Sprint owned about 1,100 retail stores before it announced a deal with private equity firm Standard General, RadioShack’s largest shareholder through subsidiary General Wireless. Under terms of the deal, General Wireless, which has acquired 1,743 RadioShack stores out of bankruptcy, and Sprint will be co-tenants with Sprint as the primary brand in marketing materials and advertising. Sprint will operate as a “store-within-a-store” in the RadioShack locations and occupy about a third of the retail floor space.
The wireless carrier plans to “exclusively sell mobile devices across Sprint’s postpaid and prepaid portfolio” along with products and accessories from RadioShack. Sprint CEO Marcelo Claure said:
Our new products and services are resonating with customers — they’re coming to our stores to switch to Sprint through our Cut Your Bill in Half offer, take advantage of our industry-first leasing plans, and shop for new devices. Customers value the ability to walk into a neighborhood Sprint store near where they live and work. With more stores, and including Boost and Virgin Mobile, we’re providing additional shopping opportunities and making it easier and more convenient for consumers to do business with us.
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This deal is a variant of the “if we build it they will come” story. Sprint believes that the new locations with the company’s name up in lights will attract more customer traffic either because of or in spite of the relationship with RadioShack. If the RadioShack stores had been attracting a lot of traffic the company would still be standing on its own two feet. Adding Sprint’s name to stores that no one visited hardly seems likely gin up hordes of new traffic.
The one sure thing is that it cost Sprint a lot less to expand its retail network with this deal than it would have cost them to open more than 1,400 stores from scratch, and the idea is certainly worth a try.
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