The new owners of Radio Shack reveal the 'Amish test' for discovering which distressed brands to scoop up in bargain deals

  • Founded in 2019, Retail Ecommerce Ventures has acquired a number of distressed retail brands in recent months, including Pier 1 Imports, Modell's, and Radio Shack. 
  • "What we're trying to do is keep amazing brands alive and well in America," Tai Lopez, the company's co-founder and executive chairman, said to Business Insider. 
  • When it comes to deciding on an acquisition target, Lopez said the company is "looking for deals" as well as brands that consumers still have strong ties to.  
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Pier 1 Imports, Modell's, and Radio Shack have at least two things in common: their previous operators have all filed for Chapter 11 bankruptcy protection, and they're all now part of Retail Ecommerce Ventures' growing portfolio. 

The private holding company REV, founded by serial entrepreneurs Alex Mehr and Tai Lopez in 2019, has bought a number of distressed retail brands on the cheap, with the hopes of reviving them as healthy e-commerce businesses. The company is funded by the co-founders' personal capital as well as investments from a group of high-net-worth individuals around the globe. 

"What we're trying to do is keep amazing brands alive and well in America," Lopez, who is the company's executive chairman, said to Business Insider.

REV announced on Thursday that it had also acquired Radio Shack's brand and websites, though a price was not disclosed. REV's portfolio also includes Dressbarn — which had been shut down by former parent company Ascena Retail Group in 2019 — as well as Linens 'n Things, MentorBox, FarmersCart, The Book People, Franklin Mint, and Knowledge Society. 

When it comes to deciding on an acquisition target, Lopez said the company is "looking for deals." 

In August, it outbid private-equity firm Sycamore Partners to buy Pier 1's branding and e-commerce business after the home goods retailer announced plans to close all of its stores in bankruptcy. REV paid $31 million for it. 

More important than price, though, is that the brand the company is buying is one that consumers care about.

Lopez, who lived in the Amish community for a period of time when he was younger and who still owns a farm in Amish country, said that any potential acquisition target has to pass what he calls "the Amish test." 

"When I bought Pier 1, [they] were like, 'Oh, we've heard of it. Or we've driven by it on our horse and buggy,' meaning it's really well-known in America," Lopez said. "We're looking for brand awareness."

"And I think that opportunity in the retail space is going to be possibly even bigger next year," he said, adding that a shift to e-commerce was already well in the works even before the disruption of the COVID-19 pandemic further accelerated the trend. 

Reviving a 100-year-old brand 

While REV's primary focus is on e-commerce, its cofounders don't necessarily believe brick-and-mortar retail is dead.

There are still several hundred Radio Shack stores, for example, which are operated by independent dealers and will pay a commission of their sales to REV going forward. Mehr said the company wouldn't be against opening new stores in the future, either. Overall, it's more important to get the balance between online and physical retail right. 

"In this game of retail, you have to be e-commerce first," he said. "We are not dogmatically saying, 'Oh, retail brick-and-mortar is bad.' It's just that the ratio is out of whack for a lot of these companies."

Lopez added that the high costs of long-term leases have been deadly for a lot of legacy retailers. 

"You're talking hundreds of millions of dollars of fixed costs in just leases and store-related costs," he said. "And if there's a hiccup, like COVID, you have no leeway to just absorb that."

Radio Shack was founded in 1921 by brothers Theodore and Milton Deutschmann. It has filed for Chapter 11 bankruptcy protection twice in the last 10 years — once in 2015 and once in 2017 — and once operated more than 1,500 stores. It's changed hands several times since its second bankruptcy and was most recently owned by investment firm VeyeP, according to the Wall Street Journal. Over the years, the brand has faced stiff competition in the electronics category from players like Amazon and Best Buy. 

But, REV has high hopes that this reincarnation of Radio Shack will be successful. 

"I think this will be a big player in the electronic space in a rather short period of time. I really think so," Mehr said. "It's a matter of putting the right products on and finding products that people love."

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