Exactly. Why buy a phone from Radioshack instead of directly from the service provider or for that matter Walgreens or Fred's or Walmart. They didn't have any competitive advantage in the phone market.
With components they had a nitch market. I'm not sure if demand dried up or what. I think they needed more kits and more educational toys and at a lower price. That would have helped develop more hobbyists who would shop more for components.
My guess is that Internet sales has really hurt their business too.
The online shopper could have it delivered to their house for less than it takes to go to the store. And they didn’t have to pay taxes on it either.
The brick and mortar stores have to pay employees, rent, insurance, and taxes.
That's not the case. Their business model of having a selection of electronic parts in every store was flawed. Perhaps it was good enough for 1960's when a ham was expected to wind his own inductors and make his own high voltage capacitors. Even making of a power transformer was NOT out of the question, and I had some quantity of magnetics to do so. You could build a radio with parts selected from a list that does not exceed a few hundred items.
However today this is utterly not the case. There are tens of millions of different electronic components today, and you want to have access to all of them because you never know what this or that design calls for. Digi-Key offers mail order of nearly anything you may desire, and their prices are pretty low for a retail facility. (You can do better by going with Avnet and their ilk, but they require volume buy.)
What I'm saying is that RS could not stock enough parts in their retail outlets. It would be outrageously expensive, and they'd never be able to keep track of those parts. (Some of them are invisible without a microscope.) Digi-Key has a single, highly automated warehouse that ships orders within an hour or two from the moment you click "Submit order." You can order by 5PM and receive the shipment by 9am next morning. Or you can select USPS shipping and receive a small box a few days later for a song ($3 or so.) But the real advantage of distributors like Digi-Key, Mouser, Allied, and a few more is that they have a lot of stuff. No single brick-and-mortar store can stock even 1% of what they have. This means that Radio Shack just reached the end of that particular road. They had to change... but they had neither skills to do so, nor wisdom to understand that.
It was a “hobby shop” that lost its way...
Consider whats it’s name......... Heathkit.
No one makes their own TV’s any more. Mo one needs a Q multiplier kit or a stereo receiver.