Does Microsoft need stores?
Microsoft on Friday announced plans to close all its 83 stores globally and fully focus on online sales and support.
Sources told The Verge that the move was planned for 2021 but accelerated due to COVID-19.
In a LinkedIn article, Microsoft corporate vice president David Porter wrote that Microsoft’s product portfolio has evolved to digital products, including Microsoft 365, gaming and entertainment. Microsoft already reaches 1.2 billion people monthly with its online stores at Microsoft.com, Xbox and Windows.
Microsoft has also “proven” its ability to handle support remotely. Its team has virtually trained and supported thousands of customers during the pandemic. Since stores closed in late March, Microsoft has hosted more than 14,000 online workshops and summer camps and more than 3,000 virtual graduations. No layoffs are planned.
Microsoft’s new retail approach includes:
- Remote in-person support: From Microsoft corporate offices and remotely, staff will continue to serve consumers, small business, education and enterprise customers across sales, training and support. Mr. Porter wrote, “We deliberately built teams with unique backgrounds and skills that could serve customers from anywhere.”
- Online support: Current tools include virtual customer support, online tutorial videos and virtual workshops with tips. New services planned include 1:1 video sales support.
- Showcase stores: The company will convert four stores — London, New York City, Sydney and the Redmond campus location — into Microsoft Experience Centers with no sales available. “We will continue to co-locate engineering, sales, support, envisioning centers, executive briefing centers, and retail spaces for maximum impact for our customers and our company,” Mr. Porter said.
Microsoft Stores, which launched in 2009, showcased Surface and Xbox hardware plus a selection of third-party PCs. Many observers felt the store mimicked Apple’s approach.
The closures will lead to a charge of $450 million, or five cents a share, in the current quarter.
“This is a tough, but smart strategic decision for Nadella & Co. to make at this point,” wrote analysts at Wedbush in a note. “The physical stores generated negligible retail revenue for MSFT and ultimately everything was moving more and more towards the digital channels over the last few years.”
- Microsoft Store announces new approach to retail – Microsoft
- A New Day for Microsoft Store – Microsoft/LinkedIn
- Microsoft is closing all of its stores – CNN
- Microsoft to Close Its Retail Stores – The Wall Street Journal
- Microsoft to permanently close all of its retail stores – The Verge
- Microsoft Retail Stores Shuttering In $450M Hit – CRN
- Microsoft to Launch Retail Stores – RetailWire
DISCUSSION QUESTIONS: Will most of the hardware sales previously done through Microsoft’s stores now likely go to its online platforms or to other retailers? Do you see more pros or cons for Microsoft in making this move?