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Microsoft Permanently Shutters Physical Stores

Adriana Lee

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Brick-and-mortar retail has another casualty, with Microsoft deciding to nix its physical stores.

After 11 years, the tech giant said Friday it will permanently close all 83 of its stores, except for four locations — in New York City, London, Sydney and its Redmond, Wash. campus — that will morph into “experience centers” without merchandise for sale.

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The company isn’t planning any furloughs or layoffs in conjunction with this decision, saying only that retail employees will keep serving customers in its corporate facilities or remotely.

In terms of direct sales, Microsoft will focus on e-commerce exclusively. It notes that its digital storefronts on microsoft.com, and stores in Xbox and Windows reach “up to 1.2 billion monthly customers in 190 markets,” according to the announcement.

“Our sales have grown online as our product portfolio has evolved to largely digital offerings, and our talented team has proven success [in] serving customers beyond any physical location,” said David Porter, Microsoft’s corporate vice president, in a statement. “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.”

For years, tech company-branded stores have been regarded as something like vanity projects or perhaps consumer research labs, where companies can see how the public interacts with their products. The outlier, of course, is Apple and its high-value stores, which were raking in about $5,500 of revenue per square foot annually before the pandemic.

Like most stores, Apple suspended physical retail operations due to the health crisis. The iPhone maker began reopening in May, only to re-close as many as 32 locations as COVID-19 cases spiked again.

The collateral damage in all of this might be malls, where many tech company stores are located. The mall business has seen dwindling foot traffic over the years, and that’s now punctuated by cornerstone department store closures.

Companies like Microsoft will likely not feel much pain as it shifts more toward digital sales. Malls, on the other hand, are facing a reality of surviving with fewer anchor businesses to draw shoppers.