Home > Industry > BREAKING NEWS: Microsoft Set To Close Stores, New Online Initiative Set To Compete With Retailers

BREAKING NEWS: Microsoft Set To Close Stores, New Online Initiative Set To Compete With Retailers

Microsoft is set to close their Australian retail store along with 82 others worldwide after another consumer exercise failure, the Sydney store is set to be “reimage” as an ‘Experience Centre’.

Instead, the Company is set to crank up their online store in direct competition with retailers selling Microsoft product.

Back in 2015 when Microsoft opened their Pitt Street store in Sydney ChannelNews tipped that this store would eventually fail, even their online operation has come in for criticism

Back in 2018 Microsoft’s Phil Spencer, Head of Gaming claimed that the Microsoft Store “sucks”. He admitted to major problems with the online retail operation, that is stripping revenue from bricks and mortar partners.

“I think we’ve got a ton of work to do Spencer said during a Microsoft event.

Users of games downloaded from the store complained of an endlessly recurring string of download errors and various installation bugs.

Microsoft said that last night’s announcement reflects what the company calls a “strategic change” for its retail business as sales increasingly shift online.

Microsoft said it would “reimagine” the physical spaces at its four high-profile Microsoft Experience Centres in New York, London, Sydney, Australia, and at the company’s headquarters in Redmond near Seattle USA.

Microsoft said the closures would result in a pre-tax charge of over half a billion dollars, or 5 cents per share, taken in the current quarter ending June 30.

“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.

In Sydney Microsoft handed out free discount vouchers just to get people to attend their opening.

Off course, Microsoft didn’t disclose how much revenue it was getting from the stores in the same way that when Xbox sales started to slump the Company suddenly stopped announcing sales numbers.

Microsoft first announced its plan to begin opening stores in 2009 when at the time, Microsoft had trouble getting big-box electronics retailers such as JB Hi Fi and Harvey Norman who at the time were selling Microsoft mice and keyboards, to effectively showcase Microsoft products in an often chaotic store with unevenly trained staff.

After the company hired Porter, a Walmart veteran, to lead the retail effort stores were offered incentives to sell Microsoft products such as Surface PC’s.

Bloomberg said that as the software maker moved into hardware with the release of the Surface device 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.

Microsoft Stores were often empty

The assortment of outlets grew to include their high rent Microsoft store in Pitt Street Sydney that was often empty.

While the Pitt Street retail outlet 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.

Now it’s full steam ahead to reengineer their online operation after Microsoft said it has seen “significant growth” through 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 1:1 video chat support, online tutorial videos and virtual works.

Earlier this week, the company announced it was shutting its Mixer streaming-video service. Microsoft’s fiscal year ends June 30.

Microsoft’s shares fell 1.6% to $197.02 at 12:51 p.m. in New York Friday.


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