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Time to say RIP RadioShack; is Best Buy next?

The horrible results from RadioShack's latest earnings highlight the situation faced by electronic retailers in the brick-and-mortar space.

Margin compression is coming and stocks are being priced accordingly. Granted, RadioShack stock is currently only trading around $1.30 a share, but it can get worse. The same holds true for larger scale retailers such as Best Buy. The stock readjustment we have seen is just beginning.

Investors are betting that these stocks are becoming value opportunities. But the problem facing investors is determining whether this is a value stock — or a value trap. And when trends are moving so rapidly against brick-and-mortar electronic retailers, I just don't see how it can be a name that makes sense unless you are playing a major contrarian view.

David Paul Morris | Bloomberg | Getty Images

There is a place for electronics retailers; it's just not the current space they operate in. Best Buy understands what the future looks like and you see their electronic kiosks in airports around the country. That's an efficient distribution of goods that Best Buy deserves credit for pursuing. But this path is massively disruptive to its current model and the company still faces many challenges.

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Best Buy reported reasonable earnings in its latest report, but it was more about cutting costs than increasing revenue. True, they have announced that they are increasing their dividend and that is a positive for investors. Additionally, with a price-to-earnings ratio of close to 9, it does appear to be a discounted brand in the midst of a turnaround.

RadioShack operates as a bastion for the electronic hobbyist. But in an age where cell phones, tablets, and digital cameras rule, the need to have a retailer with a transistor to replace in a radio is just not that great. RadioShack is trying to adapt but compared to online retailers, their cost structure is simply too high.

The common theme with Best Buy? The stocks are being repriced based on their future prospects, which are less than bright.

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But lest you think the online retailers like Amazon are destined to roll in profit, one only needs look at the company's recent quarterly report numbers to know that simply is not the case. New entrants simply need a website and a distribution scheme to become a retailer. Margin compression impacts Amazon as delivery costs rise and competition seeks to chip away at their market share.

So who wins here? Consumers. Compressing margins means more competitive prices. There will be a time in an age of internet transparency where online and brick-and-mortar margins will look a lot like grocery stores — thin. Profit generation will be from generic goods produced cheaply in China such as cases, lens covers, and screen protectors.

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I expect RadioShack to fade away; it's time has come and gone. Best Buy will still exist but become a smaller presence in electronic retailing. They will survive but the forces of the marketplace are going to vastly remake their business model and this will have a significant impact for those investing in the stock.

At the end of the day, transparency and margin compression will win. Consumers will win. RadioShack and, to a lesser extent, Best Buy will be casualties in the continuing emergence of efficient delivery of retail goods to consumers. The new economy is well underway.

Commentary by Michael A. Yoshikami, the CEO and founder of Destination Wealth Management in Walnut Creek, California. He is also a CNBC contributor.

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