(“Microsoft”) today announced a strategic change in its retail operations, including closing Microsoft Store physical locations. The company’s retail team members will continue to serve customers from Microsoft corporate facilities and remotely providing sales, training, and support. Microsoft will continue to invest in its digital storefronts on Microsoft.com, and stores in Xbox and Windows, reaching more than 1.2 billion people every month in 190 markets. The company will also reimagine spaces that serve all customers, including operating Microsoft Experience Centers in London, NYC, Sydney, and Redmond campus locations. The closing of Microsoft Store physical locations will result in a pre-tax charge of approximately $450M, or $0.05 per share, to be recorded in the current quarter ending June 30, 2020. The charge includes primarily asset write-offs and impairments.
“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,” said Microsoft Corporate Vice President David Porter. “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.”
I’ve seen comments about how this is a PR spin and that the new approach is to move away from retail. Online retail is still retail. This has been the trend in the booming ecommerce market in China. Unless the products on sale are impulse buys, physical retail stores nowadays are more of a place to showcase items where potential buyers can test out the items before the purchase.
However, this has increasingly become less important of an issue in China due to the high quality of customer service. You can purchase many items to try for 7 days and return with no questions asked as long as you retain the original packaging and keep the item in mint condition. So there’s no need to go into a retail store. Order your item, it gets delivered to your doorstep for you to take it for a spin for a week. If you don’t like it, the delivery person comes to your door to pick up the return on the same or following day.