Microsoft has announced it’ll permanently close all of its physical retail stores and transfer most of its resources to online channels. This comes after the computing giant shuttered the outlets in late due to the COVID-19 crisis. In what Microsoft is touting as a “new approach to retail,” the corporate said its mercantile establishment employees are going to be transitioned to its corporate hubs and can provide customers remote sales, training, and support.
The company will focus its efforts on existing digital stores on Microsoft.com and thru Windows and Xbox, which have a collective reach of 1.2 billion people globally. Microsoft added that the closures will end in a pre-tax charge of around $450 million, which it said consists mostly of asset write-offs and impairments.
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The Seattle-based tech titan debuted its first physical retail experience back in 1999 at the Sony-owned Metreon shopping complex in San Francisco , though that closed around a decade later. Microsoft’s first real raid brick-and-mortar retail was in Scottsdale, Arizona in 2009. This grew to around 100 similar outlets across the U.S., including its ny flagship, which opened in 2015. The company later went international, opening seven retail stores in Canada, one in Australia, and one within the U.K.
The COVID-19 effect
While Microsoft has tried to place a positive spin on the shop closures by touting its “new approach to retail,” the broader retail sector has suffered during the pandemic. Social distancing measures and mercantile establishment closures have led to a sizeable uptick in online purchases, and businesses have had to adapt. A number of big-name retailers — including JC Penney — have recently filed for bankruptcy. Apple closed its retail stores in March, only to start out opening them again in May, but the corporate had to reverse that call in some areas after a surge of COVID-19 cases.
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Microsoft’s decision to shutter its stores are often attributed to losses over the previous three months, including signs that pedestrian traffic is unlikely to return to pre-COVID-19 levels anytime soon. But the coronavirus may have simply accelerated the inevitable shift toward online shopping. Indeed, CEO Satya Nadella recently said COVID-19 had resulted in two years’ of digital transformation in only two months.
Microsoft will maintain a limited presence within the physical retail world by continuing to take a position in experience centers in London, New York, and Seattle.