Today Microsoft announced that they will be permanently closing all of their retail spaces, globally, excluding the Microsoft Experience Centers in London, NYC, Sydney, and Redmond campus locations, and these are going to be “reimagined,” whatever that means. Microsoft says this will hit their books for a pre-tax charge of approximately $450M, roughly $.05 a share.
Microsoft Corporate Vice President David Porter stated “Our sales have grown online as our product portfolio has evolved to largely digital offerings… We are grateful to our Microsoft Store customers and we look forward to continuing to serve them online and with our retail sales team at Microsoft corporate locations.” This is an interesting statement, since the reason it appeared Microsoft opened its retail stores was to try and pivot to be more consumer facing, and they’re basically now retrenching. It’s pretty hard to serve the consumers of the world from 4 physical locations only.
The announcement states that they’ve experienced significant digital sales growth, and as such, it might make sense to close down some of the stores. Since Xbox and Windows are now selling so many digital games and programs there doesn’t really need to be the large and expensive footprint in malls around the world to sell discs. Excepting, of course, the importance of mindshare and a way for customers to get hands on time with new technology, like Surfaces or Xbox Series systems.
Microsoft also states it’s going to transition the staff over to “new” services which include things like “1:1 video chat support, online tutorial videos, and virtual workshops” and it adds that more online services are to come. While no layoffs were announced, they don’t explicitly state there won’t be any either.
It is almost certain that Covid-19 factored into this decision. Given the spikes of the disease in many parts of the world, particularly the America’s, perhaps the company thinks that this situation isn’t going to be resolved in the near future and that retail is gonna be different enough for long enough that retail space just really doesn’t matter. Businesses don’t love uncertainty, and there is no shortage of it these days.
Either way, I’ll miss having a physical location to take my Surface Pro to when it’s misbehaving. I’ve always received excellent support from the Calgary location, and the move to online only support isn’t one I, nor many others, will cherish.