Microsoft Corp. (NASDAQ:MSFT) is going all in on digital.
The Seattle-based company said it will close its physical store locations permanently but will continue to invest in a digital storefront that, along with third-party retailers, has driven sales of products such as the Xbox game console and Surface tablets.
The move will result in a pretax charge of about $450 million U.S., or five cents U.S. a share, in the current quarter, Microsoft said in a written statement. Microsoft closed its 83 retail stores, most of which are in the U.S., in late March due to the COVID-19 pandemic. Rival Apple Inc. has reopened its retail sites only to shut more than 30 of them again as the virus re-surges.
The company didn’t disclose how much revenue it was getting from the stores. The thousands of workers from the retail outlets have already transitioned to the digital store side of the business and will continue in those roles, the company said.
While under lockdown, Microsoft said its retail team has virtually trained hundreds of thousands of enterprise and education customers on remote work and learning software and helped customers with support calls. The team supported communities by hosting more than 14,000 online workshops and summer camps and more than 3,000 virtual graduations.
Microsoft announced its plan to begin opening stores in 2009 ahead of the release of Windows 7 after Apple saw significant success and popularity with its modern, clean retail outlets. As the software company moved into hardware with the release of the Surface tablet in 2012, it accelerated the pace of store openings, ending up with more than 100 and often scouting out real estate near Apple’s stores.
The assortment of outlets grew to include a store on New York’s Fifth Avenue and one in London, opened last July. But while the retail outlets let users try an increasing array of Surface models and test out Xbox games, they often suffered from a lower level of interest and foot traffic than nearby Apple stores.
Microsoft said it has seen "significant growth" of its digital storefronts, including Microsoft.com, and stores for Xbox and Windows. The company will continue to invest in digital innovation with new services including video chat support, online tutorial videos and virtual works.
Tech Insider
