On Friday, June 26, 2020, Microsoft announced that it will be closing all its physical retail stores in the United States and around the world, moving its operations online. Only four centers will be kept open which will act as “experience centers.”
Microsoft to exit physical retail, announces permanent closure of all stores
This move will result in the closure of more than 80 Microsoft stores, which had not reopened post-March, due to the coronavirus pandemic. Those four locations, where the physical stores will be converted to “experience centers” are New York City (Fifth Avenue), London (Oxford Circus), Sydney (Westfield Sydney), and the Redmond campus location. These centers will showcase Microsoft’s technology such as Surface PCs, Xbox, “Minecraft”, Windows and Office but won’t sell anything.
Microsoft’s growing online presence
From henceforth, the company plans to concentrate on digital retail stores. As per Microsoft, Microsoft.com, and Xbox and Microsoft storefronts reach up to 1.2 billion customers monthly, across 190 markets. Also, since the physical stores have closed in March due to coronavirus pandemic, the company has hosted about 14,000 online workshops and summer camps and more than 3000 virtual graduations.
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Microsoft mentioned that their retail team will continue to serve customers from Microsoft corporate facilities, remotely providing sales, training, and support.
David Porter, Microsoft Corporate Vice President said,
“Our sales have grown online as our product portfolio has evolved to largely digital offerings, and our talented team has proven success serving customers beyond any physical location.”
Mr. Porter also mentioned in a Linkedin post, that this decision will not result in layoffs. The company has set aside $450 million to cover the cost of closing down the locations.
Microsoft Surface retail business
In recent years, Microsoft’s retail business focused on Surface tablets and laptops as well as Xbox gaming gear. But in comparison to Apple, Microsoft could not build the same momentum in the retail business. According to some industry experts, this decision can also be attributed to the low retail business for Microsoft Surface.
The Pandemic Impact
In the coronavirus pandemic, when social distancing has become important, Microsoft is relying on teleworking, distance, and education software and services. Microsoft has also closed down its video game streaming platform Mixer, while this gaming industry is dominated by Twitch owned by Amazon and their rivals, Youtube Gaming, and Facebook gaming.
The pandemic has not yet reflected in Microsoft’s financial results. They have achieved a net profit of $10.8 billion from January to March, up to 22% year on year, on a turnover of $35 billion.