Microsoft has announced it will close all of its physical store locations. Officially, this is due to COVID-19. The memo announcing the change is long on PR-speak, short on actual information. We are told, for example, that “As we look forward, we start a new chapter for Microsoft Store,” and “As part of our business plan, we announced a strategic change in our retail operations,” — a strategic change, you say? How delightful! — “including closing Microsoft Store physical locations.”
This seems less like a strategic change and more like “quitting the retail business.” Ah well. What can you expect from a company statement released primarily on LinkedIn?
Microsoft is closing all 82 of its retail locations, though four Microsoft Experience centers will stay open and not sell anything. As someone who lived near a Microsoft Store for several years and visited on multiple occasions, I’ve got mixed feelings on this.
Seeing a laptop before you purchase it is always nice, particularly when it’s a system as expensive as the Microsoft Surface. Machines like the Surface Laptop 3 are gorgeous and fully capable of standing up against other luxury hardware, like the MacBook Pro. But while Microsoft has built Surface into a profitable business with $2B in sales, the company hasn’t built the same brand cachet as Apple or won an equivalently-sized fan base. (That’s in comparison with ~$5B-$8B for Apple Mac.) Seeing the hardware always helps, when you’re trying to gain market share against an entrenched, known competitor.
So while I genuinely valued being able to visit a Microsoft Store to see Surface hardware, the company’s decision to kill its phone business and pivot towards the cloud probably played a part in why the Microsoft Store retail idea never caught on. Apple stores carry a wider variety of accessories and products, and they give people more of a reason to stop by even if they aren’t planning on test-driving a laptop. Even when products like the Xbox One had major demo space in my local store, it didn’t feel like Microsoft was all that excited about selling it out of that location, or as if the company had plans to integrate more Xbox products into the overall store lineup.
Microsoft’s decision to pivot away from retail probably makes sense given store traffic and the fact that the company’s business is more corporate than consumer-focused, but it’s unfortunate that Microsoft couldn’t find a model that gave PC owners something closer to an Apple-like experience. The reason Apple Stores generate strong foot traffic is that people like and want to walk into them. Microsoft has often struggled to generate the same interest. In this brave new world of ours, it’s no longer interested in trying.
Microsoft’s decision to close 82 stores isn’t going to be the straw that breaks the economy’s back, but I wish the company had delayed the decision by a year or two. Microsoft, as a giant tech company, is one of the handful of tech employers that provides community retail jobs. Given that tens of thousands of businesses have already closed, permanently, communities are going to need every single job they can get. I won’t pretend the move would make much financial sense, but unprecedented times call for unprecedented measures.
The company has said that its retail employees will be transitioned to other support roles, but I’d be surprised if this extends to all employees. Phone support is a different game from working in a retail store. Microsoft claims “We will make our digital storefronts the best place to learn, buy, and receive support across software and hardware.”
I’d like to think we’ll all be walking past the (digital) Microsoft Store to check out the cool new apps and features in a few months’ time, but I’m not optimistic about it actually happening. As for how this could impact the Xbox Series X launch, I’m not sure it will. If retail stores are open, customers will likely buy from Best Buy, Wal-Mart, GameStop, and the like. If retail stores aren’t open, Microsoft will probably look rather smart for deciding to shut down early as opposed to dragging this out another 4-6 months and then killing them regardless.
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