more inviting. More hobby, lifestyle and business merchandise purchased and displayed. New merchandise includes: Model airplanes, cars and boats (both gas and electric), Flat Screen TVs, Cellphones, Office Supplies, Business Equipment, iPods and MP3 players, and photographic cameras and equipment.

A marketing and advertising plan was established to map out the events and the merchandise and advertising requirements for each event. Each area of merchandise will be tracked to observe its success and profitability. Print advertising and newspaper inserts from RadioShack are being used to drive traffic. Comparison-shopping is being considered for higher volume merchandise (i.e. batteries and printer paper). An aggressive web presence is planned for the 4th quarter of 2007. Additionally, the store is involved with the recycling effort for batteries (the new California law) and for computer and electronic equipment by providing bags and drop off locations for these items.

Results

Jim and Susan have doubled the size, greatly improved the image and openness and expanded the inventory to $100,000 in merchandise. As Radio Shack suggested early in the process, traffic is up. Sales are up approximately 15% in the few months since the expansion even before the major advertising push and before all the merchandise is fully in place. The store is much more open and inviting than the old space.

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