Mr. Lucky of the CBers

Mr. Lucky of the CBers

The high-volume sales of Citizens Band radios received another boost on New Year's Day, when a Federal Communications Commission ruling that delighted CB bugs went into effect. The FCC authorized the use of 17 more channels to supplement the 23 already crowded by 7.8 million licensed CBers. Although retailing biggies like Sears, Roebuck will gain much from demand for the new, higher-capacity radios, the firm that stands to benefit most is a fast-growing Texas-based chain of consumer electronics stores called Radio Shack.

The ubiquitous (more than 5,000 U.S. and Canadian outlets) Radio Shack claims 15% of the market in Citizens Band radio equipment; CB enthusiasts accounted for almost 25% of the chain's $742 million in revenues last year. Experts forecast sales this year of at least ten million of the new CB models, and Radio Shack is set to take home to its parent, Tandy Corp. of Fort Worth, an increasing share of the industry's profits. With its sales of hi-fi and stereo equipment also booming, the chain is expanding at a pace that puts it further and further ahead of its closest rivals. Lafayette Radio Electronics, for instance, was once bigger than Radio Shack, but is now one-eighth as large.

The driving force behind Radio Shack's success is Tandy Corp.'s chairman and president Charles D. Tandy, 58, a Texan who attended Harvard Business School, sold war bonds while serving in the Navy, then went into the family leather-goods business at the end of World War II. He bought the small Boston-based Radio Shack chain 13 years ago, when it was $1.5 million in debt.

Key Incentive. At the time, the stores sold 25,000 different products, including sporting goods and pots and pans. "Get rid of all that garbage," Tandy ordered; he cut the line by 90%. He set out to blanket the nation with small stores in new shopping centers; he crammed them with radio merchandise and backed them with intensive advertising. Most important, Tandy devised an incentive system under which store managers (average age: 25) earn low salaries but can make up to $30,000 a year through profit sharing and bonuses tied to sales. "I want people who live for and will die for this work," says Tandy, who talks with a kind of cultivated Texas swagger. "If they don't want to do that, then beat it. Let them work for Sears." The system has produced managers such as C.L. Whitfield of the Guam Radio Shack, who journeyed to Japan to pick up new 40-channel CB radios so he could be the first to sell them on U.S. soil Jan. 1--which was still Dec. 31 on the mainland.

Tandy's formula has worked. After a decade of solid but fairly slow growth, the chain suddenly took off; between 1972 and 1976 the number of stores more than tripled. During the company's fiscal year ending last June, profits rose 120%, to $64 million. Radio Shack indeed has almost taken over its parent firm. Tandy Corp. has spun off most of its other businesses into separate companies chaired by Charles Tandy, and now has only minor operations other than Radio Shack.

Bright Outlook. Not all has been success. Radio Shack stores in big cities have done less well than those in small towns--perhaps because Tandy's locations, shopping malls, are rarely found in large cities--and the company's outlets in Europe and Japan are faring so poorly that Tandy has put a freeze on expansion there. But overall, the outlook is bright. Electronics buffs say Radio Shack's products are reasonably priced and of good quality. As CBers clamor for new 40-channel "ears," Tandy can relish his own CB "handle": Mr. Lucky.

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