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Microsoft is closing all of its retail stores

A few thoughts from a former Apple Retail employee.

By John Sherrod , written on July 1, 2020

From The Ecommerce Desk

Last Friday, Microsoft announced in a blog post titled, “Microsoft Store announces new approach to retail” that it is closing its 83 retail stores. As I was composing the headline to my own blog post, my wife looked at me and said, “I didn’t even know Microsoft had retail stores.” And that’s probably the same thought a lot of people had when they saw this news.

When Steve Jobs announced that Apple was going to open physical retail stores in 2001, there was a lot of skepticism that they would be successful. Everyone had in their minds the (at that time) recent failure of the Gateway computer stores. And believe it or not Apple had some humility about the launch of its retail stores. “Retail is hard,” Steve Jobs said as he unveiled Apple’s plans to open a series of brick and mortar stores.

Fortunately for Apple, they made the pivot into retail at exactly the right time with exactly the right people. When I worked in Apple Retail from 2005–2012, it meant a lot to me that I ultimately reported to Steve Jobs, but it also meant a lot to me that I reported to Ron Johnson, the ex-Target exec who helped Jobs create Apple’s retail experience. The timing couldn’t have been better either. Apple had been making a splash over the previous three years with products like the iMac and iBook that had captured the attention of the public, but it rocketed to the forefront of popular culture just a few months after the first two Apple retail stores opened with the release of the iPod. In a short period of time, Apple had become the consumer electronics company. I remember teenage girls would stop in front of the store and say, “Ooh, let’s go in the iPod Store.” That retail excitement exploded when the iPhone launched in 2007 and began the iconic scenes of people camping out for days before a new model would go on sale.

Microsoft’s retail efforts just never worked. They copied a lot of the surface level things that make an Apple store unique like the wooden tables, a large screen for workshops, and the Answers Desk to compete with the Genius Bar. But the problem is that Microsoft has never been seen as “cool” or a leader in pop culture. (The one big exception to this is the Xbox, but I’m not sure most people really associate the Xbox brand with Microsoft in any meaningful way.) For a time it had an mp3 player to compete with the iPod, and for a time it had its own smartphones and their own smartphone operating system to compete with the iPhone, but it abandoned those products years ago. For the last several years it has had its own line of Microsoft-designed and branded personal computers, but I’m not sure how well known or desired those are outside of the business world.

I do give Microsoft some credit for boldness in their retail endeavors. They hired away retail talent from Apple, and they often located their stores very close to existing Apple Stores. But that boldness backfired on them because it was easy to look at a nearly empty Microsoft Store and then look at an Apple Store bursting at the seams with customers and tell that their was an interest gap between the two locations.

Fortunately Microsoft will be retaining its retail store employees to work in sales in other areas of the company. And it’s certainly still a massively successful business, nipping at Apple’s heels currently in the market cap race, where currently both companies are now worth more than $1.5 trillion. But the failure of its retail stores is a testament to what Steve Jobs said nineteen years ago — “retailing is hard.”