Microsoft Takes A Giant Leap Into Retail
February 13, 2009 11 Comments
Microsoft has been contemplating a new frontier…
Retail.
Over the past couple of years, Microsoft has recognized that it needs to take a more active role in the retailing of it’s products. It can no longer leave in-person merchandising and selling to retailers. What’s driving the urgency in Redmond to get into stores?
Apple.
Apple has radically changed the paradigm for retailing in technology. Rather than relying on retailers to deliver in-person experiences, Apple stores have revolutionized both the sales model and the service model for technology retailing.
That’s why it’s no surprise that Microsoft just hired a former Walmart executive to open a chain of retail stores. This effort will report into Kevin Turner, Microsoft’s COO (and a former Walmart executive) who says the aim is to
Transform the PC and Microsoft buying experience at retail by improving the articulation and demonstration of the Microsoft innovation and value proposition so that it’s clear, simple and straightforward for consumers everywhere.
This follows Microsoft’s recent unveiling of its huge Retail Experience Center in Redmond. I actually visted the center last year while doing some work with Microsoft on its retail strategy; it’s quite impressive.
My take: The technology market is maturing. Mainstream consumers are now the largest market; not techies. There’s a broad base of customers who want to buy technology products (PCs, phones, MP3 players, TVs, etc) who don’t understand anything about the underlying technology. So the listing of speeds-and-feeds (along with other technical specs) is an outdated retail marketing approach.
Unfortunately, retailers have not kept up with this shift. If you look at the 25 retailers that we ranked in Forrester’s Customer Experience Index, three of the bottom four were electronics retailers (Best Buy, Circuit City, and Radio Shack). This might also explain why stores like Circuit City and Tweeter are going bankrupt. So manufacturers like Sony, Apple, and now Microsoft are taking a lead in finding the right approach.
Here’s some of the things that mainstream technology users need:
- Plain language about feature benefits to enable trade-offs (why should I care about 60 HZ or 120 HZ when buying an LCD TV?)
- Products that are easy to setup and provide very simple interfaces for making common configuration changes
- Easy-to-use decision making tools for narrowing potential products
- Human advice (through trained employees and social media forums) for making product decisions
- Access to help for setup, repair, and usage questions
The bottom line: The electronics retail experience is overdue for a makeover
About Bruce Temkin, CCXP
Customer Experience Matters® 
Yes, I agree that reaching out to the consumer is a good practice for all electronic retailers. But I can’t help but wonder how Microsoft is planning to do it as well as, or better than Apple does. Apple has a loved brand and brand loyalists. Microsoft seems to have indentured users. People use Microsoft products because they’re there and there is little choice. If Microsoft opens a retail chain, they will undoubtedly suffer the same failed comparison to Apple as they always have when they try to mimic Apple’s marketing strategies. Apple and Microsoft are very different brands, and I think Microsoft should be targeting their own audience instead of trying to become as cool as Apple. The first step should be making their actual products user-friendly.
I agree with Michael that Microsoft ought to begin by improving their actual products, and his notion of indentured users is right on.
I can only imagine a retail launch of this sort succeeding if Microsoft chooses to eschew the Apple model entirely, going instead with a model that opens micro-outlets inside of existing retailers: a Microsoft popup store in Toys-R-Us that helps parents understand online security for their children; a popup inside of select music retailers that is focused on digital music and the Zune…
Not likely where they’re headed, but a focus on specific utility is a conversation that Microsoft can have. A lifestyle appeal is a real reach.
Mike/Ian: I couldn’t agree more. Microsoft needs to learn from, but not mimic, Apple. It’s a dIfferent brand, different product, and has a different eco-system.And the retail strategy can’t be divorced from the product strategy; they’re all part of the brand experience.
Don’t forget — Microsoft has experimented with a retail presence. They had a Microsoft Store when the Metreon (a shopping/entertainment complex) opened in 1999. It actually was a pretty decent store, from a design/layout perspective. It seemed to be more a “lifestyle” store than one that was meant to really move merchandise, though, and they closed it down after a couple years.
Peter: Thanks for the additional info. Microsoft is definitely raising the bar on its retail endeavors!
I think the danger is that these store will be like all of the Cell phone company stores. Just selling product, not selling the brand. I always describe the Apple stores as “a club”. It feels like these are a place for people to meet. Especially some of their flagship store like the one in the heart of London’s shopping district.
Colin: I really like the “club” description for Apple. It works for Apple, because its users already felt like they belonged to a club before Apple opened any stores. Microsoft, on the other hand, has to clarify its brand positioning as a first step before it designs its retail outlets.
I’m not sure that Microsoft users (which likely includes everyone reading this blog) consider themselves as club members. So Microsoft has to decide on its target audience and define a brand message that will resonate with them. The retail outlets will only succeed if they reinforce that branding.
No surprise, this reminds me of the 2nd principle of Experience-Based Differentiation: Reinforce the brand with every interaction, not just communications.
The fact that they chose a former Wal-Mart executive to head their retail stores is, to me, telling. Wal-Mart is spectacularly efficient and their business model is something worth studying however, Wal-Mart’s customer experience is lacking because of their over-emphasis on efficiency.
I don’t blame Microsoft for wanting to have an efficient model for their retail locations but if they put more focus on streamlining operations, they won’t achieve the effect that Apple has been able to cash in on and end up hurting their brand.
Brennan: That’s a fair hypothesis (given the WalMart connection), but I wouldn’t jump to the conclusion that Microsoft will follow the supply-chain efficiency model of WalMart. Hopefully they’ll be smart enough to bring in some people with stronger brand experience skills. We’ll see…
It’s a logical evolution for Microsoft to try retail, but they should have looked for someone from a successful boutique retailer. Apple’s success has nothing to do with Wal-Mart’s success. Another misguided choice for MS.
Steve: That seems to be the prevailing view on this blog. Microsoft needs to clarify and reinforce its brand in the retail setting. The operational efficiency at WalMart is not what Redmond needs right now. Thanks for joining the conversation.