Microsoft store at Fashion Mall closing as part of broad strategy shift

Microsoft is dramatically shrinking its in-person retail business and will permanently close all but four of its brick-and-mortar locations, redirecting consumers in search of an Xbox or service to its online store.

The move will include closing Microsoft’s store at the Fashion Mall at Keystone. The 6,000-square-foot store opened in 2013.

“Our team has proven success serving customers beyond any physical location,” said David Porter, Microsoft Store vice president, in Friday’s announcement.

Most if not all of Microsoft’s stores have been temporarily closed since March due to the coronavirus crisis, but the tech giant now will permanently shutter 79 of its 83 stores worldwide, retaining only those in New York, London, Sydney and on its Redmond, Washington, campus, which will be redesigned as “experience centers.” All store employees will be given the opportunity to move to other positions, including in customer service, training and support at corporate offices or through remote work.

Much of that business continued online, Porter wrote, while stores have closed because of the pandemic.

“The evolution of our workforce ensured we could continue to serve customers of all sizes when they needed us most, working remotely over the last few months,” he wrote.

While stores have been closed, workers hosted more than 14,000 online workshops and summer camps, the company said, and 3,000 school graduation ceremonies.

The pandemic has taken a striking toll on retailers of all stripes as stay-at-home orders forced nonessential businesses to suspend operations to adhere to social distancing protocols. The likes of J. Crew, J.C. Penney and Neiman Marcus have all filed for Chapter 11 bankruptcy. Shopping malls, where many of Microsoft’s stores were located, have been especially hard hit; many still cannot reopen under jurisdictions’ public-health orders.

It’s also a blow to Microsoft in its tit-for-tat competition with Apple, which opened its retail locations in 2001. Microsoft countered with its own brick-and-mortar operations in 2009, but never found the same kind of success or fan following. Apple, retail experts say, cultivated its products around a consumer’s identity; Microsoft simply hawked new laptops.

“Apple’s creating a cycle of reinvestment where everyone’s got a phone that they keep for two years and then they go get the next phone and the next headphones and tablet,” said Mark Cohen, director of retail studies at Columbia University. “Microsoft doesn’t have anything like that. They have a laptop. That’s it.”

“Apple had a genius bar and Microsoft had a help desk,” added Bob Phibbs, chief executive of New York-based consulting firm Retail Doctor. “Because of that, I think Apple is still able to control the dialogue.”

Porter said Microsoft would put more resources into its “digital storefronts” and use the retail workforce to offer new training and sales services, including one-on-one video sales support.

Microsoft shares stumbled on the news during Friday trading, falling more than 2 percent to trade for $195. But analysts were undeterred and remained bullish on the company’s outlook.

“We believe this move, coupled with Microsoft’s decision to abandon Mixer (e-gaming live-streaming platform) earlier this week, continues to demonstrate the company’s commitment towards not chasing good money after bad, and ultimately reallocating investments towards higher growth opportunities and away from those areas with perceived lower [return on investment],” Brad Reback of investment bank Stifel wrote in a Friday note. The bank gave Microsoft stock a “buy” rating at its Thursday closing price, $200.

The Fashion Mall is owned by Indianapolis-based Simon Property Group Inc. At 701,000 square feet, it’s the Indianapolis-area’s seventh-largest shopping center, according to IBJ statistics.