Saturday, 20 July

A Store Not Just For Shoppers: Microsoft Will Use Its First European Location To Cater To Large Businesses

Ten years after its first retail store opened in Scottsdale, Arizona, Microsoft is set to open its first store in Europe on Thursday. And that won’t be the only first this store has to brag about. 

The 22,000-square-foot and three-story flagship, which will be located in London’s busy Oxford Circus area and be Microsoft’s second-largest store after its New York Fifth Avenue flagship, is designed with more than its regular consumers and small-business customers in mind, featuring events including coding camps and Xbox gaming tournaments.  

For the first time, Microsoft will dedicate the largest retail store space—involving one entire floor, featuring conference rooms and a theater-style space for group trainings and presentations—to serve its large business customers. Microsoft is also locating some offices in the same building that houses its London store. 

Its large business customers include Marks & Spencer and Tesco in the U.K. and Mastercard and Gap in the U.S.

“One of my roles is to make sure we align Microsoft’s store mission to the mission of the company,” David Porter, who oversees both physical and online stores for Microsoft, said in an exclusive interview, recalling his mandate from Microsoft CEO Satya Nadella when Nadella became CEO in 2014. “It’s very important for our store team to be used in every audience segment. This is going to allow us to connect every single customer, from individual to small business to large enterprises.”

Including the London store, Microsoft has 82 retail locations, mostly in the U.S., with the rest in Canada, Australia and Puerto Rico. Microsoft declined to specify any plans for future openings. It said it also has online storefronts in 190 countries. 

Its top rival Apple, in comparison, has over 500 brick-and-mortar stores in over 20 countries. 

Microsoft began two years ago to use its physical store employees and locations to service its large business customers and host training and presentations, Porter said. That also involves store employees visiting business clients on site. For example, when Mastercard decided to roll out the Microsoft Teams office communications tool in less than 10 weeks, Microsoft dispatched its store employees across the U.S. to 25 Mastercard offices to train its employees, Porter said.

An added benefit: Those employees could use the opportunity to invite business clients to check out in-store events and products geared for regular consumers, Porter said. 

“We made the decisions to change our (retail) business” to include all types of customers, he said. “The value of having a direct relationship with the customer is so critical."

Microsoft said it trains all of its store employees to have the knowledge to assist any type of customer who walks in its stores, with some specializing in areas including its Azure cloud service, a growing business that directly competes with Amazon's AWS cloud service. Microsoft said it's also using its stores as a live showcase for how retailers, for instance, may use its tools to run their own stores more efficiently or aggregate data to glean insights about their customers. 

That approach may help Microsoft as it vies with rivals that include Google and IBM to compete for consumer and business wallet share on different fronts. The new retail strategy echoes Microsoft’s bid to evolve its business account strategy beyond its traditional role as a software supplier and licensing company. Microsoft has changed its compensation structure to reward its business sales team to work with its clients closely and compensate them when a Microsoft software service is used instead of what service they have sold, Judson Althoff, executive vice president of Microsoft’s worldwide commercial business, has told me.

Microsoft declined to break down the percentage of its revenue for large business and other segments, except to say Microsoft Store in the past year has worked closely with its large business account teams to “drive billions of dollars of revenue” for the Redmond, Washington-based tech giant.

"London is really going to demonstrate that strategy," Porter said. "The key for us is to make sure every single (store employee) has the knowledge (about the business). You never know when a CIO shows up with their family."

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