Microsoft is permanently closing its retail stores
Four stores remain open as “Experience Stores”
Microsoft shuts down all of its brick and mortar stores.
Four stores to be converted into “Experience Stores”.
No employees to be laid-off.
On Friday, Microsoft announced that it’s shutting down all its physical retail stores around the world. Microsoft had temporarily shut down all its stores due to the Covid-19 pandemic but will continue this closure permanently. They hope to cater to “1.2 billion monthly customers” through Microsoft.com, Xbox and Windows. Microsoft has excluded 4 stores from the closure situated in New York City, London, Sydney and the Redmond campus. Similar to Tesla, remaining locations will be turned into “Experience Stores” that don’t sell products.
The Microsoft Store line was launched in 2009 and aimed to take on Apple Stores, which have been highly successful due to their presence in key locations with elegant designs. Unfortunately for Microsoft, these stores didn’t fare well and rarely saw the masses of people Apple Stores are accustomed to. Reasons for this may include a lack of presence in key markets and a limited product offering (“Specialty Stores” only had Surface and Windows-based products).
Courtesy: Imagine Cup
In a LinkedIn post, Microsoft Store VP David Porter revealed that no employees would be laid off explaining
“our commitment to growing and developing careers from this diverse talent pool is stronger than ever.”
Earlier in April, Microsoft had outlined their efforts to assign duties to retail store associates for remote work and made sure they continued to be paid. On Friday, Microsoft sent out an update saying:
“our retail team members will continue to serve customers working from Microsoft corporate facilities or remotely and we will continue to develop our diverse team in support of the overall company mission and objectives”.
Conclusion:
Microsoft’s move though unexpected, does make sense. Microsoft had never achieved much success compared to Apple’s physical stores. The stores didn’t make financial sense and seemed wasteful for the multi-trillion dollar company which needs little advertisement.
Microsoft’s choice of imitating Tesla with its Online Shopping/Experience Store setup seems useful in the present locations which boast hundreds of thousands of people. While some retail stores may be effective, if Microsoft successfully deploys its new strategy, it could be a big cost-saving measure - Making up for the $450 Million they spent closing. This will really be tested when their new Surface Duo and other products will hit the “stores” early next year.