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Renovation Exchanged For Exclusivity & Advertising

Radio Shack, an electronics retailer with 7,000 locations, is getting down to the basics and using barter for its surprising turnaround. When they tapped the former chairman and chief executive at the Shoney’s restaurant chain to be president of Radio Shack, he led a new focus on retailing.

Leonard Roberts did what every smart business-owner does, he focused on “using what he had to get what he wanted.” He figured Radio Shack’s greatest asset was its 7,000 stores—even if some were outdated.

With visionary insight Roberts decided he would refurbish the stores, having suppliers pay for it in exchange for exclusivity within those stores.

The three suppliers he worked with were Sprint, Compaq Computer, and Northpoint Communications Group.

When Sprint Corporation was looking for a retail base from which to sell its new wireless phone network, Radio Shack and Roberts offered to make Sprint its exclusive national wireless provider for ten years.

In exchange Sprint would provide tens of millions of dollars in new store fixtures and advertising support, plus about 5% of the revenue generated by their shared customers.

Radio Shack cut a similar distribution deal with Compaq Computer. Compaq would refurbish a portion of Radio Shack stores, controlling the look and merchandising of the space, and sharing some of its service revenue.

Likewise, Radio Shack struck a deal with broadband internet service provider Northpoint Communications Group in which the stores sell high-speed web-access contracts.